The Montrose Gold Team Blog: January 2010

Nice Post by Shane about how google is likely hurting us little Realtors with small Adwords budgets.

Thanks Shane!

Moan and Toast to Technology and Real Estate

Technology actually probably brings out these emotions in most people not just Realtors.

We are:

• Excited about what it can do for us,
• Scared of how hard it will be to implement and use,
• and even More Scared about how hard it will be to integrate with our other technology tools and what it will cost us in time and money.

It seems that every week a new technology and platform or application comes out.  And most of them are very cool and innovative ideas, and their marketing is getting more creative as well.... Try a dumbed up version for FREE. 

It is a great sales pitch, (wish we could use it on homes), kind of the traditional "puppy dog close" where the pet store owner sends the small child home with a puppy and tells them if their parents say its not OK, they can bring it back....  But it doesn't work as eloquently as it always should... or we don't have time to play with it and it sits on our disk...  These marketers know this and are starting to let you use it free for 1-2 properties rather than unlimited for 30 days, but both options are out there.

Another "moan-able trait" of technology is the Internet itself.  It, "The Internet" or more specifically"The Web" and its "crawling" or "Surfing Tools" like IE, Firefox, Safari, Chrome, etc. are our windows into this virtual sea of information, "It" is a truly amazing and I believe life changing technology...   It has definitely changed and will continue to change the Real Estate Business.

(BTW - Its perplexing to me that we evolved from "crawling" to "surfing"...  I mean I get the connection of the original Internet interfaces and transfer rates were definitely "crawling" slow", but how come we didn't change the name of the "web" to the "wave"?  You know the "World Wide Wave" we all surf on!  Yet the analogies of getting stuck in a web and the interconnected fixed IP addresses and their links look like a web, yet we seem to surf it in waves and to some extent this is encouraged by search engines.  A popular site becomes more popular...)

Still "It", the Internet-Web-Wave, is full of a lot of garbage, very creative and persuasive sales people and marketers all trying to capture the eyeball and proverbial click.  

I mean what is "Google juice"?   I was throwing this term around the office today telling my partner Diane why she needs to blog on Active Rain and my partner complained it sounded like or reminded her of "bug juice" and grossed her out.   Yet when I showed her how she could leap frog like 15 agents with a couple blog posts, she was hooked and I was there teaching... (non-productive, non-money making time).

Basically, we all want eye balls, we all want clicks, we all want customers, this translates to we want a lot "Google Juice" cause we can toast to the "FREE Traffic"it will bring us.   Is it really FREE?  Probably not, you either need to invest the time, or pay someone to do it for you to get the "Google Juice" up.   As Google is the number one used search engine followed up by Yahoo and Bing.  That too, could change with time as all things do.

One of the big questions today is what do you do with the "Proverbial Click"? Hopefully at a minimum you capture a name and email, or at least try to, for further contact, but for Real Estate its even better if you can capture a phone number and give them a call back as soon as possible.   Balancing the free info, desired free info (behind door number one - if you give us your first name and email) and the irritation and often accompanying fear we all can get from being asked to register for a million things.  

Know this though, on these mailing lists... most of these sign-up auto-responder lists are all Can-Spam compliant, so on any message they send you, you can un-subscribe, so don't be too afraid to try a few out.

So while Technology promises much Greatness, Realtor Leads and Resulting Riches.... most of us, me included, don't have all the pieces tied together in an optimal way, so we get new inefficiencies where the technology took away old inefficiencies, it introduces new ones...

I guess my best advice is plan out a path to your strategy of finding leads on the Internet and converting print ads to leads on the Internet, hopefully so they come "to you" rather than the floor agent, then stick with it for at least 6 months evaluating if it is working.   Don't fall for jumping for every new technology and gadget that comes out, unless you are sure it fills a need in your plan.

FREE trial - is free in the sense that you get to try it out or continue to use a dumbed up small version of the product and if you only have one or two listings and nothing better to do, go for it... But if you are a full time agent with at least 10 listings then I would suggest that you closely analyze it and the alternative solutions before you jump to try it. 

Don't forget about all the time you spend... playing with the new technology... takes away from time you could be finding clients, closing deals or even fishing.   If you like playing with it, like I do, more power to ya, but its like an addictive substance, you need to ration its consumption of your truly productive and income producing time...

Good luck and may you have more Toasts than Moans with your next dose of Technology.

BTW - It also helps to go with proven "Google juiced" techniques... like Active Rain.   I highly recommend it if for no other reason than to extract the "juice" but hopefully also extract useful tips, ideas and thoughts, to keep your own creative juices flowing...  But like everything... We even need to ration our use of Active Rain with our productive time. 

Chris Ormsbee

Century 21 Action Realty

Montrose Gold Team

1245 E Main St. Montrose, CO 81401

(970) 209-0252

www.MontroseGoldTeam.com

www.MontroseGoldTeamBlog.com

www.C21ActionRealty.com/cormsbee

The Federal Reserve - are they on a roll or headed for an abrupt end?

Based on what I have read and heard, not just based on the link I am about to give you but also in various news sites, newsletters, various books, facebook posts, rumors, consipiracy theorist sites, etc.

My personal opinion is... We the People of the United States of America - need to take back our country and the control of it. 

I think step one is to Audit the Federal Reserve Bank to determine, just what shenanigans have taken place.   And based on this article we should go back to Kennedy's proposed US Treasury backed "Silver Certificates".

I have not validated the facts on this page but many seem to correlate to my recollection of what I have read in other places. 

Its your brain so you decide for yourself, but I think it is worth the 5 minutes of reading required.

It does have music playing in the background so turn down your speakers, be sure to scroll down through the page to the links at the bottom. 

Thanks Mary for your website and asking us all to share it.

Check it out here.

http://www.wtv-zone.com/Mary/BIGGESTSCAMINHISTORY.HTML

Chris Ormsbee

(970) 249-7777 x22

Montrose Gold Team

Century 21 Action Realty

Montrose, CO 81401

www.SoldCORE.com

www.YourCOREAdvisor.com

www.C21ActionRealty.com

www.MontroseGoldTeamBlog.com

Are there FHA Changes on the Horizon?

Sounds like changes to FHA are inevitable and probably good, but also probably somewhat painful for Realtors.

Here is an excerpt of an email I got from a local Mortgage Banker.  Chris Reichman.  You know hes a good guy cause his first name is Chris.  Just kidding but he really is a good guy.

Chris' message:

Hello all.  As many of you might be aware the Federal Housing Authority (FHA) loan program has been under a great deal of scrutiny from congress lately due to losses sustained over the past few years.  The congressionally mandated 2% insurance reserve that the agency is required to keep on hand has dwindled to around .53%.  We have been watching closely as the FHA interacts with congress to develop certain reforms to the current FHA loan package.  This is impactful for us since the FHA loan program is heavily utilized, particularly for first time / younger home buyers.   Although the official announcement has not come out yet, we have learned of some of the expected changes that will be taking effect this year.  Definitely nothing too alarming here...just want to keep you all in the loop.  Some of the highlights to watch for are listed below.  Please feel free to call me if you have any questions at all.  Thank you.    

• The upfront mortgage insurance premium will be raised from 1.75% of the loan amount to 2.25% (this can be rolled into the loan) sometime this Spring.
• FHA has asked Congress for the authority to raise the monthly mortgage insurance premium.  This is only a request posed to Congress at this point, so no timeframe on when/if this will end up happening.
• Maximum seller contributions have been lowered from 6% to 3%; expected to take effect early summer

The good news...the general down payment (at least for the time being) will remain 3.5%.  It had been proposed to raise the minimum down payment to 5%.  As of now that is not going to happen.

Chris Reichmann

Mortgage Banker

Republic Mortgage

909 South Townsend Avenue, Suite A

Montrose, CO 81401

Office: (970) 249-1615

Fax: (970) 240-7931

Mobile: (970) 417-7677

Thanks Chris for the email and the info.

Hope this helps you keep on top of the change...

Chris Ormsbee

www.SoldCORE.com

www.C21ActionRealty.com/cormsbee

www.MontroseGoldTeamBlog.com

Is Walking away from your Mortgage Morally Wrong?

It depends.

I just saw a great article and video on Yahoo Finance.

http://finance.yahoo.com/tech-ticker/walking-away-from-your-mortgage-is-morally-wrong-and-financially-stupid-says-mcardle-407319.html?tickers=xhb,len,kbh,ms,bac,wfc,c&sec=topStories&pos=9&asset=&ccode

Megan McArdle puts it very nicely how and why she feels it is very wrong for people to just walk away unless they are in circumstances that provide them no other option.

She points out how "flippant disregard for promise to pay" will change the face of lending as we know it.

Check it out and you decide.

In my personal path, I have only run into people that have lost their home or decided to let it go, because they have no other option.  Megan McArdle - agrees that these people that have no other choice should immediately contact their bank about a short sale and help the bank sell the home and minimize the losses.

Chris Ormsbee

www.SoldCORE.com

www.MontroseGoldTeamBlog.com

www.C21ActionRealty.com/cormsbee

HUD Waives 90 Day Hold Period required for FHA Loans.

HUD realizes that the 90 day hold period "Seasoning" requirement for an FHA Loan is hurting buyers, especially first time home buyers more than the investors and rehab flippers (that they thought were getting rich by preying on the helpless homeowner (BTW some were))...

David H Stevens the Assistant Secretary for Housing - Federal Housing Commissioner Signed a a 1 year waiver into effect on January 15, 2010

Check out the actual text here...

http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

My Summary of the Waiver:

• For just about anyone with Arms Length Transaction and Fair Marketing Effort.

• If More Than 20% Increase from Acquisition to Flip Price - then need Justification and or documented rehab, Second Appraisal and Inspected to meet FHA and HUD Standards.

• Does not apply to the Home Equity Conversion Program.

The Brief 90 Day Hold Policy History:

• June 7, 2006 - Waiver that let Government Agencies, Revitalization Efforts, Non Profits, Relocation Companies and Disaster Areas have an exemption from the 90 day rule.

• Foreclosing have a waiver to dispose of assets.

• June 8 2008 - Waiver exempting 90 day Hold for sales of REO properties acquired by Mortgagees

• My two cents for what its worth.

• May 15, 2009 - Extension of REO Mortgagee Waiver to May 10, 2010 (sounds like an REO liquidation deadline or another extension will come and I believe this Waiver will cover them till at least Feb 1, 2011.

• Sep 14, 2009 - Waiver granted exempting sales of properties that had been previously foreclosed or abandoned by for-profit or non-profits in HUD's Neighborhood Stabilization Program (NSP).

• January 15, 2010 - This Waiver granted, effective February 1, 2010, exempting just about everyone.

   

Basically the Department of Housing and Urban Development has realized that with the flood of foreclosure properties on market, their 90 day seasoning or anti-flipping rule is hurting short sale efforts and first time home buyers and other buyers that could otherwise buy affordable housing that has been bought up and rehabbed or at least inspected and certified to be HUD approved and a few other things... that it is OK to flip that house out to a buyer with an FHA HUD Guaranteed Loan.

This should aid re-absorption of these homes to first time home buyers as opposed to landlord/investors or other investors who are planning to ride it back up and sell the homes for a profit after the market rebounds, after renting them for a few years, even if it is at a loss. There is no doubt in my mind that the houses caught in this mess are best made into homes for first time and other home buyers, the people of the United States of America that need the lower down payment required by FHA, than from a conventional mortgage.

If the average home costs $200,000 in an area FHA requires 3.5 percent down which would be $7,000. The 10 or 20% required for some conventional loans would be $20,000 to $40,000. Everyone can see how this prevents or at least dissuades home ownership. Even if someone has the $20,000-$40,000, I contend they are better off going with a smaller down payment and keeping a reserve emergency fund, rather than completely depleting their savings and moving into a new home. 

Don't get me wrong, I am not anti-investor, but I think an investor play here is to be or finance/partner with the "rehab guy" swoop in, bail out the troubled home owner, clean the place up a bit, maybe carpet/paint/minor repair and flip it to a new home owner... now they can qualify with an FHA loan 3% down. If your a long or longer term investor, I think the play is to do the above but then to finance the houses for the buyer (that can't even qualify for an FHA loan - like me), with no shorter than a 5 year balloon - give em a chance to perform... and lending should return to more of a normal state by then to where they will hopefully have a little equity to refinance and pay you off.

I know there are pundits out there that think that "risky borrowing" has led us here... I disagree, that was a component of course, but it always exists and has existed. Without risk there is no reward!

I suppose you could even use the Alan Greenspan term of "irrational exuberance". But from where I was sitting in Montrose Colorado, it was the drying up of the money supply that killed the construction and job base of our town. From what I understand this mess was caused "more by" the Banks "irrationally exuberant" bets on derivatives (a highly leveraged and speculative investment - essentially a hedged  bet on interest rates and currencies from what I understand (an option on a futures contract)).  This coupled with some investment bank's unscrupulous "packaging" of loans to make them look less risky then they were so they could be sold off as A or B paper when they were really C.   The market was essentially "manipulated" by banks so they would have bigger profits.  Were they risk takers?  Yes.  Was it "irrationally exuberant"?  In my opinion Yes at best irresponsible and criminal.

Were the small contractors and builders of Montrose Colorado risk takers, yes, of course, but they were calculated seemingly smart risks they were taking... We didn't have whole subdivisions of 50 or more spec homes built to sell to no one. In Montrose, we had small family men and women that worked in the construction trades slowly cranking out one house at a time for the next family that wanted to move to a beautiful place in Western Colorado with Great Upstream Water as I like to call it. To some extent they, these people moving to Montrose slowed down, but often they just couldn't get a loan or couldn't sell their house, but they wanted to come. These small builders only need one house not to sell for a year or so and they can go under... They use the profit from one home to obtain the loan for the next home. Risk takers? Yes. Irrationally Exuberant? No.

Regardless of who's fault it is we need to figure out how to re-build America and the USA... Create jobs and put people back in homes, rather than on the street or in apartments. For us Realtors of the world we need to figure out how to increase the number of transactions (currently lacking the buyer component of the equation...)

I realize not everyone can own a home... If I didn't own a home already, I as a Realtor couldn't buy or own a home right now, because I don't have a W-2-ed steady paycheck and job... I live commission to commission and the banks and lenders consider that risky... Can't say I disagree, but I have never defaulted on a single loan in 46 years and don't plan to start... Due to complicated and lengthy tax returns, I have used the "evil liars loan" stated-loan programs of yesteryear for my last three real estate loans. So for those of you that are screaming here we go again, wave two... I think you are wrong.

The banks and AIG should have been left to fail and this mess would of cleared faster than it will with all the bank and insurance company bail outs... (Know why AIG was going down, an otherwise extremely profitable "Insurance Company"... because they were insuring the Bank's Derivative Bets that went bad... and then they couldn't pay up, if they didn't pay, the bank failed.) How they (AIG) were ever convinced to risk their butts for the Banks behalf without making them jump through the hoops and pay the "actuarialized safe house bet" premiums, that we would all have to for any kind of insurance is beyond me, but it happened.

So what do we do... blame and punish the average guy, who might have been framing houses, dry up the money supply and essentially freeze lending and tighten up credit so none of these people can get jobs or loans and then they will lose there houses and the press will blame their loss on their risky borrowing and over-zealous budgeting and income expectations.

I ask you this? Who's job is stable today? I dare you to name more than 10 that are essentially guaranteed (I can't even think of 10 at the moment...) I mean think of it, lawsuits, mergers, bankruptcies, bank failures, government cuts, city job cuts due to reduced tax base, etc. There is little that is safe other than being self employed in something with a relatively stable demand, but even then you are constantly battling off change, the big guy and the government itself...

There are no guarantees, there are just challenges and opportunities.

This "Hud Waiver" is a welcome change and I believe it will provide opportunity and greatly help many people from new families, to old ones starting over or upgrading homes, etc. It will even help investors, and contractors that go into rehabbing properties rather than building homes...

Chris Ormsbee

Century 21 Action Realty

The Montrose Gold Team 

www.C21ActionRealty.com

www.C21ActionRealty.com/COrmsbee

www.SoldCORE.com

www.MontroseGoldTeamBlog.com

www.MontroseGoldTeam.com

PS - Share this news with your fellow Realtors, so they can educate their buyers and investors about the change. Plus you might seem "smart" to them... Feel free to reblog as well. Thanks for reading my long worded rant - news blast.