Realty World Northern California & Nevada

RISMEDIA, July 26, 2010—(MCT)—David Kosowski has a full-time job, a sky-high credit score, a solid debt-to-income ratio and enough cash stashed away to put a 20% down payment on the three-bedroom, two-bath home he’s had his eye on since spring.
But when he applied for a mortgage to cover 80% of the $495,000 purchase price of the Coral Gables, Fla., home last month, he was flatly denied.
His story is one that has played out with head-scratching regularity across the troubled housing market, industry analysts say, even as mortgage rates have dropped to historically low levels.
The average interest rate for a 30-year fixed-rate mortgage sank to a record-low 4.56% this week, according to government-sponsored mortgage buyer Freddie Mac. Fixed-rate 15-year mortgages dipped slightly to an average 4.03%, also a record.
But even as rates fall, lenders are raising the bar ever higher for applicants, making it harder for even financially-stable home buyers to qualify, and in some cases making homes affordable only to those able to pay with cash.
Kosowski, who seems to have weathered the recession and the housing market downturn better than many—he’s employed and has considerable equity in the three-bedroom home he purchased 10 years ago—said his application was rejected because the company he works for (and owns a 25% stake in) saw its earnings drop between 2008 and 2009.
That was enough, he said, for the bank to turn down his loan application—despite his 817 credit score, a history of meeting all debt obligations and a 21% debt-to-income ratio.
“They asked me to explain the earnings decline,” he said. “I wrote a letter explaining that the economy had been down in 2009, and the next day they said the loan was denied. I was very surprised.”
Steve Schneider, his mortgage broker, and owner of Greenwich Title Services in South Miami, said he was surprised as well. “His credit is as good as anyone I’ve ever worked with,” he said. “He should’ve flown through.”
Such rejections would have been unheard of a half-decade ago, when credit was flowing freely, often to people who couldn’t afford the homes and condos they were buying, said Doug Dewitt, a Miami-based real estate broker.
“Now the pendulum has swung completely in the other direction, and lenders are making you very accountable in terms of your credit history,” he said. “It’s like they don’t want to write one more bad loan.”
With South Florida’s housing market still struggling to recover from record-high foreclosures, toppled home values and a glut of inventory, the ease with which banks now turn down applicants is nearly unprecedented, he added.
Potential borrowers are being denied access to tantalizingly low interest rates for reasons ranging from insufficient down payments, to a less-than-perfect credit history, to concerns about the property or buildings they hope to buy into.
The current interest rates are so desirable because they translate into significant savings in monthly and total payments for home buyers. For example, someone getting a $250,000 home loan in July 2010 would save an average of about $155 each month, compared to someone getting a similar loan last July, when the average 30-year fixed interest rate was about a percentage point higher.
Mortgage lending in 2010—down about 50% from early 2009—has shown a complete 180-degree turn from the home lending practices that reigned before the housing market bubble burst, and represents yet another obstacle stalling a recovery in the housing market, those who track the industry say.
Kosowski had very little trouble getting a loan for the home he bought back in 2000, when his income was lower than it is today. As he looked to move into a bigger home this year, the stack of paperwork he had to fill was considerably thicker than it was 10 years ago.
“It’s night and day,” he said, comparing the two loan application experiences. “I had to give about a quarter of the information that they ask for now, my income was significantly less than it is now, and there was no problem getting a loan. It’s almost like they don’t want to lend.”
The low-interest rates have done little to spur activity in the housing market. Last week, the number of mortgage-loan applications for home purchases dropped to its lowest level since the 90s, the Mortgage Bankers Association found. Nearly four out of five applications were from existing homeowners looking to refinance, many of them rejected because of insufficient or nonexistent equity.
Despite prices that have fallen drastically in the past five years, traditional home sales to traditional, middle-income buyers have been pushed to the margins.
With the expiration of the federal home buyer tax credit and many still worried about losing their jobs, the stiff lending requirements of banks offer up yet another reason for the average person to not buy a home.
Kosowski, who works for a lighting manufacturing company, ended up paying cash for the Coral Gables home in June, and is hoping to get a refinance loan soon.
Greg McBride, senior financial analyst for Bankrate.com, predicted that mortgage rates would remain low for the foreseeable future, but it will take more than low-rates to spur a recovery.
“Low mortgage rates alone are not going to revive the housing market,” he said. “People are still nervous about their jobs, and reluctant to take the plunge into home ownership. And the market continues to be plagued by a very high level of distressed properties.”

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Repossessions climbed 38 percent in the first six months of 2010 compared 2009 and were up 5 percent from the first quarter, foreclosure listing service RealtyTrac announced Thursday.

In all, lenders repossessed nearly 528,000 homes in the first six months of the year. If that rate continues through the end of the year, repossessions will likely top 1 million in 2010, up 100,000 from 2009.

Historically, about 100,000 homes per year in total are repossessed, according to Rick Sharga, senior vice president for RealtyTrac.

More than 7.3 million home loans are in the foreclosure process, with one in 78 U.S. homes receiving a foreclosure warning in June.

On average, it takes home owners 15 months to actually lose their property after they receive the initial warning, reports Lender Processing Services Inc.

Source: Associated Press, Alex Veiga (07/15/2010)

Purveyors of goods and services who are at the top of their marketing game rarely use their mouth to draw a prospects attention and then pitch in the prayer of a sale. Rather they use their ears to learn what a potential customer needs and then present a solution that is cost effective and worthwhile.

I mention this because recently I had the privilege of meeting two of our newest members to the Realty World Northern California Family, Robert (Bob) Fernandez and Francisco Gonzalez, co-owners of Realty World – Golden Hills in San Jose, California, formerly Century 21 – Golden Hills. Both are long time veterans of real estate in the South Bay and both knew immediately what their business needed in order to compete in times of rapid change. Bob and Francisco are keenly mindful of the activities it takes to run and profit from operating a real estate brokerage firm with over fifty sales associates and a long book of business.

Since joining Realty World, our meetings have focused on the consolidation of tasks that real estate agents need to do in order to compete and win in the eyes of consumers. Bob and Francisco knew these activities were important and a prerequisite for any successful associate continuing in or just launching their real estate career. Their validation of what we are doing at Realty World was a positive sign to me that we had invested right in terms of bringing the business to the agent.
However, there is more to it than that. If you have attended any of the presentations we have conducted at various industry functions this year; you’ll know that the game of finding real estate and a knowledgeable professional to help is changing. Change is the one constant denominator of all markets.

I expect Realty World – Golden Hills to be one of the companies that will be on top of that game too. It’s my pleasure to introduce them to you and I hope you’ll take a minute to welcome them aboard! Bob and Francisco can be reached by phone at 408-238-5111.

We want to wish you all a happy 4th of July! It was on this day in 1776 that the United States of America declared its independence from England. 234 years have passed since then and I hope that many more years of freedom continue.

We hope that all of our readers are having a great (and safe) 4th of July weekend. As you’re celebrating the day and enjoying that barbeque, don’t forget what it took the Founding Fathers to win this country from the British.

So, enjoy the rest of your July 4th weekend, and drive safe!

Image via wikia

Is that what your clients or the individuals needing your expertise are asking themselves right now?

There is a game out there that has to do with finding “Waldo.” Through the way that the maze is laid out in colors and shapes it is very hard to find good old Waldo. However we know that he is there so we keep concentrating to the point of devising every imaginable way to seek out and locate Waldo.

Are we a “Waldo” in the Real Estate business that we chose as a profession? Do our clients or future clients have to devise every conceivable way to find us? I would ask you to truly analyze your business model as it is at this very moment.

Many of the “colors” and “shapes” that we are hiding in are such things as cutting back on our marketing each day, improvising something new everyday and specializing in nothing, or spending all of our time in short sales and REOs and forgetting the true real estate market that is gaining traction everyday!

No matter what is going on in your life right now you need to wake up everyday knowing that there are people outside your front door that are looking for the professional that is knowledgeable and professional enough to get them through the present slowdown in the market. There are people that want a professional that will call it like it is. Quit promising falsehoods and work with an action plan that with make things happen! Now is the perfect time to increase your visibility so that you stand out from the masses. Today is an open opportunity to show your wares and prove your value as a professional. Consumers crave pure knowledge and the understanding when it comes to real estate right now, yet above all they want someone to just take the time to enlighten them!

The real estate profession qualifies you! Move away from the pathway of criticizing, being judgmental, and being pessimistic.

You know politicians do not own the concept of “Town Hall” meetings! Politicians use them to get close to the public and give the public the opportunity to ask the questions that are important and maybe personal to the individual, the community, or the families. Neighborhoods need the real estate professional talking to them, not “hiding” totally behind flyers. Families need the real estate professional talking to them in their homes not “hiding” totally behind a newsletter.

Where are you?!

Know that Trust, Integrity, Loyalty, and Responsibility cannot be built by hiding; it is built by being face to face with the public.

The truth of the matter is the fact that if you are not in the best of health both physically and mentally, your business is going to suffer, especially in today’s new business model.

For your own sake and for the sake of your business you need to put in place a very strong action plan to take control of those things that you can control.

Day in and day out I hear from individuals that are totally frustrated and overpowered by the stress they are under due to the pressures that the real estate profession that they chose as a vocation is placing on their lives. Many times it comes from those that are very organized, have direction in their personal lives and business. Many of those that I talk with are on the threshold of a panic attack, if not worse!

Take A Break!

In so many cases we are our own worst enemy. It is not the Lender, Title Company, Appraisers, nor work associates, it is us! We tend to find ourselves loading ourselves with too many ‘to do’s’ on our ‘To Do List’ and not allowing time to recharge our inner soul that drives us. Achievement in our lives needs to be on a scale that allows us to shut down from time to time.

Do not allow your ‘To Do List’ to be the all controlling factor in your life. Instead turn it around and list those things that Do Not Need to be completed each day. This also pertains to behaviors and individuals that consume the force that allows you to be the best that you can be.

By the way those ‘electronic devises’ that we rely upon so much today need to be controlled. They ensnare us into thinking that we are productive and it does not allow one to shut down because we fall into the thinking that we are ‘busy’ when it is only a perception of being busy.

Refine your schedule for ‘your’ time! Everyone needs to be free from the pressures of the daily grind. This is so important, that if necessary, schedule your shut down time in your day planner and respect and hold it more hallowed than the time we put aside for our clients and business!

Live in the present and complete each undertaking well before moving on to the next one. The word ‘multitask’ handicaps so many in today’s business world. You need the ability to clearly see each undertaking, complete it fully before moving on. You need to be able to be organized and have the ability to sort out and define each task so that it can be completely accomplished.

And then there is my biggest pet peeve that chips away at the foundation of our lives, families, and business. Learn to say ‘NO.’ Yes, it is very hard to learn how to say ‘no’ to someone, however this goes back to the point made earlier, concerning behaviors, individuals, and undertakings that consume us. Don’t lie when you say ‘no’ state the facts and reasons even to the point that you just need some free time to organize your thoughts.

Once again, for your mental and physical well being: Take A Break!

So, you’re probably wondering amidst all the good news about the economy spun from the dominate media culture, why the economy still feels bad? Simple answer, many in the media complex don’t run businesses and they are listening to people who don’t run businesses for their sources. What to do?

Well, if you’re like most real estate people I know; you’re working 5 times harder for less than half the income. You’re not alone either. You know where the vacant buildings, warehouses and retail stores are; you drive by them every day. Just last summer a little over two-thirds of the entire industrial capacity in the US was working and in some sort of production use. Today, that has dropped to just under 75% or about 5 points less than normal when the economy is doing well. Don’t hear that in the news to you?

What does all this mean to your income? It means you have to see and touch more people with your value proposition in person. Belly to belly. Face to face. A prospect can’t send you to the deleted file, mail filter or trash can. They have to talk with you at some point, hence your selling strategy and listening skills had better be ready and oiled for action.

What advantage will I have in this scenario? Well, most salespeople are going to be dead before they start. Meaning they are getting ready to get ready. They will never go anywhere. You know who I’m talking about too. Second, most salespeople will resist the street in favor of blast emails, wasted postage and off line gimmicks from personal promotion to refrigerator magnets. That will account for about 93% of the competition. 7% will know this and immediately shift to the street for instant prospecting and immediate results. Remember, even a call on a prospect that has to interest to purchase or sell is a worthwhile event. It tells you who’s not players; sharpens your tactical skill and presents an opportunity for seeking referrals.

Those same 7 percent will communicate not only in person, but will use that offline call time to redirect their prospect to an online resource (namely their BLOG) to keep the prospect attenuated to the needs analysis and selling points of your in person call. Similarly, to what you do in the online world.

There is no better time to wake up and smell the pavement.

How many times have you been in the car with your wife, and driven past a property with a for sale sign in the yard, and no flyer in the box? Frustrating to say the least. I jumped in the car the other day and took the flyer challenge! After first driving to a local real estate office for a current list of active properties, I set out to find at least one current flyer in the box, and stopped at any property with a sign in the yard along the way.

Initially, I was fairly optimistic considering I had spent so much time over the course of my career as a Senior Mortgage Loan Consultant creating marketing pieces for open houses, and other agent’s new listings as a courtesy. I was assuming that I was sure to find at least a few flyers, whether they were good or bad quality was arbitrary. Being that in this case, if you were simply making an effort to provide information about the property in the box, you were already more proactive that your competitors. Out of the 25 properties I had wasted my precious fuel driving to, can you guess how many flyers I was able to find? Anyone? Absolutely zero!! That’s right, zero for 25.

In effect, if I was actually an interested buyer looking for information on the property (i.e. room count, square footage, etc…), I was left with no other option than to call the number on the sign. Although wait a minute the number on the sign rings to the real estate office? Not the listing agent. Do I really want to talk to track the agent down right now to get the information, or would I rather prefer to just be able to show my wife the amenities of the property so we can discuss it on our way to the next home for sale? Perhaps if the agent had posted their website address on the sign, I can write down the information and check it out online when we get home…IF I remember to do it.

If you are trying to differentiate yourself as a professional in your community, the one sure fire way would be to have flyers available at all your listings. Sure the neighbors are going to take most of them, but a few buyers too. Who is to say that the neighbors might not be looking to sell soon as well?

After all of my efforts, I once again had to drive by another real estate office to request a flyer for a property, and what I was handed just blew me away. The black and white layout of the flyer left a lot to be desired, and had just one photo…of the front of the house! I had already seen this view of the property, when I was standing in front of it. The paper it was printed on was stock printer paper as well. You might as well print at the top of the page “here, you throw this away”.

Which brings me to my next point. What does the quality of your flyer say about you as an Agent? Does it represent you as a true industry professional? Does it bode well for your experience, and expertise? Take a look at the picure below, and tell me which flyer you would prefer to show a potential buyer or seller. If you are going to provide a first impression of your listing, which do you think is going to be more powerful? The flyer on the left took just 8 minutes to create, and is printed on quality high gloss paper. Feel free to give me a call and I’ll show you how easily it was done!

Image by HomeBiss via Flickr

A good friend and business associate recently turned me onto a new source of powerful information I thought was very interesting and fun to use.  It is a computational knowledge engine that is in its early but exciting stages of development.  This application is based upon natural language processing, which simply means you can compute massive mathematical computations by using simple language.  The site is http://www.wolframalpha.com/ .  However, I recommend watching the short presentation before using the application.

What can it do for us in real estate?  Well, it will calculate debt payments; give you the estimated value distribution of properties in an area; display histories of prices and medians with interactive graphs and just about anything you can verbalize into a mathematical sequence including internal rates, etc. Why would you not want cool stuff like that, especially if it’s that easy to use?

I thought it was interesting and certainly a different perspective to learn that I’ve been alive 18,244 hours.  Put your birthday in; your LDL level; find nutrient levels, etc…

I’ll wrap up by asking to watch this presentation. Even if you don’t use the site you should know about it.

And I always thought natural language processing was something humans did since the dawn of time…

Image via Wikipedia

Since I was a kid, or as long as I can recall, I followed the airline and oil business because I was interested in the way they worked.  Those dynamics are not any different than any other business I learned as I grew older.  Eventually, the bastion of profitability wait on the many efficiencies software developers invented to fill a specific need. Airlines eliminated travel agents by bringing the ticket directly to you via software.  When was the last time you called a travel agent for a round trip ticket to Orange County?

The successful real estate agent today needs a systematic solution-based program that functions as the central nervous system of the marketing, sales and communication process.  To make selections of tasks based on data that is already uploaded for multipurpose uses is increasingly the central need and more agents are demanding that kind of power in real estate specific applications.  The trend turned movement and there is no sign of slowing down.

Every broker and associate in our company should make assessment of this business dynamic and how it can positively impact your bottom line.  I’m grateful to work with talented people that craft and create these types of applications for your benefit.  Sometimes we forget what we have invested in and we just need reminding.  We have easy to use tools for you to compete in the new world and the additional advantage you have is access to millions of dollars in software for a sub-fraction of the cost.

If you’re wondering why some of the associates you know are doing more business, chances are they are involved in these online systems.  They take advantage of online video training, integrated applications and web driven tools that are easy to use and make practical sense.  So, do yourself a favor and log on or call the corporate office and ask what we offer.  You’ll be amazed.