Given the number of blogs on the difficulties agents experience on short sales, I thought I’d take another shot at a canard that banks are now using to justify more delays, and that is the following:

“The investor is reviewing the file.”

This is typically followed by 60 days of nothing. 

Now, I don’t argue that the investor is reviewing the file, I simply question the wisdom of the investor reviewing one file at a time. 

Let’s go back to mortgage 101: when a mortgage application is underwritten, it is reviewed by an underwriter to ensure that it conforms to the standards of the investor, which for example, could be Fannie Mae or Freddie Mac. Fannie and Freddie then buy these loans by the thousands in bundles. If Fannie Mae and Freddie Mac manually reviewed every new mortgage application one at a time we’d just be getting around to closing all the contracts written in 2007. It is utterly absurd for them to do so. Commerce would cease.  

We have read a great deal on how the Obama administration and others are working to streamline short sales. Well, I don’t personally see, nor have I read, any examples of the system getting any better. None. 

It should take as much time to approve a short sale as it does to underwrite a mortgage application. The process is parallel to approving a loan.  Once title is run and there are no other liens, they should issue an approval or denial, period. It completely analogous to verifying borrower qualifications, appraisal and title on the buying side. The bank negotiator is reviewing the borrowers finances, verifying hardship, and getting the home appraised.

It’s simple. It has always been simple.

The only difference I can see is that the lenders have to be dragged, kicking and screaming, into taking a loss that, were the home foreclosed, would be far larger. Of course, once the bank does take back the house they are in a hot hurry to sell, to the point where they bully the buyer like an abusive relationship. These are the same buyers who have to sit on their hands for 4-6 months waiting for the bank to take a smaller loss in a short sale. 

It is a mystery why banks resist short sales with such passion. They have enormous culpability in current market conditions. There is a word for people who would set your house on fire and then trip you when you run for a fire extinguisher, but I won’t repeat it here. We’ve got to stop the barriers, impediments, obstacles and straw man red tape delays so we can begin a more meaningful recovery for earnest homeowners who have lost their jobs and equity. We are minimizing lender losses for goodness sake. It only makes sense, but asking the industry that screwed everything up to use common sense is a muse anyway. 

Now someone please show this blog to Mr. Obama.  I’m going to go watch Fight Club. 

Today is the 5th birthday of Gregory, our 3rd Treasure. Gregory is on the spectrum for Autism, and attends a special school with an extensive ABA (applied behavioral analysis) program. It has help him enormously. He is great with eye contact, affection, and being “there.” We are still working on boundaries, executive functions, and meaningful speech. 

Gregory looks almost exactly the same as I did at his age. It is really uncanny. That is a hell of a trick to pull off when your mother is Korean. It will be “that” month in our house until January 14, when Catherine turns 6. They’ll both be 5 until then. 2004 was quite a year. 

Gregory’s special needs have posed quite a challenge to use. Managing expectations is difficult, because sometimes he amazes us and other times we unintentionally do things for him he ought to do himself. Patience.. you don’t know patience until you have a child with special needs. Sleepless nights (children like Gregory have unreliable sleeping habits) are growing less common, but his knack for timing is amazing. He seems to know what mornings I need to wake up early so he can wake up at 3am and play, loudly. 

Through it all, his mother has been his greatest advocate. I work out there in the field while she mans command central for the business at home, often with all 4 home from school. You don’t know multi tasking until you’ve seen double jointed, ambidextrous Renaissance Mom at work. 

So happy birthday to you Gregory. We love you very much, and you are 25% of the reasons that Dad and Mom work so hard. I hope you understand that someday. 

When I graduated college in 1989 (ouch), I decided that I wanted to follow my older brother in sales. So, I interviewed insurance companies and financial planning firms, only to find that I was ill-suited to that industry. I was advised to make a list of my 100 closest friends and relatives and tell them I was in the insurance business. I wanted no part of that embarrassment; I went into sales for a publisher. After Catholic school from grade 2 to my BA, I’d still rather talk to nuns and principals than solicit friends and family. 

Nuns. Franciscan nuns. 

In Philadelphia. 

In 1996 I was convinced by a college roommate to get into real estate with him and his father. 

In Rochester. Where I knew nobody. Even if I did have the cajones to contact my sphere of influence , they were 300 miles away. I didn’t even know any of the nuns. 

Fast forward to 2009. I’ve been back home in Westchester since 2000, I have been on Active rain over a year and Facebook for at least 6 months. Facebook has been a virtual college and high school reunion for me, and it has enabled me, effortlessly, to reconnect with old friends, some of whom have real estate needs they have shared. 

The first closed yesterday. An old wrestling teammate from high school, whom I haven’t seen in person since 1989 and lives in Maryland, referred me to his younger brother. Michael and Stephanie are recently married and had been through at least 2 other agents. They made a couple of offers, but nothing panned out. Michael is not his older brother; he’s deliberate, cautious, and reserved. He also had suspicions about the agents whom he was dealing with, for good reasons. 

Given the nature of the referral, trust was not an issue. Plus, it helps that I know what I’m doing a little bit. We made an offer on a short sale several months ago, and it was not an easy process. But I did my job, we stayed in communication, they used the attorney I referred, and together, we got through to closing with a happy successful closing. 

There is a nuance to using social networking that is for another post; however, I have to say that the medium has more than potential, it gets results if done right. Return on investment: Pretty high! 

I’ve got Croton on Hudson on the mind lately. It isn’t because my older brother has lived there for 30 years or because I camped at Croton Point Park as a young scout dozens of times. It could be because the only Bed and Breakfast in all of Westchester County is here, or maybe the numerous excellent restaurants. The real reason Croton is on my mind is because I’ll be leasing office space there in the near future, and I intend to do more business in the area in 2010.

Downtown Croton is idyllic- small shops, food, boutiques, and towny-type places that date back prior to my youth.    

 The Village has one of the biggest train stations on the Hudson line of Metro North. It is a major interchange, and even Amtrak stops here.  

The views of the Hudson River from many points on the Village are breathtaking, and I think we get a little spoiled after seeing it every day.

If you want to know more about Croton, the NY Times did a very nice piece on the village last month, and included a very good slideshow also. I highly recommend them. Of course, I like my own photos of the place.

Terms are often overlooked because people are so preoccupied with price in this economy. However, they are, in many cases, just as important as price. I often have buyers question what difference the size of their down payment makes to the seller, since the money is just as green if it comes from the lender is it did their bank account. In a zero sum world, this is true. But context is important, and there is an immutable law that cannot be avoided:

Guarantees cost money. Certainty costs money. 

If you are going to put 20% or more down on a house, your lender will not require you to pay for mortgage insurance (PMI). If you put less than 20% down, PMI is required. PMI hedges the bank’s bet that the loan will perform. But it is more than that- the bigger the down payment, the more likely the loan will get approved. The reason for this is simple: the less value of the home is borrowed, the more likely the borrower will repay. Therefore, a low LTV (Loan to Value) is attractive to loan underwriters. The lower the LTV, the lower the risk. 

So the size of the down payment will determine the peace of mind of the seller and their confidence that they are dealing with a qualified buyer. The ultimate down payment is 100% down. From there certainty erodes. So if you are buying a home in Westchester or the surrounding counties with 3.5% down, you ought not balk if the seller is concerned. Selling a home is tough these days, and it would be tragic to have a house off the market under contract for 60 days only to have the deal fall through. Big down down payment deals seldom fall through. 

I am a big fan of FHA mortgages, not because they are common in Westchester, but because I did dozens of them in Rochester. However, until recently, FHA mortgages in Westchester County were as rare as hens teeth because the FHA loan limit was so low there were few Westchester homes that were eligible. With the changes to FHA loan limits and the fall of prices, they have become common, but agents and sellers alike are still not yet used to them. I have seen sellers take a deal 5 or 10 thousand less because of the larger down payment. Again, certainty costs money. So if you are going FHA on a Westchester County home, keep that in mind when you are formulating your offer. Terms matter, and down payment is a big factor. 

Peekskill, NY now has a wonderful Dog Park! Opened October 31, 2009, the project was started by Peekskill homeowner (and dog owner) Michael Sellers, who devoted a year and a half to getting the city to dedicate unused park land to the project. The park now has a board of directors, a terrific website with plenty of pictures, and 50 visitors a week. It has also made the local news several times, including Journal News coverage of a visit from Santa Claus just 10 days ago (and you thought he just dug reindeer). You can read the story by clicking on the link on the park website.  

To take underused parkland and transform it into a place where people and enjoy themselves and build a community is a special undertaking, but then again, you have to know Mr. Sellers like I know him. I sold him his house in Peekskill 3 years ago. As fortunate as he told me he feels about putting down roots in Peekskill, I say that the city got the better part of the deal when it landed Michael Sellers. Hats off to my client and friend. 

My dog Max would approve!

If this isn’t protocol already, it should be. If you are an agent with a buyer interested in a listing, by far the best way to get their questions answered is to email the listing agent. There are many reasons to do this, not the least of which is that you’ll get answers in writing, but why would you ever feel that you’ll get a more accurate answer from a harried, preoccupied agent in the car en route to an appointment who clicks you through on call waiting than emailing them than having someone get you answers in writing, straight from the file? 

Some of these calls catch me at an awful time, and, with 35-50 listings to service and a brokerage to run, if I don’t have a file in front of me in the car, I’m going to ask you to email me. If I got 2-3 questions on every listing today, that would be 70-150 requested answers with my liability hanging in the balance each time. I don’t like those odds, and I don’t want to be inaccurate either. Do I get that many questions a day? No, frankly. But 20-30 questions? You bet. 

Consider the advantages:

• You get the answer in writing;
• You don’t get answers piecemeal;
• Email is permanent and is a paper trail of you doing your client’s due diligence;
• Email doesn’t forget;
• Email covers your rear end. 

I grew up in Ossining and still reside in the Ossining school district. Ossining is the fictional home of the Draper Family from the AMC Series Mad Men, and is also home of both Sing Sing Prison (the origin of the phrase “up the river” from the old gangster movies) and Maryknoll Catholic Mission. It is about 35 miles north of Mid Town Manhattan, and beat Houston, TX to the punch by electing an openly gay mayor several years ago. It was a wonderful place to grow up and I am proud to call it home. 

70 homes sold in the village thus far in 2009, compared to 78 during the same time period in 2008. Prices are also down, with the median price of $387,000 in 2009 compared to $416,000 in 2008. 

Overall, $387,000 is down considerably from the 2005 median peak of $443,000. There are 64 active listings now, putting the current inventory of homes at about 11 months worth of available properties. Given the quality of life you can enjoy here, with prices this low Ossining is probably one of the best bargains in Westchester County going in to 2010. 

I have blogged about Croton on Hudson previously. Croton is a beautiful river village just about an hour north of Manhattan by train, and is a popular commuting point. I spent much of my youth there, as my older brother and his family have resided there since about 1980. 

Of the 42 single homes sales this year, the price breakdown is below. My data source is the Westchester-Putnam MLS. 

There are no surprises here. If you want a decent place for under half a million, Croton is a fantastic choice. It has upscale homes also, but overall sales are down for 2009. The market started slow in the village, and thus far this year only 42 homes have sold. In 2008, by comparison, 68 homes sold during the same time period. At the peak in 2005 the number was 85, so sales by transaction total are down 50% from the peak.

There are 52 homes on the market as I write this, so we have over a year’s worth of inventory available. Given the fact that available inventory is at it’s lowest ebb in December, that could swell up to well over 70 after the holidays. One good piece of news is that the median home value of $455,650 is down only about 10% from the 2005 peak of $510,000. That speaks well of the village, but speaking well of Croton comes easy to me. 

I suppose I should have blogged earlier about an article published last month, but when the subject property has been vacant since 1966 it seems only right. IN my experience, the most enigmatic downtown area in all of Westchester County is that of my own hometown of Ossining, NY. It has been punctuated by old, derelict and vacant buildings since before I was born, and no local administration has been able to make a difference. 

However, this story in the Times gives me some hope. The old Ossining National Bank building, vacant since 1966, is being converted into condominiums and retail. Given the historic nature of the building and the restrictions on its renovation, it was problematic to complete work on. 43 years hard, I guess. One wonders how every single other downtown in affluent Westchester County is able to pull it off when Ossining could not.

Still, I welcome the development and hope that it is the start of more improvements to a once proud downtown in a village that is close to my heart.  

From today’s NY Times:

Houston is the Largest City to Elect an Openly Gay Mayor

My hometown of Ossining (pop: 29,000) also has an openly gay mayor and was one of the first municipalities to elect one. This is a tremendous step forward for everyone, gay and straight, as we progress toward a better, hate-free world. 

The margin of victory at press time was 53%-47% and given the demographics of Houston, Mayor-elect Annise Parker got votes from all populations- white, male, straight, and everywhere else. 

So congratulations to Mayor-elect Parker and her constituents from this Catholic (albeit heretical), white straight male in New York. 

After 3 days away this week there is nothing like being back home. My kids, my wife, my dog. Ann’s chicken thingies with the bread crumbs. Yummy. Last night was the first really cold night of the season, so I lit a good fire. 

I have to say that my fireplace is one of my favorite things in my home. There is no place on Earth, no amenity elsewhere, no 5-Star hotel that is as welcoming as my own home and hearth. I fell asleep in the couch with my laptop and that fire cooking with Max, my German Shepherd, sawing wood 5 feet away. 

That contraption you see is a cool system for blowing fire-heated air into the living room. It helps with the heat and keeps us toasty. 

A fireplace was on my “must have” list when Ann and I bought our new home in 2007. I also had to have a basement. I got both. Things like this make me mindful of my clients’ “must have” list when we are out looking. 

Be warm. 

From my humor consultant, Tiffany Pratt:

Question: Why are there so many toxic waste dumps in New Jersey and so many lawyers in New York?

Answer: New Jersey got to pick first. 

I love that one. 

I got the following email today: 

Dear Customer,

This is the reminder note to let you know that your order at <company> is almost two years old.

Your order Reference I.D.# 100-9113361 will be automatically deleted in 10 business days. We want to let you know in case you plan to re-order a product with this design:

If you would like to re-order now you can save 20% on your purchase. Click here or copy and paste the link at the bottom of this email.

Until I saw the image, I thought the email was spam. Then, I remembered that we actually used these sheets for notes when buyers would call on listings. Buyers seldom call anymore, though. There is far less a need to handwrite notes on their preferences and criteria. Bad news? 

Not really. Buyers are emailing and filling out online forms with their data now. We no longer take dictation because the information is now online in the data the prospective buyers submit. Some of it is sparse, to be sure, but who didn’t get phone calls that were just as close to the vest? It wasn’t too long ago I was living off of post-it notes and carbon paper messages.  

Clearly, the business has changed. That is good on a variety of levels. When it is online, the data is hard to lose under the car seat. It uses less paper. We can simply forward it to the company agent we refer to. We use a Gmail platform, so organizing and tracking the inquiries distributed to the agents is streamlined.

Everybody wins. Well, everybody except the printer. 

The Good Faith Estimate (GFE) is among the most important documents in your life in my view. When you apply for a mortgage, you have to, by law, be given one, and it is aptly named- it is an estimate of the costs associated with your mortgage, itemized and estimated, deemed in good faith to be accurate. These costs include closing costs, bank fees, escrows, and every penny you’ll need at closing.

If, for some reason, there is a significant change in your costs as your mortgage process goes forward, you should be given a revised GFE. There should be no surprises at the closing table, and you should never be subject to a last minute scramble in the days prior to closing because the initial estimate was too low.

The bait and switch occurs when costs change so late into the process that the borrower is forced into choosing between possibly losing a deal or being coerced (extorted) into paying higher fees because they can’t switch lenders.

Just yesterday, a scheduled closing on a buyer client of mine was adjourned because the lender told the buyer that his costs would be $17,000 higher than initially represented at his application. I’m not accusing anyone of a bait and switch, as the reasons given included a far higher tax bill than anticipated and higher title fees. But $17,000 is an absurdly high amount of money to fail to account, and someone dropping the ball big time. If it isn’t clear already, the client found this lender on his own and we had no reason to be concerned thus far.

My advice to the client was to get out his GFE and see where they went wrong. I want to see it. New York is a high cost market with expensive fees for sure, but you don’t overlook 17k and then find it the day of closing without serious fraud or incompetence.

The answer, my friend, may not be blowing in the wind, but it sure is in the Good Faith Estimate.

Let me preface my remarks by stating that when I act as a buyer agent I truly enjoy negotiating the best deal I can for my buyers. But make no mistake; we make a deal. I’ll explain after I list a few examples of what I don’t mean:

• On a $450,000 listing, an offer of $400,000 comes in with a remark on the cover sheet: “Buyer is unable to be very negotiable with this offer.”
• On another listing, the buyer agent tells us that their buyer has been looking for a home for 2 years. 2 years. After I get the seller to accept their offer, the buyer walks. We took too long.
• In a multiple bid situation, we ask each party to make their highest and best offer. One party withdraws, not wanting to get into a bidding war.
• In about a half dozen aborted deals in the past 3 months, I have been told by either the buyer or their agent that they are looking at homes they do not qualify for and that they just make 80-85% offers because they want to steal something.

None of the buyers in the above examples bought anything! All they did was go from property to property bullying and posturing, and they still live in their in-law’s basement. And with an $8,000 tax credit, insanely low rates, prices down to 2003 and 2004 levels in some places (and lower), and sellers willing to do more to cut a deal than they have in years, if you still live in that basement apartment, you missed out. It takes a special kind of obtuse to be a buyer in a market where so much is done to help you, and still not actually buying anything in multiple attempts. My advice? Go to the corner store and buy some gum. Prime that spending pump. Then work your way up.

A buyer’s market gives buyers an advantage. Buyers are getting better deals now than they have in the past 20 years. To take advantage of it, however, the buyers actually have to BUY SOMETHING. Beating the crap out of a seller and then walking away because they didn’t throw in their 17 year old daughter is not making a purchase, it is being a serial haggler. Now, some seller’s are unreasonable. But if you are on your 3rd offer, it probably isn’t the seller.

It isn’t a “haggler’s market.” You have to be a buyer to take advantage of a buyer’s market. To be a buyer, you must actually buy something. Otherwise, all these incentives and advantages are just words on paper. I’ll tell you what isn’t words on paper- living with your mother in law.  

Two weeks ago a colleague asked me about Triple Play. I had no idea what he was talking about. Triple Play, he explained, is a convention put on jointly for NAR members from Pennsylvania, New Jersey, and New York, held in Atlantic City. I’m not a big convention guy, but I checked it out. The events were pretty interesting, with continuing ed, speakers, a large exhibition, and receptions in the evening.

So here I am, on my laptop, choosing whether I want to hear the Mobile technologyspeaker or the guy on connecting with online consumers. I arrived late yesterday and caught up with some colleagues I seldom get a chance to hang with. We attended the New York reception, then had dinner at Caesar’s. I really enjoyed that, I have to tell you.

This will have to qualify as my vacation for 2009.

In 2010 Ann and I come together.