Imagine that you are meeting a prospective client for the first time. You set everything up, leave early to meet them, have the address in the GPS, and set out. For some reason, however, the GPS fails you. An urban street ends due to a new pedestrian walkway. A new townhouse community stands in the way of a left turn. Perhaps the GPS doesn’t have the exact address. Somewhere between panic and concern, you look at the listing sheet for a cross street or other directions, and you see one discouraging word: Mapquest. At best, you are late. In some cases, you blow an opportunity to pick up a buyer. I’ve had cases where I call a buyer to tell them I am 2 minutes away and am told they don’t like the location and will be moving on. *click*

The practice of replacing directions to a property with the phrase “mapquest” has reached epidemic proportions in some parts of New York. When you consider what procuring a listing entails, it boggles my mind why an agent would do this, considering that it can sabatoge the mutual effort to get a buyer into the home. People don’t even print out directions anymore since GPS systems have come into play. Moreover, with the boom in development this past decade, even in mature areas, map information can be unreliable.

I have blacked out certain parts to protect the guilty, but this ia fairly typical in some parts of New York: “Penalizing” buyer agents with no offer of a commission, outdated open house information, and that damnable mapquest instead of directions or a cross street. This agent should be ashamed.

Here’s another rocket scientist’s work of salemanship:

If you are the listing agent, you need to look out for your clients and ensure that cooperating agents know the cross street at the very least. Act like the fiduciary that you are.

 Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City. 

I have been contacted by an investment group that showed interest in a short sale listing. They claim to be cash buyers, but have not shown proof of funds. They also want an incredible amount of information on the property and sellers so they can “evaluate” whether or not to go forward. I probably should have kicked them to the curb in the beginning, but thought it best to err on the side of giving them a chance to redeem themselves. 

After giving my agent a form to fill out on the property and mortgage, I contacted them and explained why we cannot disclose certain things. Moreover, I told her, we know nothing of your ability to perform. This went back and forth a few times via email, and the more I delved into it the more I knew my initial instincts were correct. They had their own team of “negotiators” to do the workout instead of myself and the seller’s attorney. After reading email replies with flowery wording reminiscent of the Nigerian Scam,  and dotted with terms like “full disclosure,” I told the seller to forget these people. He agreed. At best, these are well-meaning people who are amateurs trying to follow some bologna class or program they got into. At worst, they are con artists. 

I there are some scenarios where it might be OK for a buyer to be an authorized 3rd party to negotiate with the seller’s lender, but that should be done over extremely controlled circumstances and after enormous due diligence. The buyer might be a licensee with experience, an attorney with expertise in workouts, or some other credible scenario where checks and balances exist. It should not be granted lightly. In this case, where the buyer is shady, vague, and evasive, it should be avoided at all costs. 

“We’ll be paying in cash.” “We won’t require a mortgage. We have the funds.”

The perception that cash buyers are afforded courtesies, discounts and red carpet treatment has caused some out there to represent themselves as such. The only problem is that they are not cash buyers. Some are just confident that they can get a mortgage, and a few are flat out scammers. Moreover, all cash buyers in this economy seldom have the sort of advantage that some think they have. Cash breaks a tie or overcomes perhaps a 1% difference in price in my experience selling Westchester County Real Estate, but that is about it. Anything to the contrary is anecdotal and not something I can model my brokerage practice on.

I know cash buyers. I have worked with one in particlular since 1996 and dozens of others as both investors and owner occupants. I know the rules of engagement in this industry and what constitutes good faith. The one thing that all cash buyers have demonstrated since day one has been the ability and willingness to furnish proof of funds. I don’t need to see it either; so long as the seller’s attorney is satisfied, so am I.

What I will not do is jump through hoops for someone claiming to be a cash buyer who gets cute about verifying their funds, who among their party actually has the money, who their attorney is, or diverts from the common practice of good faith. Mystery and real estate don’t mix. In our local market, offers are submitted with basic information on the buyer, their pre-approval or proof of funds, and attorney contact information. If a buyer is unwilling to conform to those basic points, they are acting suspiciously. It costs nothing to go over to Staples and photocopy a bank statement or print something up online.

In God We Trust. All other are required to show proof of funds before we start bending over backwards.

Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City.

Dear <agent>

Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City.

An appraiser in nearby Rockland County has done an analysis on the price changes to a typical raised ranch in his town from 1965-2008. You can see the results here on the board’s online newsletter. Once you hit the link, scroll down to page 5. The results are very instructive. In the last bust (1987 correction, Savings & Loan crisis, stock market crash of 1987, early 90’s recession), it took until 1998 for prices to get back to the prior peak of 1986. Prices declined for 5 years, then rose nil to very little for another 6 years.

This Great Correction is a doozy compared to those times. The drop of prices from 2007-2008 of 11% is historically unprecedented, and I wouldn’t be surprised to see another decade of malaise. It is irresponsible to believe that things will be better in 18 months; we still have billions if not trillions of bad debt to wring out of this economy. New York Home sellers need to understand that they are competing with short sales, bank-owned foreclosures and other distressed situations and that their best chance of selling is to price their home as competitively and aggressively as possible. 

I saw today that a listing that expired and did not renew with me has re-listed with another broker for $50,000 less. Now, as a guy who specializes in expired listings, I have to admit that I usually am on the other side of this; by the time people get me as their agent, they are, shall we say, educated. This particular seller was a tough case. A contractor, he bought the house at the height of the market, made improvements and wanted every cent back + $100,000 in under 4 years of owning the place. 

The home was just across a county line, so their post office and school district were in different counties, making the home very difficult to be “found.” Worse, they were incredibly un-savvy when it came to the Internet and appreciating my marketing. What made this a bigger issue was their dippy daughter who (no kidding) would put their address in the URL window of Internet explorer and flame me for not being what appeared on the screen afterward. When I brought them to my office and explained how people search for homes online, they were skeptical- who wants to go through all those steps? My answer: over 80% of home buyers and growing. 

Why did I take an overpriced listing to begin with? 2 reasons: first, I didn’t promise them their price. I agreed to start out at their number with the proviso that we’d adjust as the market indicated. On this, they reneged. I also bet that their desire to be close to their grandchildren would overtake their desire for an unrealistic profit. I lost that gamble too. 

SO…when they told me that they were giving up on selling and choosing to remain in the home, I took them at their word. Not so. I primed the pump for another agent. I did a good job- they whacked the price 50 grand, probably because they want to live closer to those grandkids. 

That’s baseball!

I won’t say when or where this happened; suffice to say somewhere in New York. A buyer contacted me to show what appeared to be a short sale listing that had already been approved. The approval was for a previous buyer that walked away from the deal, so the window of time was narrow. It was a vacant condominium, and we saw it on a weeknight. We took a 2nd look that weekend, and it was there that the listing agent informed me that the “nuance” of the deal was that the “approved” price was actually $20,000 lower than the MLS list price. 

Where was the other $20,000 going? The seller. The seller wanted to be greased $20,000 to sell his pre-foreclosure in a short sale. I have been involved with short sales where the seller has been forced to sell appliances and furniture just to raise the money to move. In some cases, the buyer of the home bought the chattle, and that was legitimate- nothing precludes people from selling their belongings. There wasn’t anything in the apartment to buy to give the money a justification. Nothing. Not even a folding chair. 

Aside from the obvious bank fraud I was confronted with, what was particularly disturbing was the brazen stupidity of the listing agent, who so unapologetically continued to lobby for the side deal. He didn’t know me from Adam; I could have been a mole for the Department of State for all he knew. 

I advised my buyer client to stay away. I have 4 children to feed and a company to run. I am not going to lose my livelihood over a brokerage fee. I’m not morally superior. I’m just not stupid.   

Zillow used to be on my last nerve. It seemed that no matter how compelling my rationale was for pricing, a seller would claim that Zillow had their house at $50,000 higher or a buyer would lament that the value of the home they were buying was $50,000 lower. It was maddening. Zillow seemed arrogantly unapologetic about the dreaded “zestimate,” which no doubt killed more than it’s share of deals. 

However, over time, Zillow seemed to become more agent-friendly. Their responses on blogs like Sellsius seemed to be less defiant. They syndicated listings. They created profiles for agents,  and indexed us by locale and even specialties. Moreover, they have become far more transparent in the accuracy of their property value estimates. 

Good stuff, huh? I even posted a link to my Zillow profile in my Sidebar. 

Then, things started to creep away from the warm fuzzies again. An Inman News article expressed dismay that aggregates like Zillow and Trulia hijacked the SEO of individual brokers.  Not the end of the world, but food for thought. Or so I thought. 

This past week, I got a call from Amanda at Zillow. This wasn’t your garden variety solicitation for a banner ad. The upshot is that they want to position agent ads so that people searching for properties will call the agent who bought the zip code and not the listing agent. The extortion selling point was that I should buy my zip code before someone else does. 

How galling.  No content from agents like me, and Zillow is out of business. Why do I have to buy the privilege of getting the call on my own listing? It is MY content! I already paid for the right to market it with my blood sweat and tears. 

I’m not so jazzed about syndicating my listings to Zillow anymore. I am all for Zillow making money, but not by sandbagging me or hijacking my listings. They can do whatever they wish; So can I. I’ll consider unchecking them in my syndication options. 

No, not my brother Tom Faranda, but the Tom Faranda he was named after. 

Whatever you are doing right now, you are doing it free from fear and confident in your future. You have much to look forward to. And for that, you owe a debt of gratitude to a US soldier. 

Tom Faranda was my father’s cousin, who was part of the invasion of Normandy in 1944. He perished in the assault of the beach, and  his remains were never found. He was in an amphibious tank which was hit and never made land (I asked my brother if there is a remote chance that he somehow crawled to shore and was nursed to health by some Mademoiselle and lived out his days with a beret sipping wine, to which my brother responded “on Omaha Beach?”). My brother Tom found out what division he was in once, and maybe he’ll post that. But the first Tom Faranda gave his life in the liberation of France and the defeat of the Nazis. He died for his country and the liberty of man. 

Tom Faranda. Now you know his name. 

Withheld. 

This is what sometimes appears as the name when sellers of a home instruct their agent that they wish to remain anonymous. I can understand the sentiment, but in this age of information, home owners should think long and hard before engaging in this practice. Other markets outside of New York may be different, but here in Westchester County and the surrounding areas the connotation of “Withheld” may be counterproductive. 

Over the years, homes sold by a withheld owner were often under distress. REO brokers often use this, and traditionally homes marketed as pre foreclosures would withhold the owner name to help them avoid embarrassment. That worked far better in 1997 than 2009 for reasons related to technology. Unlike 1997, public records with the owner of record’s name are a click away, rendering privacy a moot point.  

Other reasons for wanting to have the seller name withheld has been privacy concerns. This is the predominant reason why a non-distressed seller would not disclose their name. However, it backfires all too often.

Privacy should not trump the suggestion of distress. If a listing unintentionally hints a distress sale, the seller’s posture is more vulnerable- that can cost them serious money when an offer arrives. And once a buyer believes the seller is in a bind, no amount of denying it will completely eradicate doubt in the buyer’s mind. 

There have been times that it helps to know the name of the owner of a sold home when advising clients in pricing their home, and if “Withheld” supplants a last name when trying to ascertain the exact identity of a recent nearby sale, the practice becomes a counterproductive nuisance. 

I think that in most cases people who withhold their name are doing more harm than good. I recall selling a listing right next door to Supermodel Heidi Klum’s home, which was also for sale. Now, if anyone would want to withhold their name, it would be a supermodel. Ms. Klum’s listing disclosed a corporate owner. She had her anonymity without the “Withheld” moniker. 

Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City. 

The fact pattern:

1. Total time on market: 18 Months. Time with my company: 120 days
2. Original Price with prior broker: $629,000
3. Original means of pricing home: oldest son’s date of birth (6/29)
4. Current price: $489,000
5. Number of offers before yesterday: 0
6. Current offer: $420,000
7. Number of competing home for sale: 40
8. Number of comparable sales: 4
9. CMA value: $440,000
10. Counter offer to yesterday’s offer: $465,000. 

I have blogged previously on things a buyer should know before they buy a bank-owned foreclosure. Home values in Westchester have come down quite a bit since the “Great Correction,” which has brought out many people who wouldn’t have been candidates for ownership when prices in New York were unsustainably high. Foreclosures contribute to that pricing change very impactfully. Since a number of buyers I am now working with are seeking to buy an REO in earnest (and who can blame them? “Affordable home” and “Westchester County” are seldom uttered in the same sentence), I have a few observations. 

1. Lowball offers won’t work with aggressively priced REOs. It wasn’t long ago that you couldn’t find a decent house in Yonkers for under $400,000. Then, the line was lowered to $300,000. We now have bank-owned foreclosures priced in the $80,000-$130,000 range. The interest level in these properties is enormous, as those prices are less than that of a vacant lot. Making a $100,000 offer on a $125,000 listing which whill probably end up selling for $140,000 in a bidding war is a big waste of your time and your agent’s time. One buyer I worked with in the last 2 weeks realized this on her own; her agent was appreciative. 
2. Pre-approvals aren’t optional. Once a house is on the market, the asset manager at the bank wants it gone yesterday. They won’t tie  up the house under contract with a an unqualified buyer who can’t close. The people at the bank don’t know you; the only way they’ll have any assurance that you’ll perform is a pre approval. They simply won’t take an offer without a preapproval seriously, and many REO brokers cannot even upload the offer to the bank without one. 
3. The lawyer you get for free through your job or union probably isn’t the best one to use. I think it is great that your union or employer will help you set up your will and a number of other low-impact legal services for no or low cost. However, a real estate transaction, especially the purchase of an REO, is a high-impact legal service that requires proactive advocacy. Your job-related attorney isn’t set up for that. Let me make myself perfectly clear: If you are going to spend hundreds of thousands of dollars, why would you scrimp $1000 on the attorney? If you use an attorney that won’t return calls until Friday (or at all), and other acts of indifference, it will sabotage the transaction. You need a lawyer versed in foreclosures the same way you need a dentist for your teeth. They are specialists. 
4. The bank will not consider a contingent offer. The bank will not consider a contingent offer. A mortgage contingency is OK; selling the home you currently own isn’t. Sell your current home or rent it, but you can’t make that a contingency of the purchase. There are no exceptions. None. Ever.
5. “As is” means “as is.” Other than egregious environmental problems like a bad oil tank, you can’t get anything fixed. 
6. 203(k) loans don’t happen overnight. 203k and other rehabilitation loans for buying a home in need of rehabilitation are great, but they require enormous red tape and paperwork. They take longer. Take nothing for granted. If the loan officer wants something, get it to him or her immediately. If you go past deadlines, you may not get an extension and you may lose your deposit. 

People that want to buy a foreclosure often want a bargain but too often don’t understand that what they save in price is paid for in other ways by bureaucracy, bank regulations, and other forms of red tape. Banks are not typical sellers. They are enormous monolithic institutions that don’t make exceptions for circumstantial requests. Understanding this will help you going in to avoid additional stress. Forewarned is forearmed!

Listening to NPR the other day, the commentators were wondering what to call the current economic crisis. It isn’t a garden variety recession; it isn’t just the Credit Crisis, the Sub-prime Meltdown, or the failure of Freddie Mac/Fannie Mae. They mentioned that people are now texting the letters “ITE” to shorten “in this economy” the way they abbreviate IMO for “in my opinion.” Recession is too weak. It isn’t a depression. What are we in? 

Well, the Dow has corrected to around 8,000 from a high of 14,000. Home prices have corrected to about 20-30% lower in most places. The prior highs of price and value for property and securities were often labled unsustainably high and have corrected. I would therefore humbly suggest that we call the current economic condition that we are going through the Great Correction. It is a little ironic, a play on words, and certainly an apt term. 

Use it with my permission. 😉

Hopefully, growth going forward will be sustainable, realistic, and devoid of irrational exuberance & poor judgment. 

 

According to the NY Times, minority homeowners are three times as likely to be foreclosed on than the norm. The NAACP is actually suing lenders over what they perceive as a new kind of redlining- giving minorities inferior and unsustainable loans. I made the following comment on the article on the Time’s website:

As I have often written, I list and sell short sales all over the metropolitan New York area. I still see the effects of predatory lending and poor decision making. But the common theme is a betrayal of trust. Many people assumed that because they had something in common with their agent or loan officer, that “they were one of them,” they wouldn’t get hurt. But get hurt they did, because greed is colorblind.

 

The government has moved to increase the incentive for lenders to allow short sales on their defaulted loans. I welcome this, although there is nothing specified as to how they’ll hold banks accountable for streamlining the process, which is rife with red tape, bureaucracy and long waits. If they truly want to make short sales happen more frequently to help more distressed homeowners out, they would mandate a maximum of 6 weeks for a short sale approval.

The current system, which varies from lender to lender (negotiator to negotiator, really) is unsustainable. I did a successful, relatively fast short sale with Option One in 2007. The 2009 closing was a year-long nightmare that required heroism. Same lender. Go figure. 

The administration has banned the insidious practice of lenders cutting the commission on short sale brokers, which I applaud. This is another good sign, and I hope they continue their efforts with a push to make the approval process shorter and simpler than the current disaster most transactions now are. There was a reference in the Inman News report that they want the lenders to give the sellers at least 90 days for the short sale, another positive sign. 

Short sales in Westchester County are now part of our vernacular; moreover, the stakes are high. Often, the prices are the among the highest in the nation. A deficiency judgment in Rochester could be $10,000. In Westchester, it could be $200,000. People that make a good faith effort to do a short sale should not have their ordeal magnified by an inefficient system. 

I am encouraged by this move. 

 

I was emailed this question:

Hi Philip, I am a first buyer interested in homes in the city of XXX. I was interested in using you for my home purchase and have a question regarding buyer’s commitment to agents. If I see a property through an agent, am I required to submit an offer through that agent? I was told that typically, using a different agent can lead to commission disputes and I would like to clarify your policy regarding this. Thank you for your time and consideration.

That got my radar up. What I’d like to say and what I will say are very, very different.

If he is referring to using a different agent than the listing agent, whoever gave this guy that advice is out to lunch. 13 years in this business and I’ve never had to arbitrate a commission.

If he’s referring to a different agent from the one who showed it, yes, that could cause issues. If this person saw a home with Agent A and then submitted an offer through Agent B, that would invite a commission dispute, not prevent it.

.

My reply was the following:

I don’t know who gave you that advice; I have been in real estate for 13 years and never had a commission dispute with another company. I don’t see how a commission dispute could arise if the agent that showed you the home was the agent that wrote the offer. In general, agents like myself work quite hard (as you can see, I am starting my day at 5am) and that unless we were somehow inept, that morally the right thing to do would be to use that agent to represent you through that purchase. It would also seem to me that, logically, the way to invite some dispute would be to switch agents in the midst of the process. Staying with the agent who showed the property would not give any impetus for a dispute. Involving more than one agent certainly would.

At any rate I am quite familiar with the XXXX market and would be happy to help you. My contact information is below.

Best regards

Phil Faranda

I will leave what first came to mind to your imagination. I don’t know if this guy is warning me of duplicity or is an overthinker. I googled him and he’s a scientist, so that might mean the latter, rendering this more of an  innocent question. You never know, this might turn out to be a great client.

The $400 toilet seat has always been the symbol of government waste, but now it is the TARP (Troubled Asset Recovery Program, or, better known as the “bailout”) funds that banks are, in my view, squandering. What I personally experienced below is the tip of the iceburg.

• 225 West Lovell, Mahopac, NY: Offer of $225,000 rejected by Countrywide in September, 2008. Home sold for $137,000 by referee in March, 2009. A very nice young couple lost their home and credit in this case despite our best efforts. With carrying and legal costs, the lender squandered $100,000 easily.
• 37 1/2 William Street, Ossining NY: Multiple offers of $270,000-$280,000 were brought to Ameriquest (now defunct-go figure). The negotiator, some guy in California named Rivas, insisted the house was worth over $330,000 because of an appraisal from 2005. They foreclosed, and relisted it in August 2007 for exactly the same amount they were offered when I had it listed. It sold in April, 2008 for $219,000 over a year after they had offers of $60,000 higher. These clients were smart enough to talk to the press about the predatory lending and bait and switch they experienced with the lender in this article. Because the bank didn’t accept the earlier offers, they had a nonperforming loan for another year. These are the people to whom you entrust your paychecks.
• 442 Park Hill Avenue, Yonkers: Lender was offered $475,000 short sale in July 2007. They rejected it and later auctioned the property instead in March 2008 for $316,000. They couldn’t discount it $25,000 for an owner occupant but did whack $150,000 off for the investors at auction. This is the only house that I didn’t lose a commission on, as the investors re-listed it with me. Good for me, bad for my old client.

Our tax dollars at work, folks. We go to work every day and pay taxes to subsidize thousands of stories like the three I personally experienced.

This is a national disgrace. Write your congressman. Make noise. Make government accountable for the money that goes to the lenders, and make those lenders act with common sense. Otherwise, we’ll be at the same dance in another 20 years.

Mr. Cuomo, this happened on your watch. President Obama, what are you going to do about this?