Commentary • August 15, 2012

On Powerful Women in Real Estate

by J. Philip Faranda

I was raised by a very strong woman. She was not simply a high spirited person, she changed things. My mother had her own quite distinguished career, spearheaded changing the school’s then “mothers guild” to the Parent’s Guild in the 60s, and became a leader in most of the things she devoted her energies to. And because she is my mom, I have always regarded “powerful” and “woman” as very congruent terms. I was raised by a powerful woman, I married a powerful woman, and as I look out at my efforts, I am building my company in large part with powerful women. Hell yes.

I am building my company with some powerful women. Mothers, daughters, wives, and sisters. It is funny how real estate is one of a very few industries where top producer, leader and agent are not automatically masculine terms. Our producers, leaders, and agents are often the fairer sex. I could really care less about the old explanations like the hours or the ability to work from home. When and from where don’t matter to me. In my firm, powerful women cause great results and ecstatic clients from hard work and effectiveness.

I am building my company with powerful women. Of our 34 team members, 20 are women. Of our 6 associate brokers, all 6 are women. There are only 3 executives with the firm. Two are women. But that isn’t why I am confident about our future.

I am confident in our future because we aren’t joined at the hip to a patriarchal paradigm.The women in my firm see things I don’t see. They ask questions I wouldn’t know to ask. They often come from a different point of view with a better long term ecology. The strengths that cause people to excel in our industry are up a powerful woman’s alley. They have empathy, they have compassion, they grasp subtleties, they read people, exercise caution, and when they lower their eyebrow, you had better get out of the way.

Their stories are incredible. They have raised remarkable kids. Tackled special needs. Adopted at-risk kids and caused nothing short of amazing results in both health and academic achievement. Executives in other industries. Teachers. Nurses. Lawyers. Entrepreneurs. And most humbling to me, they have chosen our firm to create their next victory.

I truly believe that when the most pressing challenges that face our world are finally overcome, it will be because of women. They don’t shoot first and ask questions later. And when they do “shoot,” they have better aim. They ask for help when they need it. They pay better attention to detail. They ponder consequences. They wonder how this will affect others. The differences between men and women is so far beyond plumbing it is ridiculous. They simply see the world differently in so many ways, and that dovetails so very well with what works in the real estate industry.

Yes, I will continue to build my company with powerful women. Some men have a problem with a strong woman. I am not one of those guys- to the contrary, I am more comfortable with a woman of strength because that was how I was brought up. I was raised by a strong, assertive woman, and I married one. We are also raising a strong young lady; maybe someday she’ll choose to work in real estate as well. But in the meantime, let me assure you that when I write more good news about our firm, it will often be sourced by a powerful woman.

Buying • Market • August 14, 2012

What Does $245,000 Buy in Greenburgh?

by J. Philip Faranda

What can you buy for just under $250,000 in Greenburgh? I’m glad you asked.

$245,000 buys you a 3 bedroom condo in Granada Crescent in White Plains with 2 full baths, a balcony, and a beautiful swimming pool right in the middle of the complex like the one we just closed on last week. The unit was 1300 square feet, had a bar built into a closet, a large eat in kitchen, and a master bedroom/bath separate from the other 2 bedrooms.

The building was a charming Mediterranean villa style garden apartment with a stucco exterior, and the taxes were under $6000. The location of the complex was moments from highways and shopping, making it a phenomenal commuter location. 3-bedroom condo apartments are rare at this price, and it did have multiple offers.

This one is gone, but there are dozens of other homes for sale in the zip code and we can help you see any of them.

[idx-listings zip=”10607″ propertytypes=”2459″ orderby=”DateAdded” orderdir=”DESC” count=”25″]

Company News • August 12, 2012

J. Philip Real Estate Welcomes Angela Johnson!

by J. Philip Faranda

Sometime back in 2006 I was in Otisville, New York working with a buyer client who wanted information on some new construction she couldn’t afford and she insisted that I call the listing agent. I was in a foul mood, an hour away from home, and I think it was about dusk on a Sunday. I was tired, alone, hungry, and cranky. And I did not want to call the listing agent on a new build my buyer could not afford. But I called anyway, and ended up having a wonderful conversation with an broker who didn’t particularly want to answer the phone late on a Sunday herself. She was also from Westchester, and thanks in large part to social media, I remained in touch with my reluctant compadre through the years. I respected her more each time I got to know her a little better at industry events.

Fast forward to 2012, and it is with immense pride that I introduce Angela Johnson as J. Philip Real Estate’s first Vice President. She will be in charge of development, recruiting, and helping our growing team of 30+ licensees to become better in all facets of the business. They could not be in better hands, and I could not have gotten a better first officer.

I have great respect for Angela. She’s an attorney, a very experienced associate broker with a solid record of performance, a great writer, and knows how to grow a real estate organization in the 21st century. If you saw her resumé you’d see a body of work that has taken apartment complexes, businesses, law firms and real estate brokerages to the next level, sometimes saving them six figures. I am humbled that a professional of her caliber would join our brokerage.

Oh-and she loves German Shepherds. That’s another plus.

I have given Madam Vice President vast authority and discretion to implement what she feels will make us the best real estate brokerage in Westchester. I want nothing less. I have told her to regard the firm as her lab of sorts, because I am confident that her ideas and talents will benefit us greatly. As she adeptly put it recently, she’ll be using her superpowers for good. I love it.

I look forward to the coming days.

Commentary • August 5, 2012

The Transformed Real Estate Agent

by J. Philip Faranda

One of the more unflattering stereotypes of real estate agents is that of a passive, uncommunicative person who does not carry their own weight in the transaction. It is, sadly, rooted in actual events, and I have head my share of these folks in my own deals all too often. You probably know the type. He or she disappears after contracts are signed. They are hard to reach, are never proactive, never volunteer an update, and never seem to break a sweat. They say things like “let the lawyers work it out” or make excuses instead of work on a solution when a problem arises.

Little can be done in the current state of the industry. The Realtor Code of Ethics doesn’t really address it, there is no law against being a passive, unresponsive jerk, and being frustrated with one’s counterpart in a deal is often chalked up to the cost of doing business.

There is one phenomenon that does occur on occasion where the lame agent suddenly transforms into an inspired powerhouse. On the day of closing, these feeble people suddenly rise from the ashes of mediocrity and transform into an absolutely determined zealot for a piece of paper known as the “lead -based paint disclosure.”

It is a sight to behold. Instead of hiding behind their voice mail greeting or ignoring their emails as they have done the months prior, they become the pursuer, hunting down this piece of paper as if it were the Holy Grail or the antidote for some virulent poison they just ingested. The timber of their voice changes, they give you eye contact, and there is even a detectable measure of irritation in their voice if they perceive any lack of urgency on your part about the matter. Pure, determined hustle.

You see, the “lead based paint disclosure” is an item that must be submitted to their firm or they can’t get their commission check.

Once procured, they revert back from the Hulk to Bruce Banner. So long as the compliance model of many companies is simply the withholding of pay until a form is submitted rather than truly training agents to spearhead transactions professionally, competently and with initiative, this will always be with us. Except in homes built after 1978 when lead paint stopped being used. No transformation with those homes.

Selling • July 29, 2012

A Tale of Two Short Sale Forums: Bank of America and Chase

by J. Philip Faranda

On Thursday and Friday I attended two consecutive forums for real estate agents on short sales put on by Chase and Bank of America respectively. Both forums were informative. Both forums sent a clear communication that the lenders wanted to make the short sale process better. And both forums also sent very differing messages about the culture of each institution. I won’t beat around the bush. The most memorable phrase from the Chase forum was “a graceful exit” for the homeowner. The most memorable phrase from the Bank of America forum was “we did not cause your homeowner to default!” and “I am not taking questions at this time.”

One session was run by a bunch of men in dark suits. The other was run by a singular woman with a charismatic presence, an infectious smile, and a dynamic gift for running the room- if your cell phone rang (they requested them to be set to silent), you had to get up and dance. If you think she was the “graceful exit” person, you’d be wrong. The guys from Chase were mostly loan officers and some supervisors of their short sale and REO departments. The presenter from BOA was a short sale negotiator.

Chase gave us a thick handout with copies of each slide from the presentation for our notes. The presentation was clear about their process and how we could best do things to get our short sales approved. The prevailing message beyond procedure was that of empathy for how hard we work as agents and of compassion for the sellers who faced hardship. They were generous in the question and answer session, and I left encouraged that Chase was serious about getting short sales done so we could best help those facing hardship and move the economy forward. I was really impressed.

Bank of America’s presentation was far more regimented. They did not have a handout, but we were told after that one would be emailed to us. I was glad I brought my tablet for notes. The slideshow was equally informative on their process as Chase’s, but the tone of the session, as well as how questions were handled, left me a little disappointed. No mention of the difficulty we face in the field. Nothing about what our seller clients face. And some subtle references to irritation bank negotiators get when agents submit incomplete or erroneous paperwork. Questions were written on index cards and handed in at the end. The presenter read some and answered them without any interaction or follow up with the person asking.

One particular question was emblematic of the prevailing attitude: The question asked why BOA still sent offers to modify loans to homeowners actively working on a short sale. Such letters cause issues. The answer was disappointing. “It’s the homeowners CHOICE! It isn’t about YOU and your COMMISSION!” What the presenter missed was that these letters are disruptive. They often created false hope among people who previously failed at loan mods and are enduring enormous stress. Some take these offers seriously, to their own peril when they abort a successful short sale only to have another loan modification flame out. They aren’t offers to modify. They are offers to apply.

Failed loan modifications are the poster child for the futility of the housing crash. I found her answer obtuse and insensitive. There was an official from BOA who was eager for my feedback afterward and asked to remain in touch. Good on them for that. But dozens of agents walked out at the end not knowing she was there.

The only criticism I have for both banks in common is the continued lack of commitment to review the broken BPO (broker price opinion) valuation process. I can draw a clear correlation between failed short sales and BPOs performed by people from out of the market area, often 3-4 counties away. That remains broken.

It is possible that had I not attended the Chase session the day before that I would have a more more positive view of the Bank of America forum. Chase hit a home run. Bank of America succeeded in making it clear that they were serious about short sales working, but they dropped the ball in other areas of PR. No bank has any business shouting that they had no hand in the hardship caused by the crash. They all did. Chase seemed eager to get things right all around. BOA made it clear that this is debt settlement. Not very warm.

In short sales, where people are facing foreclosure, the loss of their home, financial strain and hardship, and we agents are their only link to get their lives back in order, compassion and a little bit of warmth both go a long way.

Full disclosure: I am a Certified Distressed Property Expert (CDPE) and have closed dozens of short sales for seller clients.

Mortgages • July 24, 2012

Should Interest Rates be Raised? Probably Yes.

by J. Philip Faranda

If there is one thing we can learn from the real estate market of the past 5 years it is that mortgage rates alone will not cause a recovery. When rates went below 6%, then 5%, and now below 4%, the results have remained largely forgettable. But what few consider is the long term damage that such low rates may cause down the road.

Each year that we accumulate another round of 30 year fixed mortgages at ridiculously low rates, we sow the seeds of another bubble in 20 years. One of the calling cards of the crazy spike we saw from 2001-2005 was low inventory. In lieu of other options, buyers seeking to get their offer accepted bid prices up crazily. In another generation, we’ll have a whole era of homes purchased during the current time period where many owners will be reticent to sell simply because their rates are low and it will make economic sense to remain in their homes longer. Fewer homes for sale translates to lower inventory and upward pressure on prices.

In the 80’s real estate spiked despite double digit rates. Rates don’t affect buyers as much as lenders (or governments) think they do, but they matter to sellers, especially those who are empty nesters or on fixed incomes. The only way to entice a reluctant seller is with more money; that puts even more pressure on prices upward.

The smart thing to do might be to gradually raise rates to a sane level, where we don’t cause a generation of holders on because of their low rates. It won’t matter as much to buyers, who have historically bought no matter the prevailing rate, and it will minimize future problems.

As crazy as it may seem in this day and age where bust seems the norm, we are unwittingly planting some seeds of boom in the future, and not the healthy kind. So long as those in charge of managing the money markets of the nation view matters in election cycles and not the long term, we remain in danger of a boom/bust cycle and not a more stable or sustainable market. The outlook should focus on long term stability, not timing elections with hot periods.

Commentary • Selling • July 18, 2012

Real Estate Jargon is Terrible Marketing

by J. Philip Faranda

For the 100th time, I read a real estate write up that fell well short of the space limit, but was filled with acronyms and abbreviations that you’d need a Berlitz book to decode. I think it fair to say, after more than 4 months on market and no buyer, that this would be called a marketing fail. The amount of effort it takes to write out the entire phrase “Sliding Glass Doors” instead of the current “SGD” is negligible. Buyers don’t stick around to decode. There is too much inventory to move on to.

And of course, the sellers, who could easily see this marketing fail if they simply Googled their address once in 4+ months, are oblivious to it, because no seller would be OK with that.

We’ve all been in situations where industry jargon has confused or annoyed us. When a physician speaks to us like a colleague instead of a lay person needing explanation, it is disconcerting because confusion doesn’t mix well with health matters. It is the same when we speak with an electrician, a cop, and 100 other professions where the stakes are such that clarity goes hand in hand with peace of mind.

WBF or WB Fireplace instead of simply “Fireplace” or “Woodburning Fireplace” is another fail.
EIK instead of “Eat in Kitchen” occurs so often I no longer question it, but to a consumer out for the first time it can cause fits.
The same goes for MBR instead of “Master Bedroom.”

I could go on an on. Sometimes I’ll see abbreviations and acronyms in write ups where they simply don’t have the room-sometimes. But once in a write up where it doesn’t absolutely have to occur is too many. Moreover, I can tell you that there are other ways to get the same or better message with fewer words. But that is another blog.

Thou shalt not confuse thy prospective buyer.
Thou shalt always give thy client thy best.

Industry News • Mortgages • Selling • July 15, 2012

Is That $30,000 Incentive to do a Short Sale for Real?

by J. Philip Faranda

A number of short sale clients have shown me letters, mostly from Chase, offering them an almost incomprehensible amount of money if they’ll do a short sale. It would seem hard to believe, in a world where short sale sellers typically walk from closing with the clothes on their back and no proceeds, that lenders would suddenly offer them tens of thousands of dollars to sell for less than what they owed the bank. But there, in real living color, I have been shown these letters, right at the kitchen table, with numbers to call for verification and everything.

We’ve looked into it. The ones from JPMorgan Chase are legitimate. In some cases, Chase is giving a $30,000 incentive to underwater borrowers to complete a short sale. I have verified it through attorneys, Chase, and several Chase officials, and the explanation has been the same: Chase wants to close out these assets and they’d prefer not to foreclose. In the cases I have seen, the loans were originally Washington Mutual mortgages acquired by Chase when they absorbed WaMu in 2008. Chase paid $1.9 billion for Washington Mutual’s assets in 2008 after they were shut down by the FDIC. They did not pay face value for these mortgages. They can afford to sell them at a loss and even pay an incentive to the borrower and still remain in the black- and safely distant from the robo-signing scandal headaches.

According to a senior VP at Chase I have known for many years, other banks are doing similar incentives. Wells Fargo bought Wachovia. Bank of America bought Countrywide. And they can, in house, offer a far better cash incentive in many cases than what sellers could get under the HAFA incentive of $3,000, which many people often do not even qualify for. Not only that, under the TARP rules, the banks can claim a loss on the face value of the loan on their taxes. And that appears to be what they are doing.

Not every letter a delinquent homeowner gets in the mail promising them cash, incentives, and other goodies is legit. As a matter of fact, much of the mail I have been shown by delinquent homeowners struck me as a scam. But I have to say, in the case of banks like Chase, those large incentives to complete a short sale are a fact.

WHATEVER you do, however, never do it alone. If you are in New York or Connecticut where I work, contact a lawyer and check everything out before you ever deal with the bank directly alone and without help. We have a team including lawyers and a CPA who can make sure that our clients make all the right moves and have their backsides covered. Forewarned is fore armed.

Buying • Selling • July 15, 2012

Yet Another Reason to Avoid Over Pricing Real Estate

by J. Philip Faranda

I am working with an extremely nice pair of clients right now -due to a job transfer to Westchester County, they are moving to the area from out of state. They sold their own home quickly, and we have been out and about looking. The selection process has brought us to a number of homes, some of which were gone before we could make an offer. It has been an education.

You see a lot out there, and one particular home was quite a good fit-unfortunately, it seemed overpriced by about 10%. Sometimes you have to employ a strategy, and in discussing the merits of making an offer, my advice was that while an offer might be percived as low, it might fly and circumvent those souls out there watching the home online waiting for the price to drop. My client then shared a doubt that many buyers may have when dealing with an overpriced home.

What if the real reason it is overpriced is because it would be a short sale at true market value?

GOOD QUESTON. And yet another reason why overpricing real estate is destructive to a good closing. Sellers who resist pricing their home more realisitcally often say that buyers can “make an offer.” Well, what if the high price makes them wonder if making an offer is a waste of time?

We already beat our heads against the wall trying to explain that when real estate is overpriced, the only offers you get are from people who are comfortable with low-balling. Reasonable people are uncomfortable with a large spread, even if the offer is actually fair. Most people don’t even bother coming out to look at overpriced homes. Why bother? They watch online, and wage a war of attrition with the seller over a period of months-sometimes years-until the price fits their sense of value.

The fear of it really being a short sale is a new one, and in this case, it could well have been legit. We made an offer that was 22,000 higher than a very comparable home- and the counter was still in the stratosphere. The listing agent did an admirable job of advocating for their price, but couldn’t back it up with market activity- just well stated, elegant and clearly experienced salesmanship. But no clear comparable sale. In the end, I translated some of her references to mean that, at our price, they would indeed be upside down. Or, perhaps, not have enough money to make their next move.

Still, they were another casualty of overpricing, and I was told we weren’t the first offer that didn’t pan out. As time goes by and it becomes a stale lisitng by autumn, it could well become a short sale as reality sets in. If so, my buyer was prescient.

Market Statistics • July 8, 2012

First Half of 2012 Westchester Real Estate Market Ends With a Strong June

by J. Philip Faranda

I’ll summarize the first half of the 2012 Westchester real estate market for you in one sentence: More people are buying single family houses and they are paying lower prices. According to the Hudson Gateway Multiple Listing Service, we had the most June closed transactions for a non-tax stimulus market since 2007, but the median price was almost $50,000 less than last June.

For June 2012, there were 501 closed sales at a median price of $660,000.
For June 2011, there were 436 closed sales at a median price of $709,625.

For the 2nd quarter of 2012 that just ended, 1156 sales closed at a median price of $620,000.
For the 2nd quarter of 2011, 993 sales closed at a median price of $620,000.

The year to date sales totals show 1889 closed sales at a median price of $575,000.
The first half of 2011 had 1715 closed transactions at a median price of $592,450.

1369 homes are under contract at a median asking price of $625,000. 1369 pending deals is a mammoth number, almost twice the number of pending transactions 6 months ago. That speaks to the busy season more than an overall trend, and I unfortunately didn’t chronicle that stat from a year ago (kicking myself for that). Available inventory is 3997 available homes, down 253 from last month. Inventory is shrinking, which actually gives sellers leverage. When buyers have fewer options, it forces them to play ball with the seller rather than move on.

In my personal observations, more buyers are out there making deals. Overall they are as cautious as ever: the New Normal gave us more 2nd and 3rd visits with parents and contractor friends, laundry lists of questions, and more thorough due diligence-no changes there. But the scale has tipped on buyers following through this year more than in years past. One of the common themes of the New Normal was virtual paralysis with buyers-indeed, they weren’t buyers at all in many cases, just lookers. We’d show buyers dozens of homes, only to have them give up, or walk from deals if a problem or disagreement arose. Now buyers are sticking with it more. It’s not surprising. You can’t put life off in perpetuity. People want to get on with their goals- family, children, roots, and putting things off a year or two might be ok, but not five.

It isn’t just the buyers. Sellers are getting more realistic. Banks are not resisting short sales the way they did in 2009 and 2010. Pragmatism, absent or mathematically impossible in years past, is prevailing.

We will, absent another crisis, see a slow steady crawl of flat values and modest transaction gains going forward with a few additional caveats:

Banks will have to manage their inventory of foreclosed homes better than years past, meaning they cannot flood the market again and drive prices down.
The mortgage market will have to continue to ease up on unrealistic underwriting that prevents qualified borrowers from being able to get approvals.
Government economic management will have to focus on what works.

The last point is crucial. The government can sabotage a recovery or referee it. Raising the FHA loan limit was smart. Proposing mandatory 20% down rules, as some politicians tried in the QRM debacle, was dumb. To see what I mean, consider June 2007 when the market was artificially affected by the $8,000 tax stimulus. Westchester saw 634 homes close that month, far more than this past June. But after the stimulus ended, the market was dead. In the end, it made no difference.

Overall, we are looking at a better 2012 than 2011, which is the first organic (non government stimulus) uptick Westchester has seen in a very long time.

On Powerful Women in Real Estate

What Does $245,000 Buy in Greenburgh?

J. Philip Real Estate Welcomes Angela Johnson!

The Transformed Real Estate Agent

A Tale of Two Short Sale Forums: Bank of America and Chase

Should Interest Rates be Raised? Probably Yes.

Real Estate Jargon is Terrible Marketing

Is That $30,000 Incentive to do a Short Sale for Real?

Yet Another Reason to Avoid Over Pricing Real Estate

First Half of 2012 Westchester Real Estate Market Ends With a Strong June

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