The Case-Shiller indexes compare the sale prices of the same homes each year to determine price trends and are considered one of the most accurate home price gauges.
The hardest hit of all 20 cities on a year-over-year basis was Phoenix, where prices plummeted 30.7% during the past 12 months. Las Vegas prices plunged 30.6% and Miami sank 28.1%.
For the most part these are not Cadillac homes, but they still have a lot going for them: 1,400sf and above, stucco and tile, built 1995 or later, with back yards and garages. These homes can attract decent rents — $800 and above in most cases — and many of them will be appealing to owner-occupants on resale.
I sell a lot of rental homes, and the homes I sell stay rented. A list like this might produce ten workable rentals. But they’ll be choice rentals, attracting premium tenants and selling at a premium price when you’re ready to move on.
Investment properties make good sense when leveraged to the point where the rental income covers all costs. Most mortgage lenders require 25% down for the best rates. On a $100,000 property, that means that an investor will need some $30-35,000 for down payment, closing costs, and repairs to make the home tenant-ready. A $75,000 loan will most likely have a PITI payment of about $600.
Check Greg's list out and contact him to run the numbers. The big question you need to ask him is "Can the property command at least six hundred bucks a month in rent?"
You aren’t knocking the ball out of the park, regardless of your blogging effort. You play around on Twitter, Facebook, Active Rain, and might even comment on Bloodhound Blog. You’re probably REALLY smart and can’t believe that you’re having problems in business. I know you are; I’ve read most of your blog posts, Tweets, and Facebook messages. You fancy yourself ethical. I believe that, too.
Why is a smart, ethical real estate agent like you failing then?
You got hoodwinked. Tricked. Sold a bill of goods. That snake oil you bought? Web 2.0- it was supposed to be the new way to do business; you just didn’t realize it was gonna take 3-5 years. It’s taking longer than you imagined and you’re stuck. Your spouse is riding your ass as she punches a clock while you play on Twitter. Your kids wonder why you treat the occasional prospect who calls you to Ruth’s Chris while making them eat off the value menu at Mc Donald’s. You’re failing because you bought into the hype and you’re scared to admit that you blew it.
That’s okay- it’s not your fault.
You see, I got hoodwinked too. I was all puffed up, speaking in San Francisco and New York like I was some kind of expert. As I was hob-nobbing with the RE.net, I heard more than one of the “blogging elite” talk about their fear of personal foreclosure. I heard the practitioners talk about losing their homes and the tech gurus talk about how rich they were getting…
…off the poor practitioners whom they appointed “experts”. THAT disgusted me.
I knew I had to make a VERY big change in my life. I was following the “wrong crowd” and if I kept it up, I’d be face-down, lying in the gutter, with no customers at all. I definitely didn’t want that…so I made some changes. Those changes, combined with the things I learned from the folks who DO make money online, grew my business while my competitors were submitting employment applications at the mall.
Let me do my best Joe Biden… It’s not your fault.
Greg Swann and I hosted the Bloodhound Blog UNCHAINED Social Media Marketing Conference (sponsored by Zillow). About one hundred people gathered for three days and listened to the ideas about the brave new world. We learned a few things and changed our Orlando conference to reflect those revelations:
1- SEO matters.
2- SEO can be helped but not manufactured.
3- Organic online branding, which we talk about constantly, does take time. It is the future of marketing for real estate and mortgage brokerage but the critical mass isn’t there, yet. It’s coming and we need to be prepared.
4- You (and I) can go broke waiting for the masses to move to the right side of the learning curve. While we’re waiting, we need to find out EXACTLY how to find those potential buyers and deliver content to them.
5- IDX solutions work. The contact information capture feature, as distasteful as you may find it, works. Joe the Plumber searches for homes online and listings are the bait. Blog content, designed to call Joe to action, augment but can’t replace the contact information capture feature JUST YET. I will stipulate that more savvy consumers demand free access to listings but the average home shopper will give up his contact information to see home listings. There is a way to appease both sets of consumers and Greg Swann will teach you how to do it.
6- Social networking DEFINITELY works but you gotta bridge the digital divide that keeps potential customers behind that cyber-wall.
7- Top of mind status is important. Seth Godin talks about the importance of permission-based marketing but Gary Keller showed you how to do it. I’ll talk about how to advance the MREA idea and integrate it in into your social media efforts.
8- Buying traffic doesn’t suck as much as we think it does. It costs money and it constantly evolves but it DOES work. You’ll have a chance to hear Mitch Ribak discuss this. He is doing volume that places him among the top 50 real estate teams in the country. Mitch gets his business by buying traffic.
9- There is more than one way to “skin the cat”. Kelley Koehler (aka HouseChick) found out how and you’ll have a chance to hear how the HouseChick finds gold in sparsely searched streams for a lot less money. It’s tricky but effective.
Let’s face it. The RE 2.0 world just ain’t cutting it for practitioners by itself. Oh, there are people making a living through blogging but they aren’t demonstrating break-out results. While we are committed to the future, we live in the present…and the present challenges are just too much for the 2.0 offerings. Here’s what you can learn at the Bloodhound Blog UNCHAINED Online Marketing Conference in Orlando, Friday, November 7, 2008:
Greg Swann will deliver his manifesto about the “brave new world”. If you haven’t heard it, it’s nothing short of amazing. He’ll tell you why you, the real estate practitioner, can disintermediate traditional chokepoints and talk directly to the consumer. He’ll explain how to use the principles of direct response marketing in your online profiles….so they sell your services 24/7/365 (even while you’re fast asleep). He’s teach you how to farm the big guys’ crops by using their strength against them.
Warning: This is not the Get Rich Quick way of Blogging for Dollars. This is the slow and thoughtful way of connecting, networking, communicating. It doesn’t get you to the top of Google in 30 days, but it does get you as close to belly-to-belly as you can get online. It means you have to pay attention, think, share, discuss. It also means that we may not have anything in common, so I’m going to have to work to find a common ground. It means that I will find something interesting in your posts, and share it on my blog. In other words, it takes time to build relationships locally, which may not be the case with the echo chamber.
The echo chamber: I’m okay, you’re okay; I’m a Realtor, you’re a Realtor. Ah. A shared experience, a common ground. I may not have to pay too much attention because we have real estate in common. Unlike those local folks who may not want to talk to me at all because I’m a Realtor. You and I can fall into conversation faster, with more ease, talk shop- and it’s all good. Except it isn’t really. Ultimately it’s distracting to someone like me.
So… within minutes of hanging the sign I had eyeballs from three cars and conversion on one; you have got to love that kind of impact! BTW, the first thing my clients said was they loved the sign. I remarked how standard signs only tell people a house is for sale while marketing for the brokerage. One of the ideas behind a custom sign is to encourage people to stop the car and get out to read the sign (thus increasing the possibility of interest). They replied: ”This should do it. You know… every agent in the area is going to stop and read it!” Just love that.
If you are not paying attention to what the Housechick is doing, you are missing out on one of the sharpest minds in the RE.net. Her Vegas presentation on Pay Per Click marketing was, by all accounts, one of the best sessions of the entire weekend. Watch this space and learn how brilliant and unique marketing can create a kickass online presence. Some take aways that you can put to use whether or not you care to PPC “Win the small battles. Go niche.” Kelley’s focus for her ads is not for broad search terms like “Tucson real estate”, but in very well defined terms like “average sales price for homes in Tucson”, or even more narrow- down to neighborhoods. Then she writes posts to answer that question. She likes to focus on verbs “Buy a home in Tucson”, “Search for a Tucson home”. She’s using concise terms, with a clear benefit, and action words to create her ads. I think using those parameters as a basis for a post and post titles, is a wise idea. Write to that person’s mind, write in an engaging style, you’ve got yourself a blog that has real value for the reader.
I already mentioned Mega-Producer Mitch Ribak. He’s breaking records in a crappy real estate market (The Space Coast ain’t exactly “hot”). How the heck does he do it? Well, this isn’t Mitch’s first rodeo. He’s been involved with internet marketing long before he started in real estate. You’re never gonna believe how he learned it. I asked him and he told me:
One thing most of you don’t know about me as my first Internet business was a Dating Service. Not only did I have the dating service, I had an advice column called AskMitch.com. Oh and there was the radio show, Ask Mitch The Date Doctor, that played on 45 radio stations around the country.
So, yes, my venture into the Internet back in 1996 came from my imagination that there has to be a better way to do business.
I worked for Great Expectations Video Dating Service as their Director from 1993 to mid 1996. It was the only time since I was 23 that I hadn’t worked for myself. I spent half of 1996 trying to find a company that would build a dating software for me that I could use over the Internet.
Funny thing was that at that time they all told me it wasn’t possible to do data integration over the Internet. I didn’t believe them of course so for a half a year I searched and talked to tons of companies…it just made sense to me.
Finally I found a company that said they had heard of a new type of software that would allow me to do everything I wanted. My customers would now be able to see pictures and profiles of people over the Internet.
Think you might learn something from Mitch Ribak? Don’t say that “you’re business is different from a dating site“- Mitch has close to 350 reasons that verify that it isn’t.
While he’ll share his online marketing expertise with you at UNCHAINED Orlando, I forgot to tell you that he offers it at the e-homes realty network. What I haven’t told you is that Mitch is going to give ALL of the Unchained Orlando attendees two follow-up lessons in addition to a $49 gift (I’ll let him tell you about the gift at the conference).
I know what you’re thinking. Just what have Greg Swann and Brian Brady cooked up now? Dating sites? Long-tail pay-per-click? The Bloodhound Way of listing? Building a community weblog? Cold-calling Facebook profiles? It will NEVER work because I’m a blogger…and the tech guys TOLD me that RE 2.0 works
I’ll say it again, just like Joe Biden. I know you’re secret. Honestly, I do.
So, here’s the deal. I share our secret with you. We were nowhere near the few hundred people we thought might attend the Bloodhound Blog Unchained Online Marketing Conference in Orlando. We did a lousy job promoting it because we were pretty busy. As luck would have it, personal implementation of the principles we discussed in Phoenix caused us both to get REALLY busy in our day jobs. We lowered our expectations and reduced the room size…and that benefits you greatly.
Unchained Orlando will be MUCH more intimate for the attendees. You’ll have better access to Mitch, Kelley, Sean, Teri, Greg, and me. You’ll have a chance to bond with the other folks attending to exchange marketing ideas. I’m toying with the idea of organizing some “mastermind groups” comprised of the people who show up and participate.
We never said we were in this for the money and thank God that our speakers share their wealth so generously. Here’s the problem with the smaller room:
There really aren’t a lot of seats left now.
With two weeks left, our market is pretty limited; that’s why I’m hitting those of you who plan to be in Orlando. If you’re going to the NAR convention, the value we offer, for less than a c-note, will yield a much higher ROI than you’ll get from the convention…
You can safely delay mortgage locks if your closing after October 17th. Delaying your lock is a bit different from a "float" recommendation. It means that you should expect lower rates and jump on one when you feel it's "good enough". The market should remain volatile. The par rate (with no yield spread premium to the originator) should drift as low as 5.625% in the next 60 days but it may have to go through 6.125% to get there.
We made it through the 6's but never lower than the original 5.875%. If I still think there is room for improvement in mortgage rates why am I recommending to lock for October closings?
My strategy is more about limiting higher rates than gambling for better rates. I try to avoid unnecessary risk by being biased to locking unless there is irrational fear. While I was dead on about the irrational fear in the mortgage-backed securities market, my timing was off. If you're closing a loan this week, and delayed your lock, I might have cost you some money.
The mortgage-backed securities markets are finally able to focus on the economy now that the drama is over on Wall Street. Economic fundamentals drive mortgage rates and the economy doesn't look real healthy. Expect rates to improve to 5.625% and fluctuate between 5.625% and 6.25% through the rest of the year.
If you're closing after November 1, 2008, delay that lock until 5.625% is available. All October closings, take what you can get today.
Sean “Rocky” Purcell and I discussed his big prediction of the stock market bounce and I repented for my recommendation to stay “unlocked” in hopes of lower mortgage rates.
We felt the near-term future for stock and bond markets would depend on the numbers not events. We’re looking closely at Retail Sales (which were weak) and CPI, specifically Core CPI, this week.
NB: The feel of our show is very "garage band" but the content has been good. We've risen to the number six position for the keyword "mortgage" on iTunes in 4 short weeks, thanks to your gracious ratings. Our shows are now getting over 100 downloads within 48 hours of prouction. Listen to all the episodes onwww.RadioMortgage.net
If you're closing your loan after Friday, I left you naked (not locked). I told you that the fundamentals of the economy would bring rates lower after the bailout was announced. Rates were at 5.875%, today they're at 6.5%. What's in store for the rest of the month?
I'm still recommending that you float your mortgage rates; I believe we'll see rates come back down under 6% within the next 7-10 days. If the economic data suggest that we are NOT headed for a recession,mortgage rates will stay in the 6.25-6.75% range. If the data are as indicative of a downturn as I think they will be, lower rates should be on the horizon. As always, keep checking back.
I had the good fortune of closing another VA home loan for a Navy family this month. I was stoked to read that our team delivered a superb experience for them over on a Redfin Forum:
I am just going to do a cut and paste from another thread but I figured there is alot of good info I just learned thru the course of my recently closed VA loan. I have to say I found it important to consider a good agent familiar with VA. It was especially helpful during negotiations with REO's or "great deal" properties with multiple offers. A good agent can calm the seller's fears that a VA loan will take forever and isn't as strong of an offer. I had a couple of retired Marine Captains as my agents and I could speak their praises all day long. (Mike chiesl and Dan Chapman) I also had a great mortgage broker- who was able to pull off 100% financing above the previous $417 cap. Anyway you can read more of my recent experience below. Good Luck!
I just got a approval on VA- the no down payment is correct but there is a 2.13% VA funding fee which can be funded into the loan (the perk with this is there is no PMI) So over 2.5 years the fee is less than paying like $300/m PMI. Also the seller needs to cover closing costs. Other than that you will be caped at 417K and after that you pay 25% on the difference. So a $450K loan - 417 = 33K and you pay 25% cash on the 33K difference so $8300 or so. Which is still lower than conventional - most of which are wanting 10% down now. Google says the guy I got qualified with is America's #1 mortgage broker- after a hour on the phone with this guy I would agree. Brian knew his stuff. Never thought we would need our VA benefits but without liquid assets it is a good choice in today's market.
An update to my previous post-
I may have been one of the first VA loans to close without any money down since the President signed H.R. 3221, the Housing and Economic Recovery Act of 2008 on July 30th. I couldn't be happier that I was able to buy a great house here in San Diego and use the money I saved on a down payment on remodeling instead all thanks to Brian (America's #1 Mortgage Broker on Google). VA Benefits just got that much Sweeter in California (where you are hard pressed for a house under 417K in a lot of areas) . You now can go over the $417 K cap without paying the difference of 25%. Under old guidelines your benefit was good for 0 down up until $417 at which point you had to come up with 25% of the difference. So say on a 600K home you subtract 417K and then take 25% of the difference = $45,740.00 -Ouch! But they just changed the guidelines thru the end of the year! So any home in San Diego County, for example, under $697,500 (you can check your area cap at https://entp.hud.gov/idapp/html/hicostlook.cfm) is eligible to pay 0 down with VA, which is great. You can read the details of the bill at http://www.homeloans.va.gov/circulars/26_08_11.pdf . I literally was one of the first loans to close this kind of VA loan and Brian was able to pull it off, which is no small task in today's market. I really can't say enough good things about him and he even put me in touch with some amazing real estate agents. If you can use your VA benefits I would suggest doing it before the end of the end of the year, when the guidelines change again. Look this mortgage guy up and give him a call, seriously! Cuz the closest next option is 3% with FHA and mostly 10% with Conventional. And then a good agent can negotiate getting some of your closing costs, VA funding Fee, and even a point paid by the seller, like I did. -But you really need to be careful with who you choose to get your mortgage. It can be dicey with all these lenders going bust. It would be awful to find you dream house, get thru negotiations, start a loan with the wrong person, who starts your paperwork with a bank who goes bust 3 weeks into the process and then you lose your escrow monies and the house. So just be really choosy and go with someone who is familiar with the VA process from before the boom loan time to save yourself some money and headaches. Now can be a great time to buy with the new rule, the foreclosure deals, and since rents are up somewhere around 13% in San Diego area-just make sure you have a good team behind you
Sean Purcell and I recorded a 15 minute episode this afternoon about what the stock market crash means for working REALTORs. We may come across as a couple of polyannas but we think the stock market might get some respite from…Columbus Day.
We talk about the great opportunities for investors and how REALTORs can court them.
More than 1000 acres of land on Camp Pendleton goes up in flames, after a wildfire breaks out on the base Wednesday.
If you want to follow the action, check out this Twitter feed and this blog. Social media are the 21 century version of the ham radio operators. Twitter played a big role during the 2007 San Diego Wildfires; it should be even more useful this year.
Think good thoughts for and send out prayers to Unchained graduate Don Reedy tonight. He’s in the eastern path of the fire.
The FHA Hope for Homeowners loan program was released this month. The stated goal of the plan is to help homeowners, who are paying mortgages that are significantly more expensive than when they bought the home (due to rate adjustments), get a home loan they can afford.
Key components of the FHA Hope For Homeowners loan program are not limited to but include:
An appraisal will be performed and the maximum loan amount will be 90% of that appraised value. All subordinate liens will be extinguished and the exiting lienholder will have to agree to a loss of principal.
The current housing payment must be more than 31% of the homeowner’s gross monthly income.
The homeowner must not have misrepresented his/her income on the original loan application.
The homeowner must get a new 30-year fixed rate loan and qualify based upon documented income.
The homeowner must agree to an declining equity sharing agreement (for the existing equity), with the FHA, for a specified period of time.
The homeowner will share in future appreciation with the FHA.
The program is completely voluntary; existing lienholders don’t have to participate.
Mary Miller compiled some comments from Mortgages Unzipped authors which demonstrates the difficulty of the program. Loan originators may be hesitant to work with you because of the low probability of a successful funding. That low probability is due to the fact that existing lienholders may have to take significant writedowns. I wouldn’t blame an originator who refuses to participate in the FHA Hope For Homeowners Program; loan originators aren’t paid on unsuccessful fundings.
Nonetheless, we welcome loan applications, under the FHA Hope for Homeowners, for Californians in “upside-down mortgages”. We recently hired a team member with the skill set to work with lenders’ loss mitigation departments. That specific expertise, combined with our long history as a HUD lender, leads us to believe that we can assist folks who desperately want to retain their California home. We offer this program with a few conditions:
We must determine your maximum qualified loan through full income documentation at application. If you can qualify for a loan amount that might be a reasonable offer to the existing lienholder, we’ll proceed to an appraisal.
You must pay for the appraisal and credit report upfront; that should be about $500. The appraised valuation is a key component of the program so that valuation must be established prior to the offer to the existing lienholder.
We expect to earn a 2% fee, whether paid by you or the new lender ( through yield spread premium). That’s twice the amount we earn for new loan originations. We think this higher fee is reasonable considering the amount of work required and the low probability of loan funding. We only receive this fee if we are successful in funding your new loan.
The FHA Hope for Homeowners Loan program offers Californians a chance to stay in their homes at a reasonable price. If your intention is to live in your home for 5-10 years, this may be a workable solution for you.
While the plan isn’t perfect we know that certain sub-prime lenders have sold their loans at a significant discount and will welcome any and all offers that allow them to make a profit. For example, if you have a loan with First Franklin, this program might make sense for you. First Franklin was purchased by Merrill Lynch, in early 2007. Merrill Lynch sold these loans, for 33 cents on the dollar, this past summer. What that means is that they sold your $500,000 loan to an investor for $165,000. If we have to approach First Franklin’s loss mitigation department with a $350,000 payoff for that $500,000 loan, the new investor stands to more than double his money in a few months. That’s a reasonable proposition to entertain.
Not all loan servicers will be that cooperative, though. We believe that our connections with Wall Street and secondary mortgage market investors will be a distinct advantage to you, the beleaguered California homeowner. The FHA Hope for Homeowners Loan program isn’t perfect but it may offer you significant relief. Please contact me if you have questions about it.
The bailout bill passed the House after a decisive victory in the Senate; it is certain to be signed into law by President Bush. From Bloomberg.com:
These steps represent decisive action to ease the credit crunch that is now threatening our economy,” President George W. Bush said at the White House after the vote. He said he will sign the bill into law when he receives it. House Speaker Nancy Pelosi said the measure has been sent to him.
The House approved the measure in a 263-171 vote, four days after rejecting an earlier version. The bill’s defeat on Sept. 29 caused a 778-point drop in the Dow Jones Industrial Average, prompting dozens of lawmakers to reverse their vote on the legislation, the government’s largest intervention in the markets since Franklin Roosevelt’s New Deal.
California Governor Arnold Schwarzenegger today warned that his and other states may need emergency loans if a $700 billion financial-rescue package isn’t passed by Congress soon.
If this bailout restores order to the credit markets, California should be able to raise money through tax-advantaged municipal bond offerings. If this bailout is insufficient to cure the credit crunch and states need to turn to the US Treasury to solve their cash flow problems, credit markets have seized to the point of financial Armageddon.
You can safely delay mortgage locks if your closing after October 17th. Delaying your lock is a bit different from a “float” recommendation. It means that you should expect lower rates and jump on one when you feel it’s “good enough”. The market should remain volatile. The par rate (with no yield spread premium to the originator) should drift as low as 5.625% in the next 60 days but it may have to go through 6.125% to get there. If you’re planning on refinancing your home loan, get your documentation in line, watch the mortgage rates reports carefully, and jump on the opportunity when it presents itself.
MBS traders know in their heart that the bailout package and weakened employment data will lead to lower mortgage rates but every bump in the road (like the California request) will give them reasons to sell.
Delay your lock if you have time; lock those rates if you’re closing in 14 days.
You aren’t knocking the ball out of the park, regardless of your blogging effort. You play around on Twitter, Facebook, Active Rain, and might even comment on Bloodhound Blog. You’re probably REALLY smart and can’t believe that you’re having problems in business. I know you are; I’ve read most of your blog posts, Tweets, and Facebook messages. You fancy yourself ethical. I believe that, too.
</form>
Service. Not only did I have the dating service, I had an advice column called AskMitch.com. Oh and there was the radio show, Ask Mitch The Date Doctor, that played on 45 radio stations around the country.