In June of 2008, prior to the Fannie Mae/Freddie Mac crisis, I wrote this blog posting asserting that the president who would most impact progress in the housing market was not the winner of the 2008 election, but the winner of the 1932 election. I began as follows:

With the problems facing the real estate and mortgage industries, I look to the Oval Office to be the catalyst in the recovery of the nation going forward. I am not referring to President Bush, nor am I referring to the hypothetical Presidents McCain, Obama, or Clinton.

The president who will make the biggest difference in solving the current crisis is Franklin Delano Roosevelt.

It is hard to conceive that a free market, right leaning capitalist who abhors government bureaucracy like myself would invoke FDR. However, a realist with a rudimentary understanding of what makes our industry work will understand.

If you haven’t guessed already, I would go on to refer to the FHA mortgage, which languished in obscurity in my market during the housing boom, only to be a lifesaver for countless deals after the crash. If you’ve done an FHA deal in 2009, or 20 FHA deals, you shouldn’t thank Obama, Bernanke, or the mortgage goddess. You should thank FDR. The FHA was his baby, and it saw the country through the depression in the 30’s and every decade until the last one, when the idiots who should have been the guardians of the money markets decided to play poker with our money. In other words, the lending industry decided to re invent the wheel with sub prime. I guess 70 years of success was boring.

I closed more FHA deals in 2009 than any year since 1999, when I was in another market. FHA used to be as rare as a hen tooth in Westchester. Now people breathe a sigh of relief when they hear those 3 letters. Not only is it back in vogue, it is the belle of the mortgage ball. And rightly so. Many of us had our bacon saved by the program the past 18 months. 

There are those who disagree, but that is a discussion for another day. I’m with Tom Kelly, who said that the FHA rescued us in 2009. I expect more of the same in 2010, which is a good thing. We don’t need to reinvent the mortgage wheel, we had the answer all along. Thanks to Mr. Roosevelt. 

Happy New Year.

Late last year I posted my 2 Goals and 5 Resolutions for 2009.  I am going to review how I did then state my 2010 goals and resolutions. 

The goals were pretty simple:

• Make more money;
• Work less.

Quite frankly, I reached neither. I worked really hard in 2009, perhaps as hard as I ever worked, and for pretty much the same money. Here is the silver lining of the cloud, however: we cut expenses by almost 30%, and in the last 90 days I have become far better at entrusting things to my agents that I used to be a control freak about. Many of these things were done better than I would have done them, because I didn’t have the time or inclination.

This was actually the best lesson I learned in  2009 going forward: empower my people if I want to build my company. I can’t do everything myself, and I need to be better at team building to be truly successful. Thanks to Elayna Fernandez for getting me to reflect on this lesson. I will use it well in 2010. 

On to my 5 resolutions:

1. Take one day off per week no matter what. F. I failed miserably. I took more days off, but that’s not saying much. 
2. Create specific goals. C-. Too much working in my business and not enough working on my business. 
3. Plan my work. D. See #2
4. Blog more. A+. Over 330 blog postings in various places changed how I do business. My blog got me found by some news producers who put my clients on CNBC 4 times,  and landed me on ABC World News, AP, and other print media. This was enormous in helping with credibility, recruiting and sales. Magical and unpredictable.  
5. Laugh more. B.  

1. Double my income. 
2. Have 25 licensees with the company by Thanksgiving 2010. 
3. Make Magic Occur Regularly.

I’m not going to be hung up on how much I work, but I will make sure I have fun at work or play. And I mean to double that income. I now have 14 licensees with 3 good new ones joining in January. I want to grow the team with quality producers.  Regarding magic: I consider the opportunities that came about from blogging to be beyond my wildest dreams. Utterly unpredictable and inspiring. I will make more of that, and leave it up to God as to how it manifests itself. 

5 Resolutions:

1. Blog as consistently in 2010 as I did in 2009, and get better at it.
2. Create a Cyber Empire. I have some ideas for pursuing niches that I will implement the first quarter of 2010 with new and better web marketing. 
3. Stand on the shoulders of the best lesson of 2009 and empower my growing team more as a coach and mentor and less like a guy who does everything himself and gets burned out in the process. 
4. Plan and set goals more consistently and systematically.  I am going to focus more on listing more properties and giving more buyers to the team to service. I can adhere to this if I empower the team with things I am inclined to handle myself, but ought not, like buyers.  
5. Appreciate and support Ann more in 2010. This is more rooted in attitude and consciousness than just doing things differently. Simply put, It shouldn’t be about me laughing more. I want Ann to laugh more. 

Here’s to a magical 2010. 

Some of the comments in this story prompted me to write one of my own. The jist of the piece is that all real estate appreciation from the past 10 years is nullified by inflation. Now, I don’t know if I should go outside, stand in the street and scream 

DUH

at the top of my lungs, or just put my face in a pillow, and scream

DUH

at the top of my lungs in the privacy of my living room. 

Stories like this bring out the haters, and several commenters lamented at how a $200,000 house actually costs three times that much in total payments (wrapping it up with a lament about the failure of capitalism) and another said that the stock market is a better investment than real estate. 

There is a really really large fallacy some people fall into with when they start comparing buying a home with buying a stock, and here it is: 

You can’t live in your 401k. It gets drafty.

I really don’t care if the stock market outperforms real estate or if it doesn’t. It is an apple and orange comparison. I don’t care how many charts, graphs and algorythms you show me about how much more money you’ll have in 30 years if you took the money you would have put into a house and bought Berkshire Hathaway instead, and here’s why: Where ya gonna live Einstein. 

To take advantage of the so called “better investments” than real estate, you either have to live in a box, or be a HUGE camping enthusiast, because I haven’t figured out how to invest my housing money elsewhere and avoid eviction. A dollar can only go one place.

If you pay 2000 per month rent for 30 years, you’ve laid out $720,000 to someone else and accomplished two things: avoided being homeless and paid the maximum in taxes possible. If you pay a mortgage over 30 years, you’ve paid tens of thousands less in taxes and you have an asset of considerable value that you own, even if it hasn’t appreciated a dime. 

So, here is my question for all the bar graph guys who think they’ll have more money in 30 years playing the market while avoiding the pox of home ownership: where will you live while you’re being an investment genius? In a pile of stock certificates with no plumbing or cable? A box? Your car? 

Ann has started her own blog, focusing on Gregory, who is on the spectrum for autism. G-man is, thank God, extremely communicative and affectionate, and as this video shows, he loves to be tickled. This is one of Ann’s favorite videos, and she figured out how to put it on her sidebar.  The “Dugga Dugga” game, as Gregory calls it, sends him into hysterics, and has been used to transition him from frustration elsewhere a number of times.

Given our schedule, especially with the time I spend in the field, times like this are special. Our children do inspire us, and they make the challenges the business sometimes pose more bearable. There are things I never would have done as a single guy that I embrace as a dad. But embracing Gregory tops it all.

This article in the Real Deal caught my attention. According to the NY Times, foreclosure filings in New York State for 2009 are up 17 percent from the prior year, with just over 48,000 cases. Not all filings automatically become bank repossessions, but the number of those spiked enormously. Earlier this year I worked quite a bit in Queens and I was shocked at the high percentage of the places I was showing that were short sales and bank owned properties.  

Many of those filings will become short sales, loan modifications or get pulled back by the homeowners through other means (like paying the arrearage if at all possible). But even if that happens, the sheer raw volume of filings will end up with more REO properties hitting the market, as I first noticed earlier this year. Not surprisingly, the recession has caused other reasons for the courts to be busy- evictions, domestic violence, divorce and business disputes are all signs of an economy that is buckling from enormous stress. 

Stress is the operative word. It describes the people and the conditions. 

Russell Shaw of AgentGenius passes on a powerful email being sent to agents on how to deal with Bank of America’s difficulty with short sales- don’t send them any new mortgage business.

My comment was as follows:

Well, it isn’t surprising that this letter is being distributed. I haven’t gotten one but you reap what you sow. There was a time when Countrywide was the Grinch of short sales. When they were acquired by B of A people thought things might get better, but they didn’t. It should only take as much time to approve a short sale as it takes to underwrite a mortgage- the process is analogous. That we have to drag the lender, kicking and screaming, to get more money than they’d get if it went to REO explains how this industry thinks. It also explains how we got into this mess.

I have blogged about how lame the banks are about short sales here. 

Bryant Tutas was a frequent commenter on the story and pointed out that an organized boycott would be illegal collusion. He made some other good points here. Yes, part of the problem is lame agents. But it is hard even for a good agent when the lender won’t cooperate. I have dynamite people ( a NY law firm) doing my short sales and we get frustrated with all the stonewalling, red tape and delays. 

Are you, like me, just a little burned out on networking websites?  I Tweet, do Facebook, and LinkedIn ; there are dozens of others. I’ve been hyperactive on on Active Rain lately.  I have a YouTube channel. A Technocrati profile. Digg. Reddit. In real estate I’m on Zillow and Trulia, and that is just the tip of the iceburg. We don’t do this because it’s fun by and large. It is work, and we labor to maximize search engine optimization, to get found,  cultivate readership, and develop clientèle. Writing the blog is fun and relaxing. The other stuff is work.

Enter this morning’s email from Plaxo. I registered there years ago at the behest of a former co worker. Since then they’ve spammed emailed me for years. I ignored it until this morning when I broke down and linked Plaxo with my Facebook to minimize my efforts (I hope). Will it help? I sure hope it will. It can’t hurt. 

When I see other people who seem to have the whole networking widget universe set up with aplomb I must admit that I get a little jealous (Damn you Somers team in Philly! Damn you!). I just don’t want to do all the work. And don’t get me started on Typekey, WordPress, signing into things with my Yahoo!, Google, AOL, or other established account. I know the importance of this stuff, but I have to earn a living. And these children want to play with Daddy. 

Of course, when I finally get my act together with all these buttons, widgets, profiles and other cyber paraphernalia, it will go the way of Friendster or LiveJournal. A pimp’s work is never done.

If you’ve ever driven on any of the Westchester County Parkways, perhaps you’ve seen a quasi-official looking blue and white truck with the initials H.E.L.P. on the side. That stands for Highway Emergency Local Patrol, and they go around aiding people with car trouble. I have no idea what the cost is the the taxpayer; I do know that I ran out of gas Tuesday. 

I was driving down the Sprain Brook Parkway, right next to the reservoir when I saw I was on fumes. Just as my mind began to race about the next exit, I felt that hesitation. I coasted to a stop, dry as a bone. I was angry with myself. Trying to do too much for too many in too short a time, I was supposed to meet with a client at a construction site. And it was really cold out. 

After calling Ann & Ronnie (our admin), we found that there was no number for these guys. You have to call 911 and they send them. So I did. And the guy came. Two gallons of gas, courtesy of the taxpayers of Westchester county (the friendly snickers were free), and I was back on the road. I would have taken better photos, but I was too much of a wimp in the cold, so everything was from the drivers seat.  

One of the most common questions I get from buyers about an area they are considering is the following:

How good are the schools? 

It is a fair question. It factors in to their quality of life, the future welfare of their children, and resale value of the home they are considering. I also can’t answer the question. It is a fair housing issue, and licensees who recommend one town or district over another may in engaging in illegal steering.

So what are we to do? Well, silly as it may sound, while licensees ought not compare school districts, we can give our clients sources of the information they seek. It actually makes some sense; we don’t answer legal questions either, but we can refer people to a lawyer.

Here are some good sources of information on school districts: 

• Westchester School District Report Cards– published by the State of New York.
• National Center for Education Statistics– published by the US Department of Education
• Westchester School District Profiles– map based, put out by the Westchester County government. Mostly census data. 

• School Digger
• Public school review
• New York Public school rankings

If you Google school rankings there are lots of results, but I’m not sure of their data source. Caveat emptor. I’d start with the first three.

 

I have a deal going on one of my listings. December deals are special, and there are a lot of moving parts on my clients’ part, so I thought I’d reach out to the buyer agent to check status. She’s been good about contact, so I wondered why we hadn’t spoken in a few days. A man answered her phone. 

It was her husband. She just had a baby. They were still at the hospital. 

Since Ann and I have been down this road four times, I congratulated him heartily and asked for a call back whenever Lora was up to it. I didn’t expect anything for a few days.

I wasn’t finished with my calls, so made another call to an office. The phone rang awhile, then a woman answered. She wasn’t pleasant. “We’re closed! It’s Christmas Eve!” she said indignantly. “Merry Christmaaaasss,” she said, in a saccharin voice, then hung up. This is a respected company in an affluent area. If it were my firm, this woman would have been given her license and shown the door. 

Moments later, my phone rang. It was Lora, calling from her hospital bed. We handled what we needed to handle, I congratulated the new mommy, wished her a merry Christmas, and we agreed to speak again next week. I was blown away. 

One woman is in the comfort of an office and hangs up on me. Another calls from the hospital after giving birth. What a contrast in dedication. Hats off to Lora Giordano, who gets it. I don’t care if I am plugging a competitor, I am acknowledging the dedication of a colleague. I have seen 4 babies come into this world, and it is no picnic. I am still amazed. Way to go that extra mile, Momma bear. Way to take care of that new cub. I applaud you.

Ossining Christmas Vigil: Lighting the Way for Santa

One of the really cool local traditions in my old neighborhood on Osage Drive and Susquehanna Rd was to put rows of candles out along the street to light the way for St Nicholas. As I was driving to my office on an elf errand around 11:30pm, I drove through the street to admire the view of the Holy Child’s birthday candles. The photos do not do it justice; in person it is breathtaking.

This one is the view from Pleasantville Road as you turn in to Susquehanna Road. 

The candles light the way for St Nicholas

He won’t have any trouble finding this house. 

This was truly impressive in person. 

Prior to snapping this one a car drove by. People actually drive through the neighborhood to see the candles. 

You can see them winding down the street until they are out of sight.

In all, residents from six separate streets participate. It is no easy undertaking. Each bag has to be filled with sand, the candle has to be placed in correctly and then lit. Few go out, even in the wind. Doing 20-30 of these in the cold isn’t fun. But they do it. 

There is something quietly stunning about it; very few people do the Griswald house lights on this night, but almost everyone does the candles on this one night of the year. Call it lighting the way for Santa or birthday candles for Jesus, it is a sight to behold. It is one of the special things about the place where I grew up.

Merry Christmas, and peace and prosperity to you in 2010.

It can be confusing to understand the health of the economy from the media. As the screen shot from my news feed shows, there are seemingly completely contradictory stories on the U.S. real estate market. I’ve put red next to the “bad” news and a green mark next to the good news. One headline has things jumping up 55%; another says new home sales are down 11%. No wonder people are finding that making sense of it is not easy.

Here are a few things to consider:

• First, all real estate is local. One region can have a spike upward while overall the country can be down. New York is not Miami or Las Vegas. For that matter, the Bronx is not Bronxville. 
• There are different sectors in the market. Resales are not new homes; they are pre existing homes. In a down market, few people build new compared to the number of folks who are picking up pre-owned foreclosure properties which were built decades ago. 
• There are different metrics, such as price and volume of transactions. Prices can be down, but the volume of sales can go up. 
• Prices can go up, and the volume of sales can be depressed. 

I remember finding a letter from 1945, written by my father from the South Pacific at the end of the 2nd World War. Japan had surrendered, and he was sharing with his parents that he and his fellow soldiers were not so much jubilant as they were exhausted. He wondered aloud about the future of mankind with such powerful weapons in the hands of mere men. It was a very unique look into a time in my Dad’s life I would never otherwise see. He was 24 at the time; I was 32 when I read the letter. For the first time, I related to my father as a young man with an unknown future. 

Flashing forward to today, so many of us are creating a body of work online that will not be stored in an attic, but will last in perpetuity. Blogs, postings, Tweets, and Facebook will give our children and grandchildren enormous access into our thoughts. Some will actually know how it was for us when 9/11 occurred, Barack Obama was elected, and when they were born. Can you imagine?

Can you imagine knowing JFK’s personal thoughts during the Cuban Missile Crisis? Jackie’s feelings when she was newly widowed? What about Thomas Jefferson’s feeling on July 5, 1776? If Christopher Columbus could tweet on a blackberry, what would he have told us? Or Martin Luther? Charlemagne? Francis of Assisi? What if you could learn about your great grandfather, or your great great great grandmother? 

Knowing my mother’s thoughts when Pearl Harbor was bombed, when my father proposed, or when her dad died would be extraordinary. Understanding my father’s feelings when he was a GI in a tight spot, when he was working in the Great depression, and how he felt when I was born (he was 46) would be enormous. I have always wondered what my grandfather Salvatore experienced at Ellis Island when he arrived from Sicily.  

Future generations will know all of this. Your great great great great great grandchildren will know you. I don’t know about you, but that’s part of the reason I write. I’d like to build a company my children, if they chose, could run. If they knew that it just didn’t appear, that it wasn’t all easy, and what challenges I faced, it would make a difference in their stewardship. It might also tell them something about their father they might not otherwise know. 

Thanks to Matt Goyer for starting this group. Here are links to my two Redfin Posts:

Why Redfin Won’t be Redflop

Redfin Redux

There have been a number of posts on Redfin, and they even have a channel on Active rain now. I hope this group will foster civil discussion on the company and how it does business. I am a Redfin Partner Agent in New York and I have had a very positive experience with the company since March 2009. 

I had two accepted offers today, one on a listing I am selling and another for a buyer I am representing. Here’s a coincidence: They are on the same street in New Rochelle, less than a mile apart. They are completely unrelated deals. 

Another offer was presented on behalf of my buyer but we havn’t had a response yet. Two accepted offers and the possibility of a 3rd in one day doesn’t make me a great agent. But it does speak to the fact that people are no longer sitting on their hands. 

Word is out that now is the time to buy. Rates are fantastic, sellers are motivated, and prices are way down. The holidays are apparently not a deterrent to the pool of active buyers out there. Of course, Sundays get more husbands out with their wives when the Giants and Jets stink. 

I completed the old 2 weekend Forum in Philadelphia in December of 1989. I then did the 6 Day in the summer of 1990. I don’t know how many seminars. 20? I suppose in a community that is pushing 170,000 with such diverse groups as Autistic Spectrum Disorders ,  Dog Lovers Group and my personal favorite, 40 Somethings , that I’d come across a few Landmark Alums.

I still draw on the insights and distinctions I got from the training in my daily life. In this business, you draw on every resource. 

I just have one thing left to say:

Werner Erhard. Werner Erhard. Werner Erhard.

I’m with Susan Mangigian: Carpe Diem! Or, as they used to remind us, this isn’t your practice life. 

Now that Greg Nino and Bob Haywood have blogged recently about Redfin I thought I’d add my own 2 cents. Why not? I’m a Redfin Partner Agent. I blogged a earlier this year about the firm when I wrote Why Redfin Won’t be Redflop. 

I was contacted by Redfin’s area manager, Michael Daly, earlier this year around March. He found me through my Active Rain profile. It has translated into about 10 closed sales for the company thus far in 2009. I paid a 30% referral fee, which included a small commission rebate to the client in each transaction. We have another 4 deals under contract and about half a dozen serious buyers we are working with. 

Now, before I go on, let me ask you: would it kill you to have 10 sales referred to you in the next 6-8 months? No advertising, no bird-dogging, just an email telling you to contact Joe Buyer. Yeah, that would really suck. Another Active Rain horror story. 

I have met Glenn Kelman, CEO of Redfin, twice. He’s a nice enough guy, certainly committed to the oft-heard “Transparency” mantra, which I believe they are serious about. Glenn is also clearly regretful of Redfin’s initial splash, which was arrogant and adversarial toward the industry model. This haunts the company more than anything else. It is their Original Sin. And you never screwed up in your first year of real estate. Right. But some of the things they are criticized for aren’t what they appear to be. Their anti-short sale stance is ill advised and bad publicity, but they didn’t complain when I sold one. They want to stick with prices above a certain number, but if you go below it they either waive or reduce their referral fee. Those BASTARDS! 

I dislike firms which are called alternative models in polite company, not because of their methodologies, but because their agents suck. Crummy agents crew up deals. Bad agents tend to gravitate toward alternative models because of guaranteed pay, their gimmicks, or both. What is different about Redfin is that their agents don’t suck. As a matter of fact, the people whom I have dealt with are pretty good. 

This isn’t to say that as a partner agent I drink Redfin Kool Aid in the morning. I don’t think everything they do is wonderful, and if I have an issue, I contact Michael Daly and we speak. Glenn Kelman’s door is opened if the need arose. One thing I’d like him to do is make the site a little warmer and fuzzier. He can be such a CEO sometimes. I’m in sales. You can’t deny the emotional part of the biz. 

But some things they do will improve the industry better if we stop half a second and learn. 

• It takes guts to survey every client and publish the results. 
• They do IDX and home searches better than anyone I have ever seen.
• They track every single referral. No one gets lost, misplaced or forgotten. 
• Bad agents get sacked. 

While going through some old archives to rebut some gnu who feels agents are overpaid, I found the following passage, which I authored on May 1, 2006, on another blog. This was over a year prior to the sub prime collapse of 2007 and the Fannie/Freddie crisis of 2008. 

The sales statistics for homes sold in my area for the first quarter of 2006 are out, and sales are down from the first quarter of 2005 by 14%. This, coupled with higher interest rates means that the pool of buyers is shrinking, which suppresses appreciation. Add to this the growing inventory from the lower sales rate, and, all together now, the boom is over. Oh, one more thing: in the next 18 months, millions of variable rate mortgages which started out as fixed for 2, 3 or 5 years will hit their adjustment period. This will flood the market with even more inventory as people try to jettison mortgages which they can no longer afford. Foreclosures will spike, putting more properties up for sale, and the bank-owned REOs will elbow out a significant number of regular folks who wish to sell and who may find themselves unable to get the price they need.  Guess when this really hits the fan? 2008, which, by the way, is a presidential election year.

If you don’t want Hillary to be president, you better pray hard that they catch bin Laden, because that’s the only thing that will turn things around for this administration.  

Of course, Barack Obama was on no one’s presidential radar in May of 2006. Moreover, nobody could have predicted the house of cards that Freddie and Fannie were. As significant and unpredictable as those things were, the writing was on the wall anyway. There would be no soft landing. 

I’ll finish my answer to the person who feels that licensees are overpaid and post it soon.

There is an article in today’s NY Times asking the old question of whether using a broker is right for some home sellers. The piece invited comments, and I shared my thoughts. I’ll adapt them for this post. 

I am a broker who does business in Nyack, where the first two homes in the report are located. Ms Corvino’s issue (she has elected to sell her own home after 230 days with a broker) is not whether or not she has an agent; it is the fact that the home is overpriced, and not by a little. MLS records indicate that she bought the home in late August of 2005, literally the apex of the market bubble, for $810,000. MLS records also have her giving herself almost 10% appreciation in her 2008 attempt to sell when she listed it for $892,000, and at some point she lowered to (hold onto your hats, folks) $880,000. In reality, the value was most likely in the low to mid 700’s and may even be in the 600’s as I type this. Real estate didn’t go up 10%, especially if the home was not renovated. It went down 10%. 

Given the fact that she purchased the property with a piggyback 2nd mortgage with a balloon payment, she is most likely upside down, which would make her, at best, a short sale. The fact that she can make a website and pay for a fancy yard sign will not ameliorate the mathematical challenge she faces. So while she attempts to “save” 40k in equity which no longer exists, a default on the balloon could become a financial catastrophe. I’ll bet her broker advised her to lower her price and she demurred. Brokers often tell sellers what they need to hear, and we are dismissed for trying to make a quick buck. 230 days later, she will sell her own overpriced, outdated home on Facebook. I’ll look for that follow up report in the coming weeks on the Times.

This Times article will no doubt get many eyeballs on the lady’s home (it got mine- check out 46Voorhis.com), but unless she can lower her price, she’ll have to face the reality that the public is ambivalent about the debt structure that determined her pricing strategy. I have blogged about this very fact last month. WebMD.com is not about to replace physicians either. 

This For Sale by Owner is missing the first rule of home selling, which is the price the house right. A good broker would help her price the place, deal with a short sale if need be, and help her avoid a balloon payment default. Serious business, folks, and not something you can avoid just because you know how to make a website. So long as sellers are their own worst enemy, good brokers will gain market share. There are too many moving parts in a real estate transaction for the industry to mirror travel or discount stock brokers. A good broker remains worth their weight in gold.