Foreclosures: When Perception Is Not Reality

Today’s blog post is brought to you by two great powers: Richard C. Oliver and Wiley Miller.

One created the inspiration, and one brought the inspiration to my attention. So let me share with you Wiley’s (he prefers being addressed as such) genius before we go on:

Now let’s talk about why this is wrong.

We’re Building the Future

Hopefully the country is following suit, but as for us here in San Antonio, Texas, we’re not building houses and waiting for people to come love them and buy them. New home development has historically been slow and thoughtful here in the Alamo City, and we like it that way. When it did boom (ahem Stone Oak area, I’m talking about you) we realized our infrastructure was lacking and began quickly taking measures to ensure that folks had access to fire, EMS, and police services, and we’re upgrading those roads to get everyone in and out quickly. It’s more than a matter of supply and demand, it’s what makes sense.

We’re putting up houses with a purpose. Shelter is a basic human need, but it seems like all people really care about is money these days. With new lending restrictions the FHA and banks in general are making sure that when people need money to buy a house, that they’re not getting in over their heads. If it works the way it should, we should see fewer foreclosures and a return to the “good ol’ days.”

2011 is Mistakenly Called the Peak

I think calling this the peak is fine if you’re plotting the foreclosure rate on a graph, but I’m going to call this the trough, and I hope I don’t come off as a pessimist. But the truth is foreclosure isn’t a good thing, and calling it “a peak” makes it seem that way.

It’s going to get worse before it gets better. This January 13 article by Janna Herron of the AP states that “about 5 million borrowers are at least two months behind on their mortgages,” and until the job market picks up and unemployment goes down, we may not see much of a change.

The Rest Can Only go up from Here, but We’ll Do What we Want

The saying goes “Once you’ve hit rock bottom, the only way is up.” San Antonio hasn’t been hit nearly as badly as the rest of the nation. Our median home sales price has stayed right around $150,000 for more than a few years now, meaning value hasn’t changed much and prices haven’t sunk like they have in Florida, Michigan, Nevada, and California.

As a matter of fact, three major San Antonio areas saw slight upticks in sales prices in 2010, and we’re hoping to keep them that way. This article by San Antonio Express-News writer Jennifer Hiller details those areas and recounts the SABOR 2011 Housing Forecast put on by the San Antonio Board of Realtors (SABOR).

Is there Good News?

There always is. I always look for silver lining, even on the darkest clouds. Unfortunately this silver lining comes at a high cost to some.

With interest rates as low as they are, and an influx of foreclosures on the market (or coming onto the market), we’ll see a spike in investor purchasing. Getting the money is just as difficult, if not more difficult, than in previous years, but please don’t think that that will stop investors from doing everything they can to get their hands on homes ripe for the picking.

A future benefit of current investor purchases: while investors are buying up houses on the cheap, they’re planning on fixing and flipping them. They may not sell these houses for top dollar in the future, but they’re sure to make money on the transaction, and hopefully the next buyer will get a house that’s been revamped and is ready for an owner-occupant to live and love it.

The way it used to be, the way it should be.

Danny Charbel is a Keller Williams Realtor in San Antonio, Texas. Please contact him with any questions, comments, concerns, keep the spam to a minimum, bring on the jokes, interesting banter, comical retorts, and insightful inquiries. You can email him at dcharbel [at] kw [dot] com, or follow him on Twitter @dannycharbel.

Twenty year Re/Max veteran and top producer leaves, joins Keller Williams Realty

Every now and again I like to brag on the wonderful company I work with. Here’s an article just released yesterday from Keller Williams Realty’s international headquarters in Austin, Texas. Enjoy!

Top Ranked Franchisee Joins Keller Williams Realty

Joe Rothchild to lead Keller Williams Signature in Houston, Texas

AUSTIN, TEXAS (April 12, 2010) — Keller Williams® Realty Inc. announced today that Joe Rothchild, formerly a top ranked Re/Max franchisee and the leader of Houston’s #1 selling real estate team in dollar volume and number of closed transactions in 2009 (Houston Business Journal, March 2010), is now at the helm of the Keller Williams Signature office in Houston, Texas. The Joe Rothchild Team closed 779 transactions for $155 million in volume last year.

“Keller Williams Realty has shown that their model can adapt to any market, which was one of the driving forces in my decision,” said Rothchild, who has left Re/Max after 20 years as a franchisee. “I have been researching and contemplating for more than two years, and I discovered that I needed to reinvent my business to revitalize it. We were implementing some of the same philosophies and mirroring the Keller Williams system, so finally, one day we said…why reinvent the wheel? And, the answer was clear.”

Rothchild added, “KW’s philosophy of putting agents and ownership on the same side of the table and training on the most critical issues facing us in today’s market were also incredibly important to us.”

“We are thrilled to be in business with a talent like Joe. For the last 15 years, Joe has been one of the top 10 teams in Re/Max, and was number one worldwide for three years in a row! When a top franchisee from one of our competitors chooses to join us, we consider it a true honor and confirmation that we have unbelievable momentum behind our growth,” said Mark Willis, CEO of Keller Williams Realty.

Many of Rothchild’s current associates will be joining him at the Keller Williams Signature office. Among them, Dale Ross, an industry veteran with 29-years of experience under his belt, 25 of which have been with Re/Max. “When I factored in the Keller Williams Realty systems, training and support, and realized it was the place I needed to be,” said Ross.

This announcement comes on the heels of a year of positive growth for Keller Williams Realty throughout the U.S. and Canada. The company outpaced the downward trend in the real estate market and grew in every category – opening 30 new franchises, ending the year with a 16 percent year-over-year increase in the number of contracts closed per agent and more than 76,879 associates across North America (up three percent). In addition, the company gave back more than $32.2 million in profit share to its agents.

In addition to recently becoming the 3rd largest real estate company in the U.S., surpassing Re/Max, according to Steve Murray at REAL Trends, Keller Williams Realty received the highest overall satisfaction ratings from home buyers among the largest full-service real estate firms from J.D. Power and Associates for the second year in a row, and was ranked as the No. 1 real estate franchise on the 31st Annual Franchise 500 list by Entrepreneur magazine.

Questions? Comments? Concerns? Wondering why you’re paying so much money to your broker and are still not part of the 3rd largest real estate company in the United States? Wondering what Keller Williams has to offer? Give me a call! Email me at dcharbel [at] kw [dot] com and let’s chat! You can also follow me on Twitter, I’m @dannycharbel. See you at the top!

Buyer’s Series – I saw the sign…

I saw a sign in front of a house and wrote down the address, name, and phone number. Should I call the number? I want to know more about the house, but I don’t want to upset my Realtor®, what do I do?

Great question! As Realtors we get the “I just want to know more about this house” phone call all the time. There’s nothing wrong with that, but think of it this way: would you go to work if you weren’t getting paid? Your Realtor is going to get paid to do his or her job, so let them.

If you see a house that you like with a sign in front of it call your Realtor and give him the address. He’ll be more than happy to get you into that house. If he’s not, call me. I don’t want to show you the house. I want to talk to your Realtor.

Another reason you don’t want to call the number on that sign is because that’s the selling agent’s number. What’s that mean? It means that person is working for the seller. So anything you say to that agent that leads him or her to know things about you that may weaken your negotiating standpoint is going to hurt you if you decide to make an offer on that property.

Your best bet? Let your agent look up the information on the house, show it to you, and deal with the other agent. Your agent is well trained in the profession, and is legally obligated to protect your best interests (if you’re his or her client).

Questions? Comments? Concerns? What’s the difference between a client and a customer? What’s my email address? That’s easy, it’s dcharbel [at] kw [dot] com. Just change the stuff in brackets to symbols and you’re good to go.

Seller’s Series – Earnest Money versus Option Money

I’m selling my house and it has already taken forever to get an offer that we could live with. My agent thinks we should ask for more option money and less earnest money. What’s the big deal? It’s really only a couple hundred dollars difference. I don’t want to risk losing a fair offer because of a couple hundred dollars, what do I do?

Professionally speaking, your agent is doing his job. He’s working on your behalf to get you as good a deal as possible. When writing up an offer, the buyer’s agent will typically allot for the earnest money to be credited back to the buyer at closing. During the negotiation process the earnest money did its job to ensure that the buyers wouldn’t walk away, and now that the deal is done they get their money back.

Option money, on the other hand, is due upon acceptance of a valid offer and is to be paid directly to the seller. You see where I’m going with this? If you, the seller, are going to be required to bring money to the table or have been asked to make small simple repairs that extra couple hundred dollars may come in handy. Your agent is looking out for you.

Is it worth the risk? I don’t think so. Your mortgage payment is much more than a couple hundred dollars, and you’ll be stuck with that until you find another acceptable offer. These days, with inventory being high and property value not having moved up a whole heck of a lot, take the offer and don’t argue. The rule of thumb: $10 per day for option money. Deviate from this and you’re looking at prolonging the negotiation process and possibly alienating a willing and able buyer.

Questions? Comments? Concerns? Are you in the same situation? Need a good agent? Email me at dcharbel [at] kw [dot] com.

Buyer’s Series – Time to invest?

I want to buy an investment property, is this a good time to do that? I know it’s a good time to buy, but will I be able to find renters?

Great question! The short answer is “yes, and yes.”

Because lending is so strict right now many people can’t get qualified on home loans. That being the case, if you can qualify for a loan to purchase a rental property (where the monthly payments will be equal to, less than, or greater than the rent depending on what tax benefit you’re going for) then by all means go for it!

Property values have taken a hit (some more than others), interest rates are incredibly competitive right now, and lenders are fighting over well-qualified buyers. Grab your Realtor® and scoop up that house!

The rental market, at least in San Antonio, is hot. That’s not a real estate term, that’s just the adjective I’ve chosen to use. If priced right rentals aren’t staying vacant very long.

Before you set out to become a landlord, make sure you get your numbers straight. If you need the name of a good property manager to talk numbers with, call me, I’ll give you his contact info. Yeah, even a Realtor like me won’t bother with property management. Leave it to the pros and let me sleep through the leaky-faucet-phone-calls at 2am.

Questions? Comments? Concerns? Need a good property manager referral? Email me at dcharbel [at] kw [dot] com.

Buyer’s Series – I have no credit! Help!

A friend of mine just moved to the United States six months ago. He has six kids, a wife, and no credit history. He’s got a job, is a reliable person, but can he qualify to buy a house if he doesn’t want to rent?

The short answer, is “maybe.” It really depends on the market you’re in, but if you’re in a place anything like San Antonio (chances are good since this blog is being read in 5 countries on three continents) then you’ve got choices in this case.

Odds are that without a sterling credit history you’re not going to be a great candidate for lending from an institution. What’s my recommendation in a situation like this? Seller financing.

Seller financing is available when a homeowner is willing to sell a house as well as collect the mortgage payments (plus interest of course).

Upon completion of the payment schedule the house is owned outright by the buyer. Depending on the state title may or may not be transferred to the buyer at the time of closing/funding, or the seller can wait until the completion of the loan.

What are the benefits of seller financing? You’re more likely to have luck buying a house this way if you have no credit or less-than-perfect credit.

What are the drawbacks of this option? Just like everyone else, sellers who offer financing are looking to make money, so they can charge a higher interest rate than a bank or other lender would. You’ll also be expected to invest in the house with a down-payment.

When in doubt, find a Realtor and ask for their assistance! Need help finding a Realtor you can depend on? Email me or fill out the “Contact Us” form on my website.

Questions? Comments? Concerns? Looking for seller financing properties in your area? Email me at dcharbel [at] kw [dot] com.

Seth Says: Good Guys Finish

This post is based on Seth Godin’s post “Good guys finish”. Follow the link to Seth’s blog.

http://sethgodin.typepad.com/seths_blog/2009/01/good-guys-finis.html

Seth and I don’t agree on everything, but I definitely agree with him on this point. Good business is good business.

I’ve had my fair share (some would say I’ve had their fair share, too) of shady goings on. Banks that foreclosed on property and sold it before it was listed to someone who worked for the bank and snatched it up (even while my client had an offer and earnest money waiting), clients who signed a representation agreement and went with a Realtor friend at the last minute after I had showed them houses, and Realtors who think they can get away with under-handed deals and sneaky commission tactics.

To all those people: what goes around comes around.

I pride myself on having built a business that is straightforward, honest, and full of integrity. I provide cutthroat real estate service to my clients, sacrificing no negotiation nor costing my clients any unnecessary fees, yet deal in an honest and upright manner.

This isn’t difficult. There is a code of conduct that Keller Williams subscribes to and upholds, and there are ethics that the State of Texas says Realtors have to uphold. So in case your own personal ethics aren’t to par, you can at least fall back on a predetermined set of them from somewhere else.

I suppose there will always be sneaky and underhanded real estate agents. Those are the guys (and gals) that just make me look good.

Questions? Comments? Concerns? Convinced? Been swindled? Need to complain? Email me at dcharbel [at] kw [dot] com.

Seller’s Series – Your Realtor®’s Job

I’m selling my home. I know that putting it up For Sale by Owner (FSBO) isn’t the way to go, so I’ve contacted an agent and negotiated their rate to fit my needs. I still want to feel like I’ve done something to help though, so I want to create the fliers, do research on the Internet, and tell my friends and family about my home being on the market.

STOP!
I know I’ve only been in the business a short while when compared to many of my colleagues, but if there’s anything I’ve learned from real estate or any other industry, it’s that you never get something for nothing. You can NEVER get anyone to work for free. Even volunteers are getting SOMETHING out of the deal.

That being said, your Realtor is making a lot of money in the sale and purchase of your homes. Real estate agents are among the best paid professionals in the nation, and we’re darn good at what we do. Lawyers’ and doctors’ salaries can’t even come close to some real estate agents’ incomes. The point? Let us do our job. Better yet: let us earn the money!

I always tell my clients “I’m not afraid of work, I’m not afraid to put in the hours, and I’m not opposed to you pushing me to my professional limits.” Why? Because it’s the truth, because it sets me apart from other lazy agents, and because people respect a strong and dedicated work ethic. So whatever your Realtor’s niche or value is (great magazine ads, tech-savvy, just darn good looking) make sure they’re using that and earning their keep.

In short: if your agent isn’t doing ALL the work, find a new agent.

P.S. Outside of your local Multiple Listing System (MLS) the Internet is WAY outdated as far as home prices are concerned. Ask your Realtor, they’ll tell you and show you why. -dc

Questions? Comments? Concerns? Queries? Inquiries? Wanna hang out? Maybe have some dinner and discuss real estate? Have a home buying or selling nightmare you’d like to share or vent about? Email me! dcharbel [at] kw [dot] com.

Seller’s Series – Pricing (it right)

I want to sell my house fast and for the highest price possible. What’s going to make me competitive (besides cosmetics and other tricks)?

Your agent (hopefully you’ve chosen one of the top agencies in the city) will have access to vital data that will help you price your home competitively. There are two things that will sell your house in our current market, and one of them is correct pricing. The other is proper and effective marketing, but that’s neither here nor there.

When priced correctly your home will compete against the best and worst houses in your neighborhood, and will receive more offers than those competitors. Why? Because you’re going to appeal to the right potential home-buyers, you’ll have the advantage of not being the highest priced house in the neighborhood, and you’ll easily appraise to meet the offered price. What’s that? Appraisal? Let’s talk about this.

Any buyer, financed or cash, is going to want an appraisal. It just makes sense (and cents). Getting an appraisal will tell a buyer whether or not the property is worth the proposed price. If it doesn’t appraise the buyers can walk away (sometimes with their earnest money), you may have the opportunity to renegotiate, or the buyers can (rarely) bring the difference in cash to satisfy the lender. The last option hardly happens, so don’t hold your breath.

Say for example that your house is priced at $175,000 and receives a full-price offer. You accept (of course) and the buyers ask for an option period. After you’ve already taken the house off the market for an average option period (10 days) you’re in the thick of it with the remaining terms of the offer.

Then financing is secured. Great! The lender sends out an appraiser that compares other sales and active listings in the area and says the house is only worth $165,000. That $10,000 difference is what we’re talking about here. Had you and your agent priced your house correctly, perhaps around $165-170,000, the house may have appraised and avoided this situation. Now you’re cornered as a seller since your agent obviously didn’t do his or her homework.

Make your agent work for the money! They’re professionals who know what they’re doing, but since you’re the seller and paying for it make sure your agent is earning their keep.

Questions? Comments? Want to find out about the best brokerage in the city, the state, and even the country? Want to know what’s on my Christmas list? Email me at dcharbel [at] kw [dot] com. I won’t bite. I promise.