Existing Home Sales and Contradictory Statements by the National Association of Realtors

Quick glance at the numbers this morning shows some surprises:

• While it appears that first time home buyers are jumping on the bandwagon to buy a house before the tax credit runs out in November, the overall home sales are down in August.
• This caught the market by surprise.

Now read the statement in bold print at the bottom of the article.   And then ask yourself two questions:

• If Lawrence Yun really believes that the market is reaching a self sustaining recovery, then why is the National Association of Realtors lobbying so hard for the tax credit extension?
• If NAR believes that the  market is reaching a place of recovery, then why should we continue to pay $43,000 for every additional home sale due to the tax credit?

It doesn’t balance out, not by a long shot.

Tom

Existing home sales drop 2.7% to 5.10 million – MarketWatch

WASHINGTON (MarketWatch) – Resales of U.S. homes dropped 2.7% in August to a seasonally adjusted annual rate of 5.10 million, the first decline in five months, the National Association of Realtors reported Thursday.

The August existing-home sales figures represent “a mild retreat from a very strong gain in July,” said Lawrence Yun, chief economist for the real estate trade group. The August sales pace was the second highest in 23 months, he said.

The decline in sales was unexpected by most economists. The median forecast by economists surveyed by MarketWatch was for a small gain to a 5.40 million annual rate from 5.25 million in July.

Sales are up 13.6% from January’s bottom.

“We are very close to reaching the point of a self-sustaining recovery,” Yun said. The realtors are still “lobbying very hard” for Congress to extend and expand the $8,000 tax credit for first-time home buyers.

Technorati Tags: National Association of Realtors, Existing Home Sales

Do we extend a bad thing – or do we do the right thing?

I was at an open house yesterday afternoon for a new real estate office (established Realtor, new location) and some of us were talking about the market and the topic of the $8,000 tax credit came up.    I’m going to attempt to summarize some of what the reactions were:

• “It’s really helped my business over the last few months.”
• “I have no idea how all of the last minute deals are going to get closed before November 30.”
• “While it would hurt us short term for the tax credit to expire in November, I think it would hurt us MORE long term if we do extend it.”
• “It’s like a short term cocaine high.”  

I have to admit, I was pleasantly surprised that as many of them were either realistic about the tax credit or actually opposed to extending it.   I personally am opposed to extending it.   We are spending $43,000 for every real estate sale that is generated by it and we need to realize that not only can’t we afford to spend the money, it’s not wise.  We’d reinflate a bubble that will pop again and cause more problems.

The article below spells out a good “overview” of some of the economists and such who think there are a lot of potential problems with extending the tax credit.
 
Tom Vanderwell

Help may bring another bubble – Las Vegas Sun

Help may bring another bubble
Economists say extending tax credit for first-time homebuyers is bad policy.

By J. Patrick Coolican (contact)

Tuesday, Sept. 22, 2009 | 2 a.m.
No doubt, a big tax break for first-time homebuyers is good politics.

The $8,000 tax credit, enacted this year when Congress passed the $800 billion stimulus program, helps families looking to buy a house for the first time, as well as real estate agents and developers, who are ailing in the face of the worst housing market since the Depression.

First Time Buyer, Tax Credit

Should Realtors “interview” Lenders?

I got what I thought was a very interesting and thoughtful e-mail last week from Jessica Horton, a Realtor down in Georgia, who I’ve gotten to know.   She and I have chatted a bit both online and over the phone about the markets, the dynamics of today’s lending rules and the ins and outs of structuring deals.   Oh, and we are both authors on the Bloodhound Blog.

I’ve taken Jessica’s e-mail and my response and turned them into a post.    I’ve eliminated a few minor conversational tidbits but I’ve left the majority of our e-mail conversation intact.

Why am I reposting this? 

For three main reasons:

1. I’ve been in the mortgage business for 21 years now and I have never seen as challenging of an environment as we have now.   Yeah, we’ve had ups and downs and economic slow times, but a combination of falling property values, rising unemployment and tightening underwriting guidelines have made this the most challenging market I’ve ever been in.  
2. The days of assuming that any lender can get a loan done and that anyone can get a mortgage are over and they aren’t coming back any time soon.
3. I found it very refreshing that a Realtor is taking a good hard look at who they want to recommend to their clients and not looking at it only from the standpoint of “who’s going to buy me lunch.”

I found it very refreshing that Jessica was talking to a number (I don’t know how many) lenders and was attempting to understand better how they work and what their processes and procedures are for making sure that things go smoothly.    With the HVCC and the new MDIA and the pending changes from Fannie Mae and Freddie Mac, the rate a lender offers will always be important, but their ability to get things done is more important than it has ever been.

Take a few minutes and read through the exchange.   Jessica’s questions are in “normal” print and my answers are in bold and italics.

Tom

 

Jessica,

See below.   Thanks for giving me this opportunity.

Tom Vanderwell

---

From: Jessica Wynn Horton [mailto:jessicahorton30292@gmail.com]
Sent: Wednesday, July 29, 2009 1:58 PM
To: Tom Vanderwell at Straight Talk About Mortgages
Subject: A few questions for you

Tom:
In an effort to better serve my clients, I am asking lenders the following questions:
1. How does your PQ process work.

A couple of thoughts about a prequalification first.   My view of a prequalification is that it’s a 10 to 20 minute review of the borrower’s financial information where the buyer tells me the information and I assume that he’s telling me the accurate information.   Nothing is verified in terms of running credit or looking at income or asset or liability information, it’s all stated and assumed right.

What is the time line.   Since it only needs 10 to 20 minutes, it’s very easy to do by phone and needs very little advance notice.
How and when do you perform a pre-qualification – due to family time constraints, I like to schedule appts either between 8 and 5 or after 8:00 pm (by then my younger kids are in bed).   Exceptions can be made to that. 
How long does it take
Does this happen face to face, phone, web or remote  I prefer to do a prequalification by phone. 
What is your process of a PQ  – We basically discuss the  four tiers of mortgage lending:

Income

Assets – downpayment and also cash reserves

Credit – how good or bad and how much – monthly payments, balances (so that we can determine if any can be short termed) etc.

Collateral – how much are they looking to spend – do they want a condo, house, mobile home on land, etc.

Do you charge a fee to the client  – not for a prequalification. 
Is a credit report reviewed  – No, for two simple reasons.  Every time that a credit report is run it costs a few points on a credit score.   In addition to that, starting with loans that are sold to Fannie Mae and Freddie Mac on October 1, all credit inquiries need to be addressed by the borrower in writing and if it’s a mortgage inquiry, documentation is needed from the other lender that the loan has been "dispositioned."    

2.  How does your Pre-Approval Process work?

How does it differ from the PQ process  – a prequalification is all stated income, stated asset, stated credit.   When we do a preapproval, everything is verified. 
How and when do you perform a PA .  Here’s the "scenario" that I like to use for a preapproval:

Step 1 – Client fills out an application – I’ve attached a pdf file that is the 1003 application.   I like to have the borrowers complete that (starting about half way down the first page) so that I know they are completing the information truthfully (at least from their standpoint) and I’ve also got evidence that they are "okay" with me running their credit.

Step 2 – they either fax or e-mail the completed application to me.

Step 3 – I run it through the automated underwriting (DU or LP – or both if needed) and get them all of the necessary compliance documents (TIL, GFE, Borrower’s Authorization etc) along with a list of the documentation that we need to completely verify everything and get the loan totally approved.

Step 4 – Customer gets me the signed application documents and the income and asset documentation we need.

Step 5 – The complete file is submitted to underwriting for a review by the underwriters and sign off from them.
How long ?

Step 1 – depends on the customer.

Step 2 – depends on the customer

Step 3 – less than 24 hours, if I know it’s coming and it’s time sensitive, it can be done in less than an hour or two.

Step 4 – depends on the customer.  As part of "Straight Talk Lending," I’m committing to e-mailing the initial compliance documents within 24 hours of the submitted application.   I would like to have the documentation back within 3 days.

Step 5 – 2 to 6 days from receipt of documents in Step 4 depending on loan type, etc.

Does it happen face to face, phone, web or remote
What is your process of a PA
Do you charge a fee to the client  - The new Reg Z rules allow us to charge a credit report fee.   So far, I haven’t seen people abusing it, so I don’t expect to begin charging one. 
When is a credit report reviewed  - immediately upon receipt of a completed application.

3.  Loan Application Process

How is this completed and by who
Is this done face to face (b/c of the new legislation)  - due to the geographic challenges, I won’t be traveling down to Georgia to meet with your clients, so I expect most of them to be done the way I outlined above.   A face to face application compared to a phone or mail app reduces the time to close by 3 days but except in extreme rush’s, you wouldn’t have the appraisal back yet any way.
When is the Good Faith and Truth in Lending provided to the client .   I’ll be e-mailing documents within 24 hours of receipt of the application.   In addition, our operations department in Cincinnati will be sending the GFE and the TIL.   So they’ll get them twice. 
When do you lock loans and do you charge a fee .   That has changed since yesterday.   Let me lay it out:

Purchase – Preapproval already in process – client can lock a rate as soon as they have an accepted purchase agreement and a "close by" date.   At the time of locking the rate, they need to make a $295 non-refundable deposit (can be done by credit card).

Purchase – application not started before they sign purchase agreement – they can lock the rate at application without having to pay a fee.   On the 4th business day after application, I’ll be contacting them to collect the $295 non-refundable deposit and that’s the point at which we’ll order the appraisal.

Does that make sense?

Refinance transactions – they can lock the rate at application and then on the 4th business day after application, I’ll contact them to collect the $295 and proceed with the appraisal etc.

Do you quote accurate GFE’s (b/c new legislation requires .125% redisclosure)  As accurate as possible.   I’ll be looking for input from your preferred title providers as to the local fees in terms of closing, title etc. 
How & when do you preform updates and to whom do you provide them to  – Part of my new "Straight Talk Lending" is going to involve updates to buyer and both Realtors on at least a twice a week if not more often than that. 
Do you or your company have any service guarantees in place?    In terms of an official guarantee, no.   In terms of a reputation and integrity, I can guarantee that your clients will get straight answers, quality service, solid advice and competitive rates and terms. 

4. What is your take on the new legislation?

Check out what I wrote last Wednesday at It’s Starting Tomorrow…..

While there are some small benefits for customers, the increased regulation and bureaucracy is going to turn the mortgage world into a world where we have to be:

• More demanding of our customers.   I"m going to need more documentation than I have ever had before.
• Less accommodating – "No, I’m sorry, your paystub isn’t going to be enough.   I need your last 2 years W-2’s, a current paystub and your 2008 1040’s."
• More organized – organization and systems will be even more important than ever before.

I am asking these questions to better understand your side of the transaction so that I will be better able to serve my clients
and not put unrealistic demands in Purchase & Sale contracts.  Please respond when you have time. I look forward to doing
business with you in the near future.
–
All my best,
Jessica Wynn Horton
Broker/Owner
C: 678.871.9660
F: 888.621.7080
E: jessica@jessicahorton.com
W: www.jessicahorton.com
Jessica Horton & Associates

Fork in the Road – Part 2 – It’s Coming Fast!

On Tuesday, I posted Part 1 of the Fork in the Road Series by Jeff Brown from Brown and Brown Inc.   Tonight, Jeff’s talking about the timing of it all.   Let’s just say the clock is ticking…..

Read it and then call Jeff at 619-889-7100 or call me at (616) 292-7559 and let’s talk about how the market is going to affect you and how we can help you navigate through it.

Tom Vanderwell

Real Estate Investors — Are You In ‘Wait ‘n See’ Mode? Breaking News: Time Ain’t Your Friend · BawldGuy Talking

Real Estate Investors — Are You In ‘Wait ‘n See’ Mode? Breaking News: Time Ain’t Your Friend

Posted @ 8:41 pm – Filed under Buying Income Property, Economy, Financing, Market Correction, RE investment strategies, San Diego Property Owners

Let’s talk a little real estate history tonight, along with (takes a deep breath) some governmental lessons we’ve already lived through, if not learned from. (That screamin’ you hear in the background is my high school English teacher.) This isn’t a post on politics as much as it’s a review of the litter left on the roadside by history — litter some of us prefer calling empirical evidence.

As I said last night, the ’70’s was the first time economic policy went full speed executing the combination of massive spending + tax hikes + huge increases in our money supply. That troika proved beyond a doubt to be THE slam dunk recipe for record inflation, real estate appreciation not seen in my lifetime ’till then, or since the end of WW II for that matter, interest rates over 15%, and a continued marginal tax rate for the biggest income earners of — wait for it — here it comes — 70%! If you lived in California back then, and found yourself in that tax bracket, you netted roughly 21¢ on every subsequent dollar of income after taxes. In technical terms, I think economists call that a disincentive.

History has recorded the result. A recession lasting years. Loss of jobs, property, and hope so staggering, the ‘Misery Index’ was born. It was the first really bad times I’d experienced as an adult. Compare our status quo now to the economic nightmare of the early ’80’s.

Back then there was rising unemployment, a recession, double digit interest rates, and a mortally wounded real estate market. Now? We have rising unemployment, a mortally wounded real estate market, proposals for higher taxes, and massive new spending everywhere we look. The point is that we appear to have much in common with the period ‘76 through give or take ‘83/84. A mercurial rise in real estate prices followed by recession, and severe lending challenges.

Interest rates aren’t 15% now you say? True enough. But ask the nearest real estate investor the difference between losing a great deal due to high rates, or underwriting so silly even ultra-conservative investors raise eyebrows. There is no difference, as the result is identical — no deal.

Here are the results demonstrated in the ’80’s and the circumstances preceding them in the ’70’s. Do they sound somewhat familiar?

# High marginal tax rates — rising rates on capital gains
# An unreliable source of real estate financing
# High unemployment — still on the rise
# Massive government spending — with no end in sight
# Historic increases in the nation’s money supply
# A gravely wounded real estate market

I now quote a relatively (couldn’t resist) credible source on the subject of insanity. Einstein put it succinctly when he so pithily said — “Insanity: doing the same thing over and over again and expecting different results.”

Under what rational school of logical thought does anyone think we’ll end up with different results this time out? Please, don’t answer, as it’s a rhetorical question.

Here’s where I bring up two very important factors which are currently in play — only one of which was existent in our historical example. First, regardless of what the LameStream media would have you believe, real estate remains fiercely local in nature. What’s true in San Diego can be almost foreign in another region. This isn’t opinion. While Las Vegas is floating face down in the water, some selected regions are producing very solidly positive fundamentals — a result which still acts as a siren song to prudent real estate investors.

Second, the status quo in which we currently exist doesn’t include, at least for the moment, double digit interest rates. Hence the window I wrote of last night. That window has a shelf life people. Those in ‘wait and see’ mode will find themselves up the river without a paddle — or newly acquired income property with rapidly rising net operating incomes and low fixed rate financing.

Those who took advantage of this same window back in 1979 soon found themselves in an atmosphere of upward spiraling rents, crashing vacancy rates, and ever increasing cash flow.

I dunno, sound OK to you?

It’s time to move it or lose it people. Tick tock.

Take a minute and give me a call. One thing most folks tell me is how they learned answers to questions they hadn’t known to ask. 619 889-7100 will find me. Have a good day.

Fork in the Road, Real Estate Investments, Jeff Brown, Bawld guy

A Fork in the Road

Here’s another guest post (part 1 of 2) from my friend and real estate investment connoisseur Jeff “Bawld Guy” Brown.   Jeff spends his days helping people invest in real estate as a road to retirement (something everyone is having a harder time reaching these days.) 

Jeff and I have spent considerable time discussing his “fork in the road” theory and I’ve got a couple of thoughts to chime in:

• I think there’s a very high probability that he’s right and the next few years are going to go one of those ways.
• I think that it’s worthwhile reading not only for those who are investors, but anyone who has a financial stake in the real estate world.   

Take the time, read it over and then either e-mail Jeff Brown  or call him at (619-889-7100) or e-mail me at Straight Talk or call me at (616) 292-7559.   We’d both like to talk with you further.

Tom Vanderwell

P.S. Part 2 will be coming Thursday night

Are We Coming To A Real Estate Investment Fork In The Road? · BawldGuy Talking

Are We Coming To A Real Estate Investment Fork In The Road?

Posted @ 7:15 pm – Filed under Buying Income Property, Cash Flow, Economy, Financing, Market Correction, RE investment strategies, San Diego Property Owners, Texas

Yeah, I know, there are more than two schools of thought when we start talkin’ about what’s next in the national economy — especially in the context of the oh so important real estate markets. I get that. But the fork I see are two roads really more or less going in the same direction, which I realize is confusing. Hang with me.

This isn’t new ground by any stretch, as many have written endlessly on ‘what’s next’ — to the point we’re all hittin’ the weary wall. Sooner or later though, it’s gonna break one way or the other, something on which there is universal agreement.

The most likely direction I see us taking is on the same sad dirt road on which we found ourselves in the ’70’s and early ’80’s. I was gonna go all linky on ya, but decided it’d be far more instructive to simply begin the discussion.

Inflation followed the ‘74-75 recession. In fact, it was the first time it had ever reached double digits in my lifetime — at least to my knowledge. From ‘76 through fall of ‘79 inflation was an infection and the doctors seemed to have gone fishin’. For example, San Diego real estate went up a more or less steady 2% — a month — for those nearly four years. We’d never seen anything like it.

When it predictably hit the fan, prime rate was over 20%, FHA was about 16.5%, and both were there to be seen, not used by anyone but the most desperate. It’s a very close call in my opinion, but I think we’re maybe about to be headed that way.

The other road on which we may find ourselves sports the above mentioned inflation but without the accompanying robust economy. Seems oxymoronic doesn’t it? But the phrase ‘Stagflation’ was born just about 30 years ago. Inflation was off the charts while recession deepened. Interest rates remained high for so long, I remember celebrating at the local steakhouse when I closed a deal with an interest rate under 12%. Not makin’ that up. When rates finally dropped to single digits we nearly became euphoric.

Here’s the common denominator between the two scenarios: Both will have windows of opportunity (already open) for real estate investors. And no, this isn’t some convoluted NAR message saying “It’s a great time to buy real estate”.

In either case the entry level home buyer will find themselves shuffled off the stage. Either rates will be way to high, or prices will have left them behind. Meanwhile the supply of rental property, affordable that is, will begin to shrink. Nobody, or in any case very few, will be building. Vacancy rates will tumble as rents find new heights. This is already happening in some regions. Texas is one major example as you may have already guessed.

Those who lock in relatively long term, low interest rates now, will find themselves in the Catbird Seat. My hands-on experience with this came in San Diego of course. Vacancy rates not measured in percentages but rather time — sometimes hours. Really. Owners insisted on month to month rental agreements so they could follow (read: adjust to) the upward trending rents. Folks who’d began with a ‘break even’ property found themselves awash in cash flow a year or two later.

They did this at rates of 7.5-9%! When rates almost doubled shortly thereafter, they found themselves with slowly rising expenses, a fixed cost for borrowed money, and very quickly rising rents. Gimme that combination any time. That combo is in your future, in my humble opinion, no matter what happens.

The key though is to act before the bull’s waste product hits the wildly spinning metal blades. Once the interest rates and/or prices get their death grip on what makes investment sense — your ship will have sailed — whether you’re on it or not.

There’s no ‘being late’ to this particular party. That great deal at 5-7% becomes an easy ‘I’ll pass’ at 8-10%. So if you’re late, the party will go on without you.

I’m very interested in what you have to say — including how long you think this current window of opportunity might last.

If you wanna talk about how you might take advantage yourself, gimme a buzz at 619 889-7100 or email me. Have a good one.

Bawld Guy, Jeff Brown, Real Estate, Fork in the Road

1031 Exchanges can be used to defer losses? Huh?

This post is another guest post from my friend Jeff Brown.  Jeff’s a common sense investment Realtor who has done more Straight Talk in his career than many people I know.   Check out more of his writings at Bawld Guy Talking or at Brown & Brown Inc.  

Real Estate Investors — 1031 Exchanges Can

Be Used To Defer Losses

Posted @ 6:53 pm – Filed under 1031 Exchanges

What? Huh? What would possess anyone to defer a loss for Heaven’s sake? There are situations in which a tax deferred exchange deferring a loss would make excellent tax planning sense. Sometimes, believe it or not, investors have executed exchanges without knowing ’till the end they’re in fact not deferring a gain, but, horror of horrors, a loss. No really, I’m not kiddin’.

First of all it’s crucial the taxpayer understand a 1031 basic truth. Once you’ve done what it takes to qualify for tax deferral, it doesn’t matter whether it was taxes to be paid by you, or tax savings to be enjoyed. Crazy, no? Once you’ve filed a tax return with a transaction structured as a qualified 1031 — there’s no changing your mind. It is what it is. The gain, or in this case, the loss is deferred.

Now you know why I’m always banging away at folks to ‘call the guy’, which would of course include your tax pro when contemplating a strategy of tax deferral. Sure, I know the law and regs, even a large part of the minutia of which I talk much about here, and about which most folks don’t know to ask. Yet I still insist clients speak to their tax people or have them speak to me to ensure we’re all on the same page. My experience is chock-full of examples where clients’ tax pros bring ‘new’ facts to the table that saves the shared client from a self destructive strategy.

Oh, you wanna hear one? OK…

How ’bout the client who ‘computed’ his capital gain without the understanding of ‘adjusted basis’ and it’s impact? “Well, I paid X and sold for Y, therefore my gain is Z.” Wrong 6-figure tax bill breath. His adjusted basis effectively lowered his ‘what I paid’ number by almost a half million bucks! Uh, seems the calculations neglected to include the factoid he’d twice used 1031’s — ultimately ending up with the property in question. Not only that, but since he’d acquired the initial property in 1985 his depreciation was off the charts huge, and relatively short lived compared to today’s law. If I remember correctly, he’d barely gotten under the line, qualifying for a 15 year life. Then he traded again in 2001. Then traded into the subject property in early 2003. He came to me around Jan-Feb of 2005.

His actual gain would’ve cost him, according to his CPA, who was a real firecracker, and a funny lady, easily over $100,000. Our client wasn’t amused. His figures showed a tax bill literally in the ‘chump change range’. Go figure — pun intended.

But why would one defer a loss on Purpose?

This is where it gets way simple.

You might be protecting some other ‘loss carry forwards’ which make more sense to use time wise. It’s also common to defer a loss when you’re fairly sure you’ll be in a higher tax bracket or at least making a bunch more income down the road. Maybe you’re planning to take a good size capital gain in a couple years on another property, and plan to take the loss at that point. There are several reasons a taxpayer might choose to defer a loss.

My experience has taught me it normally makes sense to simply take the loss by selling, not implementing a deferral strategy. An example is what we’ve talked about here recently. You own real estate with significant capital gains, and also some with similar capital losses. Don’t fall into the trap of thinking all circumstances with the same facts will work best using the same solutions — it just ain’t so. Sometimes a choice made years earlier can come home to impact today’s decision.

BawldGuy Takeaway: Don’t get lost in the minutia of what to do, when to do it, or how it’s done. For those things, ‘call the guy’. The primary takeaway here is to do whatever you do on Purpose and with a well thought out Plan. The rest will generally take care of itself.

Call me with any questions you may have about your current situation. I can be reached at 619-889-7100 or via email. Have a good one.

BawldGuy

Some good Saturday listening…..

Jim the Realtor on Nightline

Jim the Realtor

Why did you use a traditional real estate agent?

The chart below can be found (with the entire article) on Bloodhound Blog.   Glenn Kelman from Redfin.com put it up there.    I find it very thought provoking for those who are in the business…..

How do you connect with potential clients?

Tom Vanderwell

Redfin.com

The Power Of The 21st Century Real Estate Investor: No Longer Hostage To Geography

This is another guest post from my friend Jeff Brown from San Diego. Had breakfast with Jeff the other day.   A great guy and someone with a very solid sense of what’s important in real estate.   I hope you’ll take the time to read this…..

Besides the real estate investment myths that have survived for decades, maybe the most costly carryover is this one: “Gotta stay local. Must be able to drive by my properties or the world will stop spinning, the sun won’t rise in the east, and McDonalds will stop sellin’ hamburgers.”

Really?

So many ‘age old truisms’ have fallen by the wayside in the 39 years since I started doin’ this. Exchanges are now ‘delayed’ instead of having to close simultaneously. Yeah, you heard right, simultaneously. You think identifying your uplegs in a tax deferred exchange bring with it a little pressure? Gimme a break. Try closing three properties being traded into seven properties — and all the lenders, title companies, ad nauseam have to cooperate so that all 10 properties close on the same morning. Sometimes I look back at those ‘cowboy’ days and wonder why more investment brokers didn’t just drop dead in the last days of an exchange.

But I digress.

Along with all the white noise driving us nutso, the information/communication age in which we live has also made buying real estate hundreds or thousands of miles away a real option. When I woke up one day back in the last months of 2003, knowing San Diego income property was no longer viable, I removed Brown and Brown’s San Diego borders. No longer would we or our clients be shackled by the artificial limitations of geographic location.

An example in real life.

Here’s the Reader’s Digest version of a couple who decided awhile back to Get Outa Dodge and get serious about their retirement.

Their ‘Dodge’ wasn’t San Diego, but very similar. The numbers simply made no sense anymore. They listed their rental home and triplex for sale. When they sold we came in and turned the sales into exchanges. When they closed we already had six properties waiting for contracts. About 40 days later those properties closed and their exchange was complete.

They signed all documents from beginning to end either in their own kitchen, or the escrow company. They received full inspections with any work needed done to their satisfaction. Property management came in at the end just before closing and captained a smooth transition. All loan docs were signed in their own home, at their convenience. The tax deferred exchange was handled by us while using an Accommodator in San Diego. How well do we know this company you ask? Well, I know the owner. My dad did business with his dad beginning around 1964. Now we do business with each other. That’s how well. Over 40 years of earned trust and demonstrated confidence.

I did business with them before delayed exchanges existed, or were even a gleam in the Starker family eyes. Who’s Starker? That’s a long story, but suffice to say they’re the reason we don’t hafta close exchanges simultaneously anymore. God bless them.

A multi-property, multi-state exchange managed by our firm in San Diego. Their properties were in a different state. The properties into which they traded were in yet another state — as was the lender. Their new real estate attorney (referred by guess who) resides in still another state.

Sensing a trend here?

Wherever you or your properties are, in today’s vastly reduced world, just isn’t relevant. What’s relevant?

The boundaries holding real estate investors hostage to their local market exist only in their minds. When regular folks can successfully do all these things, and without leaving town once — if that’s their preference — then all the roadblocks are only imagined.

Most local real estate markets around the country are not candidates for investment. You may correctly infer from that statement there are local markets proven to be not only attractive now — but also show all the signs of being fundamentally sound economically for a long time. We used to call places like that San Diego. Alas, times change. Those who recognize these changes and act accordingly will prosper. Those who don’t will no doubt realize years later, they were victims of Stockholm Syndrome, the real estate version. Bonding with the market that’s held you hostage ain’t the way to the retirement for which you’ve planned and worked so hard.

‘Local’ today is anywhere we want it to be. Anywhere it makes sense to be. Anywhere that will significantly advance your journey to retirement — or speed up that trip. Hey, now there’s a thought. Ponder that. But not too long, OK?

Tic Tock.

Use your local computer to get ‘puter’s attention. We’ll end up in a real life conversation about what local real estate market might be best for you. Meanwhile, browse through some of the podcasts and see if they don’t speak to your circumstances or what you’ve thought all along. Have a good one.

Reverse Offer – a Guest Post

This comes from Todd Waller of Real Estate One in Ann Arbor Michigan. I’ve known Todd for quite a while and have come to appreciate his new and fresh outlook on selling real estate in difficult times.   I hope you’ll enjoy it!

Is Your Agent Creatively Aggressive in Selling Your Home?

Michigan has been in the throws of a buyer’s market for at least 3, if not nearly 4 years.  As a result, Michigan real estate agents have had to adapt quickly to a rapidly changing marketplace.

Creatively Aggressive is my term for how some agents are representing their clients’ interests in this tough market.  In the examples given, the focus is on protecting the client’s interests and maintaining the fiduciary responsibility between client and agent.

Here’s an example of an agent being creatively aggressive :

The Reverse Offer

The seller has a property on the market, competitively priced, aggressively marketed, and the number of showings has been steady, but no one has put pen to paper to purchase the property.  When a buyer shows interest in the property and returns at least one more time to see the property, it’s time to make a reverse offer.

The reverse offer is simply an offer from the seller to the buyer to begin the purchase conversation.  Obviously the buyer is interested enough to see the property multiple times.  That indicates that the price, location and value combination are making the property “sticky” in the purchaser’s mind.

What the reverse offer looks like is different from property to property, so consult with your Realtor(R) before an offer is put together.  You may want to submit a reverse offer with a price lower than your list price, or you may want to submit an offer with a higher price and seller concessions.

What About the Buyer?

This option can also be utilized by a purchaser in a buyer’s market.  The effectiveness varies, but I have found that it is totally dependent upon the seller’s willingness to try something unconventional.  When my purchasers have indicated that they would be happy to purchase either home A, B, or C, I have asked the listing agents of those homes to submit an offer to my clients.  I simply state that there are multiple homes they are interested in, it’s a buyer’s market and we are acknowledging and embracing this fact.

For my buyers, it’s an opportunity to not be tied to one contract to purchase and gauge a seller’s willingness.  For my sellers, it’s an opportunity to end some of the suspense, and show purchasers that we are serious about moving the ball forward.

What have you seen used as a creatively aggressive way to sell homes?  I’ve heard rumors of using eBay, selling the handmade, scale doll house, with the actual house thrown in for free (Great Marketing idea!), free cars…. What have you seen and what works, I suppose, are two different questions!

Todd Waller or call him at 734-564-7465

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