Industry Clean-Up, Part 2

Even More!

Hello Neighbors,

More good news. This cleanup announcement is intended to help revise mortgage lending.

This note just in from our friend Jeff at Comstock Mortgage:

Here is an announcement from the Federal Housing Finance Board (Fannie and Freddie’s Regulator). Starting January 1, 2010 requiring at the loan level both agencies to obtain information on the originator (both at the loan officer level as well as the company level), appraiser and appraising supervisor. This will go a long way to quickly identifying those “bad apples” in our business and allow the tracking of delinquency and loan quality at the originator level both company and individual loan officers/consultants as well as appraisal issues. While it will not be required until January 1, 2010 I would expect to see implementation by Q4 of this year.

Thanks for sharing Jeff.

- Jim

www.NeighborlyRealty.com

Industry Clean-Up, Part 1

Excellent.

Hello Neighbors,

More cleanup activities in the works. This time, Title Company changes. This just in from our friend Eden at Stewart Title:

As you may know Governor Arnold Schwarzenegger recently signed into law legislation that gives the Department of Insurance significant new power to regulate practices in the title insurance industry, including the first program in the country to register and regulate sales representatives. This legislation will have a dramatic affect on how business will be done in the future. As part of the SB-133 regulations, we are no longer able to distribute foreclosure data. As of January 1st, 2009 we will be unable to provide you with the Notice of Default, Trustee Sales, and REO information.

The premise of new regulations such as SB133 has always revolved around consumer protection. More importantly, it creates an environment of choice based on Service, Knowledge and Experience. The Real Estate Industry will continue to go through changes…Together, we will get through them.

Those of us still doing this business well, WELCOME the changes and the continued increase in regulation.

There is nothing more heartbreaking than hearing the stories we do about foreclosure, bad loans, and families falling apart from financial stress.

Thanks for sharing Eden.

- Jim

www.NeighborlyRealty.com

Bay Area - See You on January 22nd

Hello new Neighbors,

Neighborly Realty has been asked to present to a company in the Bay Area on the 22nd of January. This company is going through a large relocation effort, and will be moving folks from the Bay Area to the Placer County and Sacramento County Areas.

We are honored to be asked, and will do our very best to help you all with this transition.

PLEASE feel free to email or call if you have any questions. We are hear to help. We've been in your positions too - in our corporate (pre real estate) careers. We sympathize, and will do our very best to get you the information you need - as quickly as you need.

We are clients of your company. We've been members since 1992. You've served us well over the last 17 years, and we would like to repay you by doing our very best to help your families.

We look forward to our sessions on the 22nd, and thank you again for this opportunity to help,

- Jim

www.NeighborlyRealty.com

Wonderful Neighborly News !!

Hello Neighbors,

VERY good news to share, and wonderfully exciting – a fine young lady has joined the Neighborly Realty Team!

Her name is Denise Fogel.

Denise comes to us with tons of experience. She had done commercial, residential, BPOs, REO listings, and a wide variety of real estate activities. She is an investor too, which we like! More importantly – she’s into old cars. The perfect Neighborly fit!

Denise is absolutely "service" oriented, and very much into this business for the right reasons. We are thrilled to have her on board - and promise to do everything we can to help her grow her business.

Please welcome Denise to the team. Wee are very happy (and proud) to have her in the Neighborly Family!

- Jim

www.NeighborlyRealty.com

How to Buy with "Nothing Down"

Hello Neighbors,

I just dug up an old email from September / October. It's from a lender partner of ours with some very good insight.

He was asked to come up with the remaining ways to buy with nothing down. His list is below.

Keep in mind that this segment of the market is changing so rapidly that we can't keep up! The consumer has to be a diligent shopper to watch what is best for themselves. Here's the list:

CalPERS FHA 97% with 3% member Personal Loan
CalPers Conventional 95% w/5% Member Personal Loan
FHA w/Neighborworks proprietary $10,000 2nd
FHA w/Neighborworks CalHome
FHA w/ SAR HELP program
Conventional w/Neighborworks CalHome
FHA w/SHRA CalHome
Conventional w/SHRA CalHome
FHA w/SHRA Target Area Homebuyer Program
FHA w/SHRA FTHB Program
FHA w/SHRA ADDI Program
CalVet
VA
FHA w/CalHFA CHDAP Program
Conventional CalHFA w/CHAP & CHDAP
FHA w/Gift Funds
FHA w/401K loan
Access Conventional (reduced to 7%) w/CalHFA CHDAP
FHA w/NHF 1st House Grant
FHA w/NHF 1st House 2nd Loan
USDA Rural Housing
FHA w/Employer Assisted Housing Program
Numerous city programs i.e. West Sacramento, Citrus Heights, Rocklin, Roseville, etc.

The funding on some of these programs is intermittent. Not all of them have funding right at this time. They all have restrictions. some are based on income, geographic locations, 1st time buyer status, employers, and other things.

MANY sincere thanks to Jeff for putting this list together.

- Jim

www.NeighborlyRealty.com

Locked their Loan at 4.625% !!!

Stunning.

Hello Neighbors,

NOW IS THE TIME TO PURCHASE OR RE-FINANCE !!!!

One of Neighborly Realty's clients locked a loan today at 4.625%.

To the best of my knowledge, that is the lowest in recorded history! Or nearly the lowest. I can't vouch for the post World War II years or the Great Depression. My memory fades...

But in the last 40 or 50 years? This is it. The lowest ever.

WOW.

Thinking of Buying?
Thinking of Re-financing?

THIS IS THE TIME.

Call me today, tomorrow, soon... just call! We can help you get this process started.

Amazing.

- Jim

www.NeighborlyRealty.com

Rates Dropped Below 5% Today !!

Stunning!

Hello Neighbors,

Thinking about a purchase, or a re-fi? NOW might be the best time in history to jump!

Standing at one of our credit union partners this morning... they handed me a rate sheet which showed a 30 year fixed loan was an amazing 4.875% (with .125 discount points). Amazing!

Their 15 year fixed loan product? 4.75% (with .125 discount points). Wow.


IF ANYONE NEEDS HELP with a loan or refinancing, give me a call and I can steer you in the right direction.

- Jim

www.NeighborlyRealty.com

Another Escrow Company Fails

Hello Neighbors,

Another sad sign of the times.

The LandAmerica Financial Group / Commonwealth Title Company (Escrow Company) is no longer with us. They’ve filed for bankruptcy protection.

From Kat Fiorentino, one of our Lender Partners:

FYI**********

Its official. Every lender has cut off LandAmerica and it affiliates from issuing title insurance. Most will not allow them to handle the escrow either. They are Bankrupt and therefore could not possibly insure any transactions chain of title.

LandAmerica Financial Group has recently filed for bankruptcy. Until a definitive arrangement regarding LandAmerica Title has been completed and First Cal can be assured that policies from LandAmerica Title are adequately capitalized, we require a new prelim and subsequent title policy from a title insurance company in good standing for any loan where documents have not be drawn.

Kat Fiorentino


This makes 3 that have gone out of business this year: Alliance, Financial, and now LandAmerica / Commonwealth.

….and guess what? We’ve had escrows in place with all 3 when they’ve failed! Yep. Unfortunately we can’t see these things coming, as most companies are private. But we are getting very good at managing the fallout from a failed title / escrow company.

You need help, give us a call!

- Jim

www.NeighborlyRealty.com

Pest Report Repairs – Licensed Contractors Required?

Hello Neighbors,

In California, the short answer... Nope!

With regard to repairs, licensed contractors aren’t required: Take a look at the text in the actual pest inspection report on page 2. It says “OWNER SHOULD BE AWARE OF THIS CLOSED BID WHEN CONTRACTING WITH OTHERS OR UNDERTAKING THE WORK HIMSELF / HERSELF”.

TONS of information can be pulled from the California Pest Control Board’s website at: http://www.pestboard.ca.gov/ One of their documents is 152 pages long, another is 600 pages! Look for their 12 page booklet from the State of California which has a bunch of Q & A on pest requirements.

This particular issue hit me hard when I sold my own house (before getting into this business).

My Realtor at the time (the same agent who didn’t tell me about Supplemental Property Taxes) told me that a licensed contractor had to do the pest repairs, and that it HAD to be the same company who did the inspection.

I found out later – once I took the “Legal Aspects of Real Estate” course for my broker’s license - that wasn’t true. Anyone can do the repairs. Most of the time when representing a Seller, we have the Seller do their own repairs. Once the repairs are complete, you should have the original pest company come back out for a “re-inspect”, but even that isn’t legally required!

I even did one repair for a client in May of this year. They were having a baby, and couldn’t get to the last repair. So I helped them out.

So be aware – when working with pest inspection companies and vendors. It is part of the process to have them bid for the repair work. Their bids were reasonable…. before this current economic crisis. Now we are seeing some outrageously high bids from these same companies. They too are hurting, and need to generate revenue just like any other business.

- Jim

www.NeighborlyRealty.com

Are Pest Reports Legally Required?

Hello Neighbors,

In California, the short answer... Nope!

Would we want a client to move forward with a purchase or sale without one? NO!

A pest report isn’t a legal requirement at all for the State of California! Nope. It’s a lender requirement (90% of the time), or something us agent’s order simply so our clients have some protection / piece of mind.

TONS of information can be pulled from the California Pest Control Board’s website at: http://www.pestboard.ca.gov/ One of their documents is 152 pages long, another is 600 pages! Look for their 12 page booklet from the State of California which has a bunch of Q & A on pest requirements.

It says directly in the State of California materials (in the web site noted above): “Most lending institutions require that homes in California be inspected for wood destroying pests and organisms (WDO) before financing a home loan.” – it’s absolutely true of VA loans for example. But we have had loans go through (where we’ve been representing the Buyer) where a pest report wasn’t even required.

Of course, we nearly always have our client get a pest report. It’s common sense. In most bank transactions, a Buyer takes the home “as is”. It’s extraordinarily rare for a bank to supply any reports and do any repairs. However, we need to know what we are getting in to. A pest report gives us a quick glance at potentially expensive issues. Pest reports are usually between $85 - $125, and that’s cheap insurance for piece of mind.

In a “standard” family to family transaction, the Seller will likely order and pay for the pest report. In a Short Sale transaction, it’s anyone’s guess. In a REO (foreclosed, bank owned) transaction, the Buyer will probably have to order and pay for the inspection themselves.

- Jim

www.NeighborlyRealty.com

Good Homes are Still Selling - and Near List Price

Hello Neighbors,

A client called today and asked about placing an offer on a bank owned home. Of course, this is a standard call we get daily... but this time I pulled a bit more data to apply to this particular offer.

Good homes are still selling. The majority of them are bank owned. ...and, most are selling at list price or above.

I have one bank-owned home in escrow now in Nevada County. Our offer was at list price ($319,000), and so were the two other offers we were competing against. I closed one a few weeks ago for client in Antelope. That one was also at list price ($211,000).

Two of our agents (Kevin and Peter) just closed a total of 4 sales:

List prices for those were: $142,900, $178,000 $151,748, and $272,900

The corresponding sale prices were $150,000, $197,500 $140,148, and $272,900.

2 sold above list price, 1 sold below list price, and 1 sold directly at list price.

I am submitting an offer tonight on a home in Marysville with a list price of $157,000. Our offer is at the list price $157,000.

What does this say?

We all have the neighbor / friend / co-worker who "bought a house at 40% of list price" or "got a steal on a foreclosed home"... but if you look at the data? The banks have been pricing homes at near fair market value, and they are getting it.

- Jim

www.NeighborlyRealty.com

Our Sympathies

Hello Neighbors,

The ordeal in India from the last few days is over, but there is much healing to be done.

We want to extend our sympathies to those Indian families who were impacted.

This event holds special relevance to us. I stayed at the Oberoi Hotel in Mumbai several years ago. The hotel was stunning. The staff was amazingly friendly and helpful. Whenever you walked by, they stopped what they were doing to say hello. Amazingly too, they all knew your name... "Hello Mr. Harris". It didn't matter if they were working the front desks, or cleaning a room. The entire staff knew.

I was there on Hewlett-Packard business at the time. Jenny followed me a few years later (also for HP) and stayed at the Taj Hotel. Ironically, those were the two hotels attacked.

Jenny and I were saddened by these events, and the loss of the Oberoi and Taj staff. We wish those families our best.

We were glad to learn that the Indian families we work with locally (to help them with their Real Estate needs) weren't impacted.

Take care everyone, and look out for your Neighbors,

- Jim
www.NeighborlyRealty.com

Slowest Time of the Year - Best Deals to be Made

Hello again Neighbors,

We are entering the slowest time of the year in this business - the Holiday Season.

November and December are traditionally very slow.

BUYERS - THIS IS ALSO THE BEST TIME TO NEGOTIATE WITH SELLERS.

If you want to buy a home, this is the season to try - and try hard. Last year I saved a family over $120,000 on new construction. The builders are trying to close out their year and get rid of "standing inventory" (complete or nearly complete homes that are just sitting). It's those we go after.

We go in wheeling and dealing, and often time wind up with smokingly good results (for the Buyers). It's the worst time of the year to Sell, but if you are curious about Selling - call me.

As December is the slowest time - January starts an entirely new "land rush" season!

Happy Holidays,

- Jim

www.NeighborlyRealty.com

Emergency Rate Cut by the Fed !

Yep!

...and it is impacting mortgage rates (loans) directly this time!

I got an update yesterday from our credit union pals - 5.625% for 30 year fixed at NO points !!! 5.375% on a 15 year fixed at NO points !!!

Stunning!

We are nearing the lowest point in history again.

Here's a blurb from another lender friend:

The Federal Reserve and Federal Home Loan Banks announced that they would purchase up to $600 billion in Mortgage-Backed Securities (MBS), exciting news that sent interest rates for 30-year fixed-rate mortgages plummeting below 6.00% and near the lows for the year!

Is now the time to Buy?

Watch for the next blog post!

- Jim

www.NeighborlyRealty.com

Happy Thanksgiving !!

Hello Neighbors,

Just a quick note to say Happy Thanksgiving.

May all of you have a wonderful time with family and friends. Relax. Enjoy some down time, and focus on what is important.

At Neighborly, our families wish you and yours the best!

- Jim

www.NeighborlyRealty.com

Working in This Business - A Student's Questions

I had a fun email exchange today. A student from CSU Sacramento sent me a list of 11 questions about this business. She is the daughter of a fellow Realtor as well.

I remember conducting such surveys when I was a wee tot. It's fun to be on the other side now, so I thought I would share the exchange.

Here you go:

1. Exactly what does your job entail (specifics on what you do)?

I am the owner and managing broker of Neighborly Realty. I manage real estate agents, set business policy, implement business strategy, and get to help my own clients (buyers and sellers) with their housing needs. I am launching another business right now too, called “Neighborly Financial”.

2. What are the educational requirements for this position?

I think it can be done with a high school education, 8 real estate specific classes, and the passing of two California state tests (Real Estate sales person and Real Estate broker’s exams). You need to be a broker before you can run your own “shop”. My own education is far beyond this. I have a BS from Chico State and an MBA from UC Davis. Both degrees are in Business Administration, with a focus in Technology.

3. What experience is required or recommended?

Nothing is really required (which is why this industry is having so many deep deep problems). Recommended? Wow. I could go on for hours on this topic. Most important points though:

a) You have to be genuinely concerned about people. If you don’t have other’s interests at the top of your list, you shouldn’t be in this job

b) You have to think long term. Where is your business going to come from in a year? If you don’t think this way, you won’t survive. You can’t just live pay check to pay check.

c) You need to be technology enabled. If you aren’t keeping up with communication trends (texting, blogging, etc.) you are going to miss out on the new folks entering the market.

4. What do you like most about the position? Like least?

Most: I get to make the decisions that I think are the best for my clients and staff.

Least: The hours. As your dad knows, we are working 7 days a week right now. Also, the lack of professional people in the business. There are some real slugs out there, and you have to be careful (for your own business, and for your clients).

5. If you could start over, would you choose the same career? Why or why not?

Yes. But I would have done it much earlier. I spent 18 years total with IBM, Hewlett Packard, and Agilent Technologies – before making the full time leap into this industry. Those experiences gave me skills that are miles beyond my peers, but I should have made the leap earlier.

6. What problems could I expect to encounter in a position of this type?

Evolving regulatory change as we recover from this current disaster. Legal challenges from unknown directions. A tough time finding good people to work with, and to work for. Tightening lending markets. Keeping your own “pipeline” full (with clients who need help in the future).

7. What future changes do you see in this field?

More regulation. Continued reduction of those agents who are just “in it for the money”. Consolidation as some of the smaller brokerages and companies merge (to survive financially). More foreclosed homes and short sales.

8. Describe the ideal person for this career.

Professional. Dedicated to helping others. Skilled communicator with good follow through skills. Someone who has a niche and can build a business based on that niche (like your dad’s language skills giving him unique access to other Philippinos – that is a networking angle he really needs to build).

9. What is the average salary for a person just starting out in this career?

Yikes. I have no idea as it is 100% commission based. In this market where times are so difficult? Perhaps $30,000 a year? A good agent, with good business skills, good coaching, and a good mentor should be earning more than that.

10. What questions could I expect if I were interviewing for a job of this type?

Style questions really. Communication skills. Fit with the exiting team / brokerage. It depends who you interview with. Most brokers are in it for the money – so they will ask you about your “referral database” business. We aren’t though, so we interview for style, fit, and genuine care for other people.

11. What professional organizations (journals, newsletters) do you recommend?

A local association membership (like the Placer County Association of Realtors or the Sacramento Association of Realtors). LOTS of web site reading with the California Association of Realtors and the National Association of Realtors. Read our blog too!

Kinda fun.

- Jim

Please Vote !! - Need a Ride?

Hello Neighbors!

Just a reminder to get out there and vote tomorrow!

If you need a ride, give us a call. Depending on need, we'll do our best to help you out. That's what neighbors do.

Good luck!

- Jim

You've Asked - We Will Deliver !

You wanted Neighborly to do loans?

Watch this space for updates!

We'll have that capability in 2009 - including FHA !

Coming soon...

- Jim

Clients Challenging Our Wages

Unfortunate.

After working for 7.5 months with a family, submitting 11 offers for them on Short Sales and Bank Owned (REO) property (we have verbal acceptance on one), doing more pre-negotiation work with new construction...

We receive an email demanding we pay them roughly 33% of our wages!

These are Buyer clinets as well. We already work for free for Buyers!

So? Free + Agents or Brokers paying client to use us? That would be a wonderful "program" to offer, but it isn't a realistic expectation.


Of course all real estate commissions are negotiable. Some real estate firms offer "incentives" back to a Buyer client if they use them. But that is not the norm. In fact, it's a very small percentage of companies. Usually it is a bulk service provider more interested in high client turnover than service. They make their revenues through volume. They don't encourage referrals, so they don't often do the very best for their clients.

In our business everyone comes after our wages. On a Short Sale home, the lender almost always cuts commissions. On a bank owned home (REO), the banks frequently cut commissions. Those two classes alone count for a little over 60% of the homes on the market today.

Now the client wants a chunk of our reduced wages too? I do enjoy charity work, but I can't buy food with only my good looks.


There is a view that Realtors make piles of money. I believe this could be true for some (I haven't met them personally). But again, it's not the norm. Of the 1.4 million members in the National Association of Realtors - over 400,000 had zero or one transaction in the last 12 months. Try surviving on that.

This is an expensive business to run.

Earlier in the year I spent nearly $2,000 listing and advertising a home for sale - that we eventually removed from the market.

We are all independent contractors or business people. In addition to high fuel prices, we have to provide our own:

* If you are an Agent, you pay your Broker a percentage of all your earnings
* Errors & Ommissions insurance policies (MANY thousands of dollars)
* Workers Compensation insurance policies (also very expensive)
* Enhanced vehicle insurance policies
* Office space leases (over a thousand dollars a month)
* Rental insurance policies for leased space
* Telecom & IT support expenses, and new equipment purchases
* Websites and email engine expenses
* MLS dues (some of us pay over a thousand dollars a year)
* Local Association Membership (several hundred)
* State Association Membership (several hundred)
* National Association Membership (several hundred)
* Medical, Dental, Vision insurance ($1300+ month for a 4 person family)
* Fees for Formal Education requirements
* Fees for Licensing and renewal
* Fees for Additional checking / savings account so as not to co-mingle funds
* Fees for contracts software
* Tax rates that are unbelievable for the self-employed
* Expenses for our street signs and open house signs
* Additional clothing expenses
* Expenses for all of our own office supplies, fax machines, printers, toner, business cards, periodicals to stay up to date, etc.
* We may even have to buy a new chair to sit in, to type up your contracts (and the coffee to keep us running)!

...and we haven't even started counting the expenses associated with marketing your home or the business.

Personally, my wages were higher with my corporate job, and I only worked 50 or 60 hours a week.

Now? Those of us who are surviving and doing well are working 7 days a week, and nearly constantly. Yep. You don’t measure the work day in hours. If you are awake? You are working.


Of course, none of the items listed above are really the consumer’s (or client’s) concern. They shouldn’t be. It’s our job to run as efficient of a shop as we can. That’s part of the risk / reward of working for yourself.

But – when we are working for you for free, and you are asking for our wages as well? Please give a thought or two to that request.

Perhaps you will understand when we say “No thank you, but I can refer you to someone who might…..”

I encourage our agents to fire clients. That's right. In this market of insanity and challenge, if a client isn't performing or is unethical? Our folks can end that relationship immediately. I'm told that's rare for a broker, but that's the way any professional organization should operate. We aren't in it for the dollars. We're in it to do the right thing. Our clients should be too.

Buying a home in this market requires a very close partnership between family (Buyer) and service provider (agent). When getting into this professional relationshp, make sure you've got the right partner by your side.

- Jim

Amazing Times….. TO BUY

Amazing times. Stunning.

The country of Iceland possibly going under.

US and European governments jumping in to “free markets” with both feet.

The Dow finishing down another 7% today. (I personally believe the S&P 500 is a more relevant metric than the Dow, and it was down more than 7.6%).

Some talking about China as a potential lender to the world… China !

Wow.

What does it all mean?

…..I will ask Bobby when he arrives on Tuesday.

Bobby is flying down from Canada to look at property near Sac State . He’s looking for a deal on investment property that he will turn into rentals. Jeff and I are going to take him out and help him with this quest.

If a family from Canada thinks it’s time to buy real estate in our area… and if the other dozen or so families we are working with are also charging ahead full blast… perhaps the macro-economic environment isn’t as crushing locally as the media suggests?

Sure – just like all of you, my 401k is 6 feet under. But Warren Buffett (a personal hero) has a saying: “When people get greedy, it’s time to go (sell). When people are running in a panic, it’s time to jump (buy)”. I believe Warren . I practice what he preaches. The other day when the Dow lost 777 points? I bought stock. I wish I had the funds to do it again today.

I genuinely believe the same is true in today’s real estate markets. If you can buy, consider it.