You just missed them. Right above this line of text. That blank spot? That’s it!

In a market like this one, where everybody is out to get a real estate deal before it’s too late, a lot of people are looking for an edge — a way to get the great deals that nobody knows about, or at least learn about them first. And some real estate agents cater to that desire with offers like “FREE LIST of up-to-date bank-owned, REO, and pre-foreclosure properties”. Never mind that the “free list” is compiled from the same Multiple Listing Service that I use to generate customized lists of homes for people, often with very specific needs or very picky tastes.

The truth is that there is no “secret” list that only the “right” Realtor knows. You don’t need a special Realtor who only deals in, for example, homes owned by Countrywide or GMAC. The nice person from Century 21 can easily show you any listing from Coldwell Banker. The only way any Realtor would possibly have an “inside track” on a property is if the signed listing agreement is sitting on her desk waiting for her to put it in the MLS system.

In this day and age, it would be a huge mistake for a Realtor to keep what used to be known as a “pocket listing”  – that’s a listing that stays in his pocket rather than being shared. What are the odds that one of his buyer clients is interested? Rather small. He’s got a lot more chance of selling that house if every agent in town knows about it and shares it with their clients!

The myth of the listing that isn’t in the MLS is almost as hard to fight as the myth of phantom inventory. Check out this San Diego realtor who went to find these mysterious listings owned by the bank but not for sale. There weren’t very many of them, a few were still occupied, and one had a lockbox on it — clearly being made ready for sale. Since mechanical lockboxes are not terribly secure, he was able to give his Youtube audience a little tour (remember I mentioned back in December to change the locks on your new place).

I don’t chase rainbows. I help real people find real properties.

Most Realtor’s websites are dominated by two things: “Look how wonderful Suzy or Jack Realtor is”; and property search. This site is different. I would rather show you that I know what I am doing than toot my own horn. And the search link takes you to my brokerage’s site. Why? First, because I see no reason to waste money (that I could use to market my listings) and time (that I could use to help clients) — just to compete with Realtor.com. The other reasons are below. 

There are a lot of ways to search for real estate online. Almost any brokerage website has a search function right on the front. Most of that information comes from their local MLS (Multiple Listing Service), filtered for public use. That same information is also available through Realtor.com, Zillow, and a bunch of other real estate websites. Some of these sites are easier to use than others, but all share some similar problems.

It’s hard — if not impossible — to search for very specific things: Most real estate searches fall short once you get beyond how many bedrooms and other very broad criteria. Maybe you know exactly which school you want your kids to attend. Maybe you’ve read about how complicated short sales are and want nothing to do with them. Maybe you’re an investor, so a property with a tenant in place is preferable. On the other hand, maybe you are planning on moving in yourself, so tenant occupied won’t work. Even something as simple as “single story vs. two floors” can be hard to do on many sites. Sometimes, the price ranges offered in the site’s “picker” are so wide as to be useless — making things difficult if you already have your pre-approval letter and know to the penny how much you can spend. Why is this? So you’ll call your Realtor!

Availability is an issue:  Many search sites make no distinction between homes that are actually available and those that have pending purchase contracts. That increases the number of possible listings you’ll see on any given search. On a regular basis, I have clients who send me lists of homes they are interested in seeing — only to be told they aren’t actually available. This is a frustrating situation for both the client and myself. The client first thinks I am an idiot for not presenting these “perfect” listings, then they feel duped when they find out the home isn’t available. Why is this? So people will call the listing office, and be told “Oh, I’m sorry that one isn’t available anymore, but may I run a custom search of similar homes for you?”

Over 80% of buyers use the internet to start their home search. Many sellers also use online resources to help figure out what their home is worth before calling a listing agent for a Competitive Market Analysis (CMA). However, the tools available to Realtors gives a whole lot more information than is available to the public at any website.

The truth is that real estate search sites aren’t really about helping you find a home. They’re about increasing your interest in real estate and getting you to talk to a real estate professional.

That’s why I can say without fear of being contradicted that I can save any home buyer time when searching for a home — and “time is money.” I can also save sellers time (and ensure they get all the money they can) by finding truly similar homes for market analysis. Feel free to search online. But when you are serious about finding instead of just searching, call the number at the top of the page or click the “Contact Me!” link in the sidebar.

By now I think we all know that foreclosures are up, which is driving prices down, which is encouraging buyers to get out there and buy “bargain” homes while they can — sales are up in 17 states, including Nevada. 

One huge group of buyers is the first time buyer. They see that they can now often buy a house for what it had cost them to rent. They see that interest rates are low. They don’t have to get out from a house that’s worth less than what’s owed on it to take advantage of the current market. They see that $8000 first time buyer tax credit. 

There’s exciting news about that credit now: it looks as though it can actually be applied directly to the downpayment. This is brand new, not yet finalized, and details of the program aren’t available yet. No word on what paperwork has to be filed with whom, nor how long it will take to get the downpayment into the escrow account. This means buyers get the benefit now instead of next April. Remember, you’ve got to buy by November to take advantage of this.

Obviously, first time buyers are not experienced in buying a house. They can get caught up in scams. They don’t know what is normal in a real estate transaction. They don’t know what needs to be done to protect their interests. They don’t necessarily know what to look for when evaluating properties. That’s where a Realtor comes in. But with so many people calling about these homes, how does the Realtor know you are serious, and not just looking? How do you make her excited to work with you?

Here’s how to set yourself apart. Before you ever call a real estate office, talk to your bank about a mortgage pre-approval letter. This does three things. First, you will know exactly how much you can afford — or let you know you can’t really afford anything yet. What’s the point of wasting a weekend looking at homes it will turn out you can’t buy? Second, if you do find that dream house, you will need that pre-approval letter to show the sellers that you are serious, “ready willing and able” buyer. Third, it lets the Realtor know that you are organized enough to have thought about the fact that you need a mortgage to buy a house. Have that letter in front of you when you call the real estate office for the first time, and let her know what it says.

If you can’t talk to your bank, or think better deals can be had elsewhere, there’s still a way to impress your Realtor that you mean business: ask your Realtor up front who she recommends to get you that pre-approval letter. She has worked with a number of mortgage brokers, and can probably give you a short list of reliable people she trusts to get the job done. This will tell her that not only do you understand what it takes to buy a house, but that you trust her judgement.

I am available to help a limited number of first time buyers. If you seriously want to buy a home, I want to help you do it! I will save you time by asking serious questions about what you need and what you want in a home before we ever start looking at listings. I’ll tell you what the real estate market is doing and advise what to do about it with no nonsense. To find out more, call the number at the top of this page, or click the “Contact Me!” link in the sidebar.

While homebuilder confidence remains near a record low, it turns out that actual housing starts are up 22% mostly due to apartments (official Census report). It sounds like the homebuilders have put in a “panic bottom”.

Renters, beware of the NAR lease scam. “In this scam, rental property is offered to consumers, who are led to believe that NAR is functioning as an intermediary to receive rental deposits from prospective tenants and, upon receipt of the deposit, to deliver the keys to the property to the tenant. The tenant is instructed to send money via Western Union to NAR’s purported agent, in the United Kingdom. NAR is not involved in this business and believes it is a scam.” At least it isn’t Elvis. 

A new HUD and DOT initiative is designed to tackle both housing and transportation costs at the same time. Many Americans have found themselves in a situation where they can’t really afford to live anyplace near their work. This is expensive and stressful for the entire family. 

This morning, I was forwarded a report on average closing prices here in Clark County. No shock that prices have declined again and foreclosure sales are up.  Prices are down roughly 60% from their peak, and have declined for 11 straight months. But the rate of decline is slowing. Greed and fear say to wait for prices to fall more, but the fact is that we won’t know where bottom is until prices begin to rise again. That’s one of several reasons I track not only average prices, but the number of homes in various price ranges.

At least we aren’t in Detroit, where the median home price is $7500, roughly what you would pay for a Hyundai. Yet more evidence that housing markets are fundamentally local, not national.

And one last item, how to spend time in Vegas without spending money.

I hope everyone will join me tomorrow for Friday Figures!

In the meantime, if you have a real estate need, please be sure to click the “Contact Me!” link in the sidebar, or just call the phone number at the top of the page.

I wish I had a dime for every time I have heard someone mistake a Zillow “Zestimate” for market value.

Zestimates are interesting and fun, but often do not reflect actual market value. They are not appraisals.  They are not a CMA — Competitive Market Analysis.  They are not a BPO — Broker’s Price Opinion. They aren’t necessarily based on much of anything that would determine how much a willing, ready, and able buyer would pay — and that’s what market value is.

I’ve seen it happen over and over, and the nice people at Rain City Guide see it too. An estimate on a recently foreclosed home, for example, probably is nothing more than the balance of the owed mortgage. Imagine the shock of thinking your neighbor’s house just sold for 10% less than prevailing neighborhood prices, when the “buyer” was just the mortgage holder. Alternatively, home owners may think to themselves that they have “insider information” that makes their home substantially more valuable than Zillow said:  ”they don’t know about my latest remodeling,” etc..

If you want a back-of-napkin idea of what homes in your neighborhood are worth, spend 10 minutes poking around Realtor.com and seeing what’s available. Depending where you live, you might be able to figure out actual sale prices using data from your County’s Recorder or Assessor. County data will be very accurate, as long as you remember that values do change over time and condition does matter. This sort of information is probably sufficient for anybody who does not need to sell their real estate. However, if you want current, accurate data, that you can use to set a fair price that will be met in a reasonable period of time, call your local Realtor.

I am available for CMA presentations and a limited number of sales listings. I would rather do relatively few listings well than dozens badly! Yes, I do short sales too. For more information or to set up an appointment, please click the “Contact Me!” link in the sidebar, or call the number at the top of this page.

The absolute best part of my job is handing keys to a new homeowner after the sale closes.

I got to do that twice today, for two different families. I am so happy for them!

Sadly, in each case there was what I consider to be a safety and security problem waiting to happen. I won’t go into great detail except to say that when you close on a new home — particularly one that was bank-owned or one that had a mechanical lockbox — you should plan on getting a locksmith out to change the locks immediately. Preferably, the same day! Nothing bad happened, but the keys were not as secure as I would have liked.

Even when buying from a private owner, you have no way of knowing how many copies of that key are out there: Did they change the locks when they moved in? Was a family member prone to losing keys? Are they forgetting about the copy they gave to a relative? Or maybe that key they lent to the neighbor to feed the cat when they went on vacation?  What about that key they hid in their glovebox “just in case”? Do they even know about the copy their teenager gave to a friend?

Institutional sellers such as banks only amplify this problem.  For the sake of their convenience, many banks key all their REO (“Real Estate Owned”) properties to a small number of master keys.  It saves them a lot of effort trying to keep track of what keys go to what home, and it ensures that the previous owners aren’t coming back.  How many of those keys are out there? Who knows! These sellers need to give access to various contractors to fix up and clean the property. All these contractors of course should be licensed, bonded, and insured! However, even the most conscientious contractor can sometimes accidentally drop a key or have his shop broken into. What if one of his employees turns out to not be as honest as we all would like?

Finally, I am not a fan of mechanical lockboxes, and haven’t been since the day I arrived at a listing to find the lockbox broken into, the door unlocked, and all the toilets missing. Some of these locks are 3 digits, with only 1000 possible choices; even the more complicated ones often have easily guessed combinations. Electronic lockboxes, while not perfect, are much more secure. Only a Realtor with the electronic unlocking device can get into them, and she needs to enter her personal code to do it. Unfortunately, the contractors I mentioned earlier cannot access these lockboxes. That means it is sometimes a necessity to have the mechanical box, but the right way is to use two boxes and make it hard for unauthorized parties to get to the mechanical one. 

The bottom line is simple: leave room in your home purchase budget for a locksmith to come and professionally change your locks immediately after you take possession of the property.

Every once in a while, somebody will ask me “Who is to blame for the current housing and foreclosure mess?”  Usually they want a short, snappy answer.  The truth is that there is a giant pie of blame, and there’s plenty to go around.  In no particular order, here are some of the culprits.  This is my opinion alone, and you are welcome to disagree with me.

Fannie Mae. The Federal National Mortgage Association, shortened to FNMA and then simply Fannie Mae, is a federally chartered entity designed to encourage home ownership primarily by purchasing mortgages from other institutions.  That meant that your local savings and loan would have the money to make new loans in your neighborhood.  That by itself is not the problem;  until recent years, they and sibling corporation Freddie Mac were only allowed to buy certain mortgages that met very strict criteria — so-called “conforming” mortgages.  The old girl has been urging people to buy a house for years, selling us a bill of goods that somehow or another our lives would be magically improved by home ownership.

The economy. The sad truth is that wages have not kept pace with inflation for almost all of this decade, inflation has been under-measured, and housing prices have gone up much faster than inflation!  Joe Average could not have caught up to the curve if he wanted to.  The economy also got a lot of people into situations where they had to take out second mortgages or equity lines of credit to pay the bills. This left them with little equity and a higher mortgage bill.

Stupid accountants. I have actually had people tell me their accountant told them to buy a bigger house for the interest deduction!  The money you “save” with this deduction is only the amount you spent on mortgage interest (not principal) times your tax bracket.  Let’s say for simplicity that you have a $1300 per month mortgage and $1000 of that is interest.  If you are in the 28% tax bracket, you are spending $1300 per month, your monthly tax savings is only $280.  If you would have spent $1300 per month renting, then fine, you saved money at the end of the year.  Many would argue that if you are spending more than $1020 on rent it’s coming out ahead.  Many people doing this math forget to account for the additional $280 out of pocket each month.  If you are “just getting by” paying $1100 per month, this “savings” will bleed you dry.

An unscrupulous minority of mortgage brokers.  Most mortgage brokers that I have known have done great work trying to get people into affordable mortgages and been brutally honest with clients about exactly how much they can afford (that’s why I prefer that clients get their pre-qualification letter before we even start looking).  However, a few mortgage brokers have been all about the fees at the end of the deal, and will do anything to get it done.  Even when that means putting people into a mortgage they can’t really afford in the long term. Perhaps they will even say tell the client to come back and refinance in a year — and they neglect to mention that they will rack up another fee to do so!  They have ruined the credibility of programs meant for special circumstances by abusing them and the homeowners they sign up for them.  “Stated income” loans?  A necessity for those who are small business owners or paid largely in tips!  Not intended for Joe Average (or his mortgage broker) to lie about how much money he makes so it looks like he can afford a house that he really can’t afford!

A similar unscrupulous minority of real estate agents. I’ve talked a little about them before.  Some agents fixate on the fact that they don’t do a lot more to sell a $200,000 home than a $100,000 home but they get paid as a percentage of sales price.  So some agents try to steer their clients up-market regardless of what they can afford. Agents like this don’t consider the effect this will have on their future business. You never know whether that guy you helped (or didn’t help) with the $100,000 home will just happen to be talking to somebody who needs help with a $500,000 home.

Appraisers in a Catch-22.  Make no mistake, appraisers found themselves in a tough place a few years ago, particularly in the hottest markets. They were being paid to say yes! Yes! That house may have only been worth 80% of that last year, but it’s worth that now. Yes! An almost identical house on the next block sold for $20,000 less two weeks ago but this house is worth even more now.  They weren’t going to get any business from their mortgage broker clients if they didn’t at least try to come close.  At $300 a pop, they had to do what they had to do.

Overly enthusiastic buyers. Motivated by greed for rising housing prices and fear that they would be priced out, some buyers over-extended themselves. They never thought housing prices could go down.  They refused to “just say no” to that house they love but just can’t afford.

Government programs to artificially stimulate housing demand.  I’m not going to criticize the mortgage income deduction here, despite the fact that it’s the only “investment” that the tax code favors. Rather, I am quite critical of programs for first time homebuyers. President Bush has made widespread home-ownership a priority of his Adminstration as part of his Ownership Society and as a result has spearheaded several such initiatives.  Unfortunately, there wasn’t really enough information and education to go with these initiatives. There are many things first time home buyers do not know and perhaps have never thought about. I think some of these buyers ended up in over their heads with homes in need of more repair than they knew how to handle,  with bills they didn’t anticipate, perhaps in neighborhoods that were not what they first seemed.  By the time they knew they were in over their heads, it was much too late.

And last but not least, the only individual I will single out.

Phil Gramm. The then-senior Senator from Texas is the prime architect of the banking deregulation resulting in “too big to fail” institutions. His further work deregulating the comodities and futures markets made possible the labyrinthine transactions that make it impossible to know just how big the housing problem is, nor how long it will take to completely play out. Further, the modern complications Senator Gramm’s deregulation allowed make it difficult for mortgage providers to modify mortgage terms to prevent foreclosures without violating contracts with investors who have purchased part or all of the paper.

While there are certainly other culprits, these are some of the biggest.

Cross-posted at TheModerateVoice.

Not that I agree with their list, but you might want to check out Lifehacker’s Top 10 Real Estate Links. By way of disclaimer, I do not recommend using Zillow as a serious price comparison tool. First and foremost, it treats foreclosure auctions as equal to sales.  If you see a house that “sold” for 30% less than everything else in the neighborhood 3 months ago, that’s not a sale.  That’s what was owed when the bank took it back!

Tips on real estate listings and fliers are really aimed more at Realtors, but I think Joe and Jane Average can learn from these tips too.

Echelon is paused but not cancelled. Not a problem.  It just pushes some of our growth a little into the future.  Truth be told, that’s probably a good thing in the long run.

As far as economic trends in Vegas, I am reduced to “What He Said!“  We still have jobs being created in Vegas, home sales are up in Vegas, and thousands of new residents still arrive each month.

The Fed Funds Rate is down and mortgage rates are up.  If you are confused about how that works, let me give you the ultra short version:  the Fed does not and cannot control the prime rate or mortgage rates.  Period. What the Fed does control is the interest rate banks charge one another, and the rates banks get when they borrow money directly from the Federal Reserve. To learn more about the Fed, please check out their educational site.

Half of all homeowners are still in denial and think the market value of their home has not gone down. I’m sorry to tell them this, but no matter how nice any particular house is, no matter how fabulous the upgrades, no matter how lovely the renovations, no matter how well the maintenance, housing values are down.

Tomorrow is Nevada Day.  Schools, state offices, and many other things will be closed.  It is, however, your last chance for early voting.  Have a great Nevada Day and a safe Halloween!

I think it’s fair to say that more people are getting out of the real estate business than into it right now, but for those of you who are just beginning a career in real estate, this post is for you.  You are getting into the field at a very exciting time, and if you can survive this market, you can handle almost anything the future can possibly throw at you.  Make no mistake however, this is not an easy career path, and the industry has changed a lot over the years.  I realize that the majority of my readers are everyday people looking for information, not real estate professionals, and not aspiring Realtors.  If you are considering a career in real estate, hit the “read the rest of this entry” link. If not, thank you for your patience.

Read the rest of this entry »

Breaking News…

I may be at REBlogWorld this Friday after all, and sticking around for BlogWorld.  More details as they become available.