Corporate Housing or Buying a House?

About a house. . .

Okay, okay, I know that’s not really unusual in my line of business.  But it was a house he saw online at Yahoo! Real Estate in the foreclosure section.  Those “listings” aren’t real.  If the properties actually were for sale, then they would not be at the prices shown.  It’s what they call in advertising a false leader: something not real that gets you in the door to get you to buy another product.  In this case it’s Realty Trac trying to get you to buy their services to get useless information.

So, like this house. .. .

That like says $300,000 on it. . .

Is like really for sale. . .

At like - $750,000.

Let’s be real, houses for sale at $300,000 would be bought by a real estate agent and never make it to the market.  They could turn it around and sell it the next day for $600,000 and make a 100% profit in 24 hours and the new buyer would still be getting a good deal.  The day of the $300,000 home in the eastern part of the San Fernando Valley is gone.  Realty Trac is doing us all a great disservice.  They are telling buyers that they can get what does not exist.

And like that home. . .

Has like a NOD. . .

But like it’s not a short sale. . .

’cause like the owners have like equity. . .

The $300,000, as you can see in the fine print on Yahoo! Real Estate, is the estimated value of the first mortgage.  They may have a second or even third mortgage.  Regardless, the market is not so bad that we are having a 60% off sale.  When is someone going to do something about these deceptive practices?  I can warn my clients all day long, but when someone is promising them a fantasy, they don’t like to work with reality.  And like it makes me go like – valley!

Where to begin?

Posted in Buying, Selling, Investing, California Real Estate at 2:13 pm by Cynthia Holt

I came into the office to catch up on some paper work and prepare for the usual weekend rush.  I checked my emails only to discover that the Department of Justice has declared war on Real Estate Agents.  They have created an entire website dedicated to removing “Barriers to a More Competitive Brokerage Market”

More competitive?  Have they been to California?  Where 2% of the adult population holds a real estate license?  Where too much competition has lead to fraud and scams?

The main emphasis of this website is to encourage people to do it yourself.  As I’ve said before, there will always be those of us who need the challenge of at least trying to do it themselves.  Some of us still bake our own bread and do our own taxes.  But real estate transactions, especially in California, have become so complicated and risky that it makes sense for most people to have someone trained in the industry to handle the marketing and sale of homes.  Add into the mix this frozen market and it’s a recipe for disaster.

This DOJ website is directed towards sellers.  They completely ignore the other half, the buyers.  After all, they are the ones who bring the money to the table.  They need the agents to negotiate the best price.  It’s not the commission price that concerns them.  It’s the size of that new mortgage.

What we need is stronger requirements for agents.  At the beginning of this month, California took the first step towards tightening up those requirements.  For many of us in the business we want even tighter restrictions.  Many blame the new people in the business for a lot of the complaints, but I blame the old timers who are too lazy or greedy to give great service to their clients.  It’s time to shut them down and bring back some pride in the industry.

http://www.usdoj.gov/atr/public/real_estate/index.htm

Disturbance of the Peace

I know that many of you out there understand what I’ve just gone through.  I’ve had workmen in my home for three days for a simple repair that should have taken three hours.  I normally write this blog from my home.  But with all the disruption and racket, I just couldn’t get anything written.  The repair is still not right.  But the workmen are gone and there is peace and quiet in my home once again.  So let the writing begin. . .

We know that consumer confidence is down and that much of it has to do with the “credit crisis”.  Lenders made loans to people they knew couldn’t make the payments once the interest rates changed or as soon as they had to make full payments and not interest only payments.  It was a short-sighted gamble to make money off of loan fees.  Those loans defaulted and lenders lost a lot of money.  So, the pendulum has swung the other direction and it is harder than ever to qualify for a loan.

Owners have caught on and they are having a credit crisis of their own.  They will only look at offers from buyers that have been not only pre-qualified, but can show proof of funds for the down payment and expenses.  It doesn’t matter how good the offer looks on paper, the new focus is on proof.  The sellers are crying – “Show me the money”.

Buyers don’t like going to lenders.  They are afraid they will destroy their dreams.  But in order to make your dreams a reality, you have to work with a bank, savings and loan, mortgage company, or loan broker.  They are not the enemy.  A good one will fight for you.  They are in your corner.  Shop around and find someone who is a dream builder, someone who makes wishes come true.  And then you and your lender will show them the money!

H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007 was passed in the House of Representatives by a vote of 291-127.  Mortgage Brokers hate it.  I consider it some of the best news for consumers in years.  The LA Times said in its article today:

The bill would bar a lender from making a loan unless the borrower had a reasonable ability to repay it, would make clear that federal standards apply to all lenders, including mortgage brokers, and would require licensing and registration for brokers and bank loan officers.

Sounds like common sense, doesn’t it?  Wouldn’t you make loans only to those you think can repay?  Well obviously didn’t.  That’s why so many people are defaulting on their loans.  The Mortgage Bankers Association is against it saying that

. . .this bill will limit credit availability and options for thousands of Americans who want to grab their share of the American dream of homeownership.

What it does is limit the mortgage broker’s ability to make money from false claims.  If a borrower can’t make his or her mortgage payments then they really aren’t buying a home.  The lender reaction to this credit crisis is to make the standards so stringent that it has become almost impossible for anyone, even those with good credit and money in the bank to buy.  They have overreacted to a situation they created.  This legislation will bring back common sense and some balance to the chaos we have now.

Working on the Holt Real Estate Dictionary www.cynthiaholt.com/dictionary has been quite the adventure.  I wanted to create something different and I wanted to include histories of the words mostly because I have often wondered where they have come from and what, if any, were their original meanings.  The first surprise was the word commission:

The word comes to us from the Latin, through the French and originally meant trust. For most of us the word commission today only means the fee we earn. But it really all begins with trust. I am a commissioned agent, one who is entrusted to conduct business on behalf of someone else. Someone who places their trust in me.

The fee is actually a percentage of the business I conduct. The first commissioned agents were the temple priests and priestesses of the ancient world. Part of their duties was to oversee business meetings, contracts, and transactions. Their fee was 10%, which is why we tithe 10% to our churches. The money was used to maintain the temple, its grounds, and house, clothe, and feed the people who worked there. They also oversaw warehouses and held documents in trust. It was a scared duty to be the eyes and ears of the gods they worshiped.

Mine may not be a sacred duty, but agency is a responsibility. Thinking of a commission as a role of trust and not as money in my pocket gives me pause to think. I may not have a temple to maintain, but I do have an obligation to earn and maintain the trust my clients place in me. May I strive each and everyday to do just that.