Archive for the ‘Industry Update’ Category

Spineless Cowards at NAR Scandal.com

Saturday, March 20th, 2010

Breaking Scandal

Here is a link from an email I just received.  The people writing at this website http://narscandal.com/ may or may not have something worthwhile to say.  But there is pretty much nothing they will ever say that will get any applause from me.  Why?  Because they go WAY out of their way to hide who they are.  Maybe it isn’t a "they" but only a "he" or a "she" – pretending to be a group of "concerned people".

This isn’t a defense of NAR.  It is saying loud and clear – don’t take potshots or engage in name calling if you want to keep yours hidden.  Otherwise, you are just a covertly hostile weasel who can’t be trusted to tell the truth.

Nowhere on the site does it say who is writing any of it or who supports them.  I have nothing but contempt for the sort of passive-aggressive person who puts up a site like this.  You want to say something and be respected?  Simple: don’t hide who you are or who you work for.

Bank of America Achieves Surrealistic Central Status

Thursday, February 11th, 2010

BofASurreal

Maybe I should have titled this post, "Attention All Lawyers – Bank of America Has Lots of Free Money For You".  What you are about to read might seem like something out of a Franz Kafka novel or a Salvador Dali painting that was somehow brought to life.  Only it is verified and real.

It is no secret in the real estate community what Bank of America does (and doesn’t do) regarding short sales.  In fact, typing, "short sales bank of america" into Google has this post right on the first page of Google.  Bank of America has routinely forced homeowners into foreclosure when a short sale was possible.  But when you read the next paragraph and get to the bottom of that paragraph – you will go back to the top and read it again because you will think you’ve misread it.  It just can’t say that.

In many instances – where a trustee’s sale has been postponed in order to complete a short sale – once the short sale is successfully completed and title transferred to the new owner – Bank of America then forecloses on the new owner.  Investors who have purchased the home at auction will then go the house, change the locks or in some cases break in to the home, thinking that the former owners simply haven’t moved out yet. 

The following all happened in my office with my staff:

Apparently BofA has no system in place to cancel trustee sales after a short sale is completed. Our office is currently working on getting trustee sales canceled on 3 files that have closed escrow on a short sale with BofA recently. On one file we closed escrow 26th of January. The trustee sale was scheduled for February 4th and BofA would not discuss canceling the trustee sale until 2 days before it was scheduled. So on February the 1st (and 2nd, and 3rd) we spent over 5 hours trying to get someone at BofA to cancel the trustee sale. In exasperation on the 3rd day of this, we finally told them “go ahead and sell the house that you have no legal right to foreclose on and you can undo it after the fact”. At that point the supervisor urged us to calm down that they wanted to work it out and they couldn’t understand why no one was doing anything.

They told us that Recon Trust (their appointed trustee for sales) charges them $3800 per foreclosure and that they didn’t want to pay that to foreclose on a home that was already sold. We had already spoken to Recon Trust trying to provide copies of the HUD1 that showed the sale had been completed a week ago, but they will only take instruction from BofA (plus there is that $3800 per trustee sale – legit or not). So far we have gotten called off 2 of our 3 homes that are closed but still scheduled for a trustee sale. This has taken hours and hours of our time to get BofA to do a job that is theirs to do. Buyers are reporting notices of sales being posted, investors trying to break in and look at their homes, etc. all because the trustee sale is not halted. The only bank currently doing this to our knowledge is BofA.

Maybe someone from Bank of America reading this could alert someone in a position of authority to actually DO something about it?  I know a whole bunch of people who would be very grateful.

The Shadow Inventory = Shadow Gibberish?

Tuesday, January 26th, 2010

Shadow Tsunami

One of the more remarkable methods used (even by "Intelligence Agencies") to establish if something is true or not is to is to label it true if it came from a "reliable source".  Who said it?  If he or she is considered reliable or an authority the data is considered true or factual.  The other – perhaps even more silly – system in use is multiple report.  If a report is is heard from several areas or people it is "true".   Five or ten people hear the same thing and pass it along, it becomes a "fact".

I have been hearing about the Shadow Inventory for well over a year now.  It is HUGE.  It is sensational.  A Big Giant Tsunami (BGT) of inventory is going to be unleashed by the lenders.  Get ready.  Like nothing you have ever seen.  The housing market will be flooded with inventory like never before.  No doubt it will change life as we now know it.

Only it is complete crap.  Nothing but invented data dreamed up and endlessly passed along by organizations and individuals who heard it from someone else (I have not yet tracked the original source for this shadow inventory nonsense as it seems to emanate from "everywhere").  What is really interesting are all the "new facts" dreamed up by "industry observers" to make the Big Giant Tsunami theory still possible – in spite of the overwhelming abundance of easily observable data that would directly contradict the idea of the banks having this huge inventory that they are holding back to be released later.

I bet I have your attention now.  Some of you may even be angry – you damn well KNOW there is a shadow inventory!!!  So lets look over why I am publicly saying it isn’t true and what the thought process was for the people and organizations who have been saying (and continue to assert) it is true.  These people would have no reason to intentionally forward false data.  So what data did they look at to conclude there was a Big Giant Tsunami of inventory the banks have and aren’t releasing?  Charts like this – graphically showing the Shadow Inventory are all over the the media and the internet.

housing bubble inventory

So what system is being used by economists and others to calculate this shadow inventory?  Simple, take the cumulative total foreclosures recorded (the big number) and subtract the current active and pending inventory in the MLS, plus the sold MLS properties (the little number) and the remaining number is "the shadow inventory".  Simple, quick and it requires NO LOOKING at anything – just grade school level math.

To be clear, I am NOT referring at all to any foreclosures yet to come.  Inventory the banks may wind up getting in the future.  I am only talking about NOW.  It is no secret that REO agents are losing market share as they, as a group, have less and less inventory being given to them by their asset managers.  These same asset mangers who – last year – kept telling them that they had a lot more coming in to give them.  It just never arrived for them to give.  The only REO agents I know who are doing better these days are those REO agents who deal in higher end homes.  Those high end agents are getting inventory, lots of it.  This is not to say that all across the country there is no REO inventory, there is – just less and less of it.  The BGT crowd has invented the idea that the banks have the inventory but are keeping it until the prices go up!

How about a few facts that I know are true here in the Phoenix area – and I have every reason to believe are true right across the country (as I can think of NO reason for these facts to only be true here).

Fact: In my local MLS, there are about THREE TIMES as many bank owned homes listed in the MLS as the MLS actually shows.  I know this because two guys who actually look counted them all.  One by one.(Mike Orr of The Cromford Report and Tom Ruff of The Information Market)  They counted them and compared the addresses shown in the MLS, one by one, with the County Assessor records.  These are homes listed by banks who instructed the listing agent to NOT use the term "bank owned" in the listing.

Tom Ruff and Mike Orr spent months going over every deed transfer in Maricopa County (Looking at each foreclosure going to the bank and tracking that house for its current ownership and they could directly account for all but about 5,000 houses) and established that for the Greater Phoenix Area THERE IS NO SHADOW INVENTORY. 

Fact: Major banks often off load huge portfolios of inventory to hedge funds.  Huge portfolios.  Anyone or any organization who is claiming that they are "tracking" what the banks are doing who does not have sufficient access to track those portfolio sales is simply engaging in the simple grade school math referenced five paragraphs above.

No doubt there will be some readers who remain convinced that what they have read about and then co-created must be true.  That’s okay.  If you are happy believing that a Big Giant Tsunami is coming – enjoy the wait.  However, I’m betting you remain completely dry.

Bank of America, RE/Max and Wells Fargo. From Very Bad to Great.

Sunday, December 27th, 2009

Einstein BofA

For his ground breaking book, "Good To Great", Jim Collins and his research team looked into just about every public company in the United States to find those companies that made the transition from good to great.  Good is the enemy of great – which is why most companies and most people never make that leap.  They are good. They are not great.  To get on Jim Collins "great list" a company had to significantly outperform the other companies in that industry for  a minimum of fifteen years.  Making the great list wasn’t going to be a fluke.  Collins first wanted to isolate the companies, then study them to find out what the great companies all had in common – which is the subject of his book.  A very interesting part of his study was also the direct comparison company chosen that had the same opportunities as the great company – but did not make the leap.  Those companies were studied, as well – to find out what they had in common.

The good to great company that made the grade in banking was Wells Fargo.  The direct comparison bank – that had the same opportunities, but did not act upon them and did not move towards greatness – was Bank of America.

Currently, Wells Fargo is the very best bank to deal with for a short sale.  The very best.  The other banks that are factually as good as, if not better than Wells (Wachovia, World Savings) are owned by Wells Fargo!

I’ve written before about Bank of America.  When it comes to short sales, from an agent’s, buyer’s or seller’s perspective, B of A / Countrywide has been, and is still currently, the absolute worst lender in the United States to deal with – and pretty much everyone in the industry knows it.

Now the good news.  A month or so ago one of the most powerful and truly influential people in real estate, Dave Liniger  assembled some top B of A executives and several United States Senators in the same room.  I think it is fantastic that Dave Liniger can contact them, tell them when and where he needs to see them and have them actually arrive.

Mr. Liniger proceeded to tell the B of A executives that their reputation – in the area of short sales was just awful.  He told them that he had about 100,000 agents with RE/Max and that he doubted very many of them would even consider directing loans to Bank of America.  He pointed out to them that if they had any hope of keeping their agent driven business they had better stop making enemies over in their short sale division.  The senators were a little surprised and dismayed at all the specifics Mr. Liniger pointed out had occurred with regard to loan modifications that never happened (after people were put on wait for six to nine months) and that the same thing was happening with short sales.

The Bank of America executives were shocked and said they had no idea such things were happening and (the good news) vowed to correct each and every one of types of behavior that Liniger had pointed out to them.  Dave Liniger is predicting that B of A short sales will soon be as easy to do as Wells Fargo short sales.

To be fair, B of A is already improving.  The loss mitigation companies they’ve hired to handle some of their short sales is not (repeat, is NOT) difficult to work with, at all.

I personally do not believe that B of A will ever consistently achieve the stellar results that Wells does.  The reason?   The executives were shocked at what Dave Liniger had to tell them – they didn’t already know.  A great executive would have not only known it was happening, they would have been able to predict it and prevent it from happening.  Great executives make it their business to know what is happening in their business.  That said, I still believe that B of A will make great strides and improve tremendously.  I want to add, I am grateful for Dave Liniger stepping up and to B of A’s top management for owning up.

Short Sales are only going to get easier!  So, THANK YOU!

A Professional REALTOR

Wednesday, September 23rd, 2009

Professional Realtor

This post started as a comment to Matthew Rathbun’s brilliant post.   At the end I decided to make it a post

Truly a great post, Matthew!

I believe that the bulk of the clamor for “more professionalism” that emanates from agents is mostly self-serving gibberish. A person gets into real estate and then observes that the public does not tend to hold Realtors in extremely high regard. Personally, they want to be held in extremely high regard but can’t really see how they can differentiate themselves in the eyes of the public from all the other Realtors – so naturally, establish how “professional” they are by endlessly talking about how “unprofessional” some other Realtors are.

All the while, without once ever bothering to even trying to define “professionalism”.

You hit the nail on the head here with regard to more education: lawyers, for example, are all “highly educated” and yet are not much more highly regarded than Realtors. Why?

Professions that are “highly regarded” tend to be professions where the advice being given is *exclusively* for the benefit of the public or the person receiving that advice: a librarian, for example. The librarian’s personal biases and preferences may well be part of their recommendations – but few people would suggest that certain books get recommended for reading so the librarian can get extra money. The same “high regard” holds true for professions like nursing but tends to fall off a bit when it comes to physicians (they *are* sometimes thought of as money motivated).

We are all salespeople and therefore will always be – rightly – regarded by the public as salespeople. Some of us are quite “professional” at selling, some aren’t. No set of rules or regulations is going to cause people who have low or questionable morals to suddenly act right. Enforcement alone does that.

What would have to change is the complaint procedure – so that agents (who are in a *much* better position to observe wrongdoing) can easily, and in a very short amount of time, file a complaint (sort of like calling 911). Then the investigation and enforcement unit would have to be able to actually look – instantly dismiss complaints without merit or grudge motivated complaints – and take swift action. In short, we would have *real* justice. As we don’t have such a thing (real justice) anywhere else in our society – in this country or any other – I’m not holding my breath waiting on that one.

The most effective thing one can do is to BE the change they hope to see in others. That isn’t an original thought of mine. But I don’t know a better one.

Bank of America Retard Division for Short Sales

Tuesday, September 1st, 2009

Bank of America Retard Division

Bank of America is to be Highly Commended for their complete willingness to give so many intellectually challenged people jobs as executives. Sure, year in – year out, most other banks have always been willing to hire a few people who couldn’t think straight. But those other banks aren’t getting any awards for what they did for one simple reason: what they did was so darn common. Now any buzz kill who cares to can go look and find some other division of Bank of America / Countrywide that isn’t being run totally by retards (for example, their REO loss mitigation department).

But I challenge anyone to find any other bank that even comes close to Bank of America / Countrywide’s short sale loss mitigation departments for non-stop, over the top policies and procedures that make life difficult, impossible or at least a lot less profitable for the following four groups (not listed in their order of importance and there may well be others).

  • All agents – either on the buyer or seller side
  • All potential buyers of any property where B of A holds a 1st lien position
  • All of the sellers (their borrowers) trying to work with them to avoid foreclosure
  • Themselves.

If B of A is in a 2nd lien position, oddly enough they have workable policies in place (seller IS going to sign a note prior to close to pay the bank a small part of what they owe). They don’t flex on this issue but it is a knowable and not completely unfair rule. If they are in 1st lien position their standard and unvarying behavior (if that behavior were being attributed to an individual person) is nothing short of psychotic or completely retarded – at least down at the imbecile level. No rational judgement, no possibility at all of dealing with them the same way we deal with all the other banks on short sales.

Other than limited personal – and for the most part, completely anecdotal data, most agents doing short sales on the buy or the sell side have a very odd picture of the overall scene. Loads and loads of mostly worthless gibberish. Notice how Chase and Wells Fargo are grouped in the same category as Bank of America? Wells does not ever pay any of the buyer’s closing costs and won’t pay for a home warranty. But ….. you can routinely close an escrow from start to finish with Wells in about 30 days. Actually close, it takes less then two weeks to get an approval. Same with Chase. Try that with B of A / Countrywide (who collectively have about half of all problem loans in the U.S.) It takes a minimum of 90 days to get any response back from B of A. And if you send them anything after submitting the original package (anything, even a better offer) that 90 day clock is reset. So, with B of A four to five months to actually close a transaction is not uncommon.

It gets better. Here is a charming response we received from B of A a month or so back:

“Bank of America is now requiring most sellers to contribute to the loss in order to qualify for a short sale. Please prepare your client for that probability and be ready to let me know how much cash the seller can bring to closing. If no cash is available, the alternative is a promissory note for a larger portion of the loss. this requirement is firm–no contribution from the seller will result in the short sale being declined. There are vary few exemption made to this. The approval time once the file has been submitted will depend on the size of the loss, the investor and the MI insurer, if any.”

Arizona is one of ten states that have “anti-deficiency protection” due to the nature of how foreclosure works here – it takes only 90 days from the time the lender files for a Trustee’s Sale for them to take the house back. Therefore, the anti-deficiency protection (very basic rules – there are others: The same purchase money loan is still on the property, e.g., they never took any money out of the house via a refi and it was a residential property of 2.5 acres or less).

The response from B of A above was on a transaction where our seller would have no possible liability of any kind if the bank were to foreclose. None. In this case there was precisely nothing they could legally do to go after him and yet, even after being told this and being asked to please verify it with their legal department, they were not willing to budge – forcing the seller to let them foreclose. They get a house back that they really don’t want for many reasons, a neighborhood winds up with an abandoned home that will invariably sell for less money after the bank gets it back and so it goes.

It is as though a complete division of Bank of America executives went looking and anything they found that could slow down the process, make it more difficult for everybody involved or simply thwart the actual goal completely – they carefully noted what that was and then adopted it as firm policy. I’m impressed.

BofA Retard

Foreclosures Surge?

Wednesday, August 5th, 2009

This was just now posted on AzCentral with the headline, "Foreclosures surged in July.  This is what passes for "reporting" by most media about the real estate market.  June foreclosures were 5,149.  July’s numbers (per the article) were 5,316.  A difference of 167 foreclosures or 3.24%.  And that is being called a "surge".marketStats

I wonder if anyone’s paycheck went up at an annual rate of 3.24% they would ever consider it a surge?

This isn’t to suggest that the number of foreclosures going up is ever a good thing – just that reading past the headlines and actually looking at the numbers might shed a bit of light on the subject.

If anyone cared to truly examine some relevant market statistics for the Greater Phoenix area here are a couple I personally find quite interesting: The current "success rate" for all listings in ARMLS is 64.8%.  You can see that (along with some other very interesting numbers) here.  But since most of the sales occurring are lender owned properties, that number doesn’t mean too much to me.  Let’s break it down.

Scroll down on this page and you will see the breakdown, based on types of listings.  The success rate (percent of all listings of that type that sell) for lender owned is 91.4%.  Not very surprising – at least not in our market.  But look at the comparison between "normal listings" and short sales.  The numbers are almost the same!  Normal listings success rate is 50.2% and short sales success rate is 49.4%.

I know, I know, the normal listings stat surged way ahead. 🙂

ARMLS Comes Out In Favor Of Realtors!

Thursday, June 11th, 2009

ARMLS

For Immediate Release: Arizona MLS Takes Stand on “Scraping” and “Indexing”

RECENT NAR INTERPRETATION CREATES COMPETITVE DISADVANTAGE FOR REALTORS®

PHOENIX, AZ – JUNE 10, 2009 – The Arizona Regional Multiple Listing Service  (ARMLS) is taking a stand on a recent National Association of REALTORS® (NAR) ruling on the technical interchangeability of “scraping” and “indexing” as it pertains to display of the IDX Database on the Internet. A recent controversial interpretation issued through the Center for Real Estate Technology (CRT), NAR’s technology arm, advised members that “scraping” and “indexing” are in effect the same practice and represent misappropriation of the IDX Database. ARMLS believes that this ruling places NAR members at a distinct and serious competitive disadvantage. ARMLS maintains that the CRT opinion does not factor in the end use of the “scraped” and “indexed” listing data. It fails to distinguish between benign and malicious “scraping” and “indexing.” These practices are termed benign if they provide intended benefits to the consumer and the buyers and sellers whom the REALTOR® serves, and are not in conflict with the ARMLS IDX Policy. They are deemed malicious if they utilize the listing data in a manner foreign to the original intent of the REALTOR® and the property owner, and are incompatible with the ARMLS IDX Policy. The practice of “scraping” or “indexing” by search engines for the purpose of displaying or indexing the data for consumer property search, and which ultimately directs the consumer back to its source, is benign, and is in sync with the REALTOR’S® intention when displaying listings on the Internet. When a third party, e.g. a search engine, through “scraping” or “indexing” misappropriates and uses the listing data for purposes not intended by the property owner or REALTOR® , these practices become malicious and should be prohibited. Any interpretation by NAR prohibiting REALTORS® from allowing search engines, such as Google, from benign “scraping” and “indexing” listing data puts the REALTOR® at a distinct competitive disadvantage. The ARMLS IDX Policy contains the statement that “IDX Brokers must protect the IDX Database from misappropriation by employing reasonable efforts to monitor and prevent “scraping” or other unauthorized accessing, reproduction or use of the IDX Database.” The interpretation of this policy was not intended to discourage dissemination of listing information through search engine indexing or to discourage brokers or their permitted licensees who offer listings from optimizing their listings to achieve higher search engine placement. ARMLS supports and encourages a change in NAR’s interpretation of “scraping” and “indexing” that factors in the results of such activities and removes any competitive disadvantage that NAR’s current opinion creates.

Mike Orr and The Cromford Report

Friday, May 22nd, 2009

Mike Orr Cromford Report

Here is a professional quality video of Mike Orr of The Cromford Report giving a talk at a Mastermind meeting I attend every month.  It is about an hour long and the specific stats won’t apply if you are not in the Phoenix area.  His interesting and unique methods for tracking and predicting short-term price movement will apply.  If there is something better available I’ve not seen it.  Click here for the link to the video.

NAR – Welcome to the Waffle House

Wednesday, May 20th, 2009

NAR-WaffleHouse

Just as a gentle reminder to all of what the actual purpose of the National Association of Realtors is supposed to be:

"The core purpose of the NATIONAL ASSOCIATION OF REALTORS® is to help its members become more profitable and successful."  You can see that here.

Prior to reading this post – which most internet-savvy Realtors have now read – I didn’t know what "indexing" was and didn’t care.  That was something I only learned in the comments section of that post.  So I now ask, Is it possible that Paula was wrong to allow search engines to find all of those listings on her site and for Google to index them?  Is it possible?  Really, isn’t it possible?  Well it must be possible, some people at NAR already thought it was wrong and Paula’s local association leaders also seemed to think it was wrong.  Do I personally think that a "no indexing rule" would be such a horrible bad thing?  If no one, no company could index listings?

It would be alright with me if Realtor.com wasn’t allowed to do it.  But Realtor.com is allowed to do it.  And they are also allowed to use terms like "MLS" in their meta words.  All of the listings on Realtor.com can be found by Google and indexed.  Because some people at NAR (who couldn’t see around corners, even a little bit) originally gave away the name, "Realtor.com" to a for-profit company instead of making it a member benefit we now have LOADS of other places that have our listings out there to be indexed.  Trulia, Zillow (and a growing list of other sites with MLS feeds) are all allowed to have the listings available for indexing.  These are all companies that would not even exist if it weren’t  for NAR’s original mishandling of Realtor.com.  Is NAR going to stop them?  Could NAR stop them?  Is NAR going to stop Realtor.com from allowing listings to be indexed?

This past week in Washington D.C. it looked for a brief moment like sanity would prevail.  In the end it didn’t.  Can anyone (elected or paid staff) at NAR, on any committee or in any position explain how this makes even a little bit of sense?  Or are you going to try to ignore this issue by justifying it with, "It will be taken up by the committee in November"?

Why would it be okay with you for public – for profit companies – to have the right to freely do something that Realtors are then prevented from doing?  What twisted, tortured logic is used to justify that? 

Anyone?