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The Stock Market Surges to 20K And The Masses Applaud Their Own Doom

Make no mistake folks, the stock market surge is based on credit and at some point, that credit is going to default. The scary part is, we all know this, we all know our country is borrowing to pay debt, our citizens aren’t saving, it’s not a secret and yet, we are applauding this credit driven stock market boom, to our own demise.

I heard it once said…or read it somewhere which is more likely…, “we can’t avoid the final collapse of this boom from credit expansion. The only choice we have is should the bust happen sooner because we voluntarily stop borrowing or later as the currency system collapses on its own”

Essentially, the problem is, our debt is growing faster than our GDP. Folks, it’s just not possible to grow the debt faster than what we make. Guys, it’s simple math…it’s going to stop.

As I read about this some more, it was put this way to me…… “So let’s run the math experiment as ask what will happen if the Fed is successful and total credit grows for the next 30 years at exactly the same rate it did over the prior 30. That’s all. Nothing fancy, simply the same rate of growth that everybody got accustomed to while they were figuring out ‘how the world works.’ What happens to the current $57 trillion in TCMD as it advances by 8% per year for 30 years? It mushrooms into a silly number: $573 trillion. That is, an 8% growth paradigm gives us a tenfold increase in total credit in just thirty years:” Chris Martenson with

To drive this home….the GDP of the ENTIRE GLOBE was only 85 Trillion in 2012. It’s going to crash….it has to and when it does, the dollars in our pockets will be worthless…literally not even worth the paper they are printed on. So….when you see all these people cheering and raising the roof over the stock market, don’t forget, it’s got to bust at some point and maybe sooner than later considering we are now over the 90% debt to GDP threshold.

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The unrealized costs of overpricing a home

Sellers, there are more expenses to selling your home than commissions if you're not ready to sell. One of worst things a seller can do is overprice his/her home when it first comes on the market. A small overage is one thing, but when that overage hits 10, 15, 20, 30% and beyond, it's like burning dollars in your furnace to stay warm.

What are the unrealized expenses of overpricing a home? I only say unrealized because it seems that sellers are the last ones to realize the costs of overpricing. Let's assume the house is in good condition, ready to show and is in a good location, but it's priced too high. What are the unrealized costs?

  • The monthly expenses of maintaining a home that could be used in purchasing a new home. (Electricity, water, heating fuel)
  • The other periodic expenses that occur and need to be paid, such as: property taxes, insurance, maintenance costs, etc.
  • The expense of keeping the house ready to show. Who wants to keep their house ready to show seven days a week for six months, nine months or a year? You can never really take a day off from living in a museum.
  • The expense of having to pick up and leave the house for showings over and over. That may inspire more dinners out, more shopping trips and of course more inconvenience and more expense.
  • The expense of giving a neighbor an insight into what not to do when she's ready to sell. She watches your unsuccessful attempt to sell your house and then lists hers for 10% less. It sells immediately. You blame it on your lame Realtor, but the truth is it's your price. 
  • The expense of stress on the family. If you have children or pets in your house the above issues also affect them. Kids can't have kids over because they might have to leave at moments notice, dogs and cats end up crated for hours on end and neither can use the house the way they did before it was listed. 

A house that sells quickly is just as likely to sell quickly because it was listed well rather than because it was listed low. When you hire an Realtor to sell your house, make sure your hire one that you have confidence in and then listen to his/her advice and insights into the local market.

A buyer will likely buy another house that is similar if the price is lower. No matter how wonderful your house is, it's in competition with every house on the market. If your house is the most expensive one, it will likely sit longer than similar properties. Think about the unrealized costs of overpricing a home. When you're ready to list your home, give your Cornerstone agent a call for an honest assessment of your home and it's potential for a profitable sale in a reasonable time. 

Check out Beth Atalay's blog: You Are NOT Ready To Sell Your House Yet!! 

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To understand the importance of setting the right price, you first need to understand the market place. When selling your home, your market place isn't a specific location, instead it's more of a worldwide economic system for exchanging goods and services. More specifically, the market place for home sales is more a figurative place than a literal place. None the less, in either case, the market place is where the law of supply and demand operates. Understanding how the law of supply and demand affects your home value in a competitive market place is key to setting the right price.


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First off, let me start by saying this is going to be a long blog because, it’s a topic I am sure is going to cause many feathers to ruffle but, I think this question should be asked because, I strongly believe we are in the beginning of a technological revolution that will dramatically and catastrophically change the face of the real estate industry and more importantly, the human face of the industry….specifically Realtors.

Let’s start with what we all know about licensed agents and for that matter, Realtors. Getting into Realestate and becoming a licensed agent isn’t that hard. In fact, the requirements to be a licensed agent are different from State to State but, for the most part, our industry and lobbying group NAR (National Association of Realtors) has done a good job at ensuring licensing requirements aren’t as stringent as other professions. The reason behind this is because, like any “unionisque” type of organization…which NAR is, they only make money on dues paid by their members so, what is their number one goal….to grow membership of course. You can’t grow membership if you limit the number of potential members by strict or hard to obtain licensing requirements. That is why becoming a Realtor is much less difficult that say, becoming a barber or stylist.

Secondly, turnover is high, very high. I believe I saw a statistic back in 2008….maybe 2007 that said during the height of the real estate bubble, before the collapse, over 90% of licensed agents dropped out of the industry after 6 months because, they weren’t able to make a living. I also seem to remember a NAR statistic a couple years ago that said the average salary for a Realtor was $28,000.00 a year…..that just a little better than minimum wage which in my state makes you between $22,000 - $24,000.00 a year. Let’s not forget that NAR isn’t the only expense agents have. For most of us, we pay for our own website, we pay for our business cards, signs, riders, office fees, splits, car note, gas, and marketing…etc…. so, even though you may be making $28,000.00 a year, I seriously doubt that’s all net profit to the bottom line. When I look back at my real estate career, my first year…I was not profitable and I didn’t net anything near $22,000.00. So, just on the economics alone, being a licensed agent is expensive and the pay sucks!

Finally, competition is fierce and new agents suffer the worse in most market places. We all know buying or selling a home is the largest financial investment most people make and as such, no one in their “right” mind wants to use a agent that just got their license 6 months ago and has never listed a home and only worked with two buyers. If you are an honest agent and have this kind of conversation with a potential seller, I am sure you will be shown the door. Ok…sure, most seller’s don’t interview more than 1 agent anyways….we have all see the statistics from NAR that tells us something like 80% of homeowners simply pick an agent they already know or are recommended to them but, that doesn’t make competition any less fierce. You see, that means you as an agent have got to be spending a crap load of money on marketing yourself and networking….which most new agent don’t have that kind of money and aren’t seeing that kind of money come in the door. So, to survive the fierce competition you better be able to afford it.

I say all that to give you a bit of a back story because the meat of this article is coming up. You see, I read a very interesting article on Bill Gates where he was explaining that world governments and business are not prepared for what advancements in technology will do to the job market in the next 10 years. He warned that many jobs will become automated through employer cost reductions using technological advancements in software automation……or robots. Now…for some of you, this may sound all, techy mumbo jumbo but, just think how your home has changed just in the past 5 years. We are seeing home automation take off like nothing any of us have ever experienced before. For goodness sake, we have Google announcing that they expect their driverless cars to be on the roads in 5-7 years from now. We have homes that communicate with your phones and allow you to turn off lights, lock doors set security systems, turn of faucets….etc…. Take this same automation technology….and more importantly mentality and start applying this to real estate.

Yes, I said it, I said take software automation and start applying it to real estate, what do you see is the future of the Realtor? As a Realtor, it really sends a cold shiver up my spine. For many of us, we are already seeing automation in our markets and think of it as a easier way to do business. For example, many of us use appointment centers to schedule our appointments for us. Some appointment centers like the one I use allows my sellers and my buyers to be completely on self help. That’s right, my sellers can log on to their account, set the parameters of their availability and buyer’s agents can log on and schedule showings without ever having to pick up the phone, speak to me, or speak to anyone for that matter. In other words, the buyer’s agent and sellers completely handle their own showing schedule without any involvement from me…….other than simply setting up the account.

We also have wonderful automated lock boxes with phone widgets. Once a buyer’s agent has a showing scheduled, they don’t need me to open the box. They just show up, open their phone widget, type in their code and boom, the box opens and reveals the key. My point is, you don’t need me to schedule the showing or to give entry anymore and we all seem to be ok with this technology because, it makes our life easier.

Now, let’s all jump on board the imagination train and see a future where sellers can go online, find a cloud based real estate brokerage where all paperwork is signed digitally on-line, they upload their own photos, provide their own measurements and can place their own lock box on their door, set up their own schedule center and get all the marketing and advertising such as, MLS, MLS Syndication, National Syndication, Local Marketing, Craigs List Marketing, etc….. for the low 6 month price of only $499.99. No commissions to pay, no silly Realtor to deal with and all of the purchase and sale forms are online and explained so you negotiate your own home sale, directly with the buyer, through a web portal where an online licensed agent can answer any questions you may have via live chat.

Just curious, did you feel that shiver up your spine yet? If not….maybe you should go get checked, you might already be dead.

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The Real Unemployment Rate is 13%

The Real Unemployment Rate is 13%

You heard me correctly, the real unemployment rate of this country is 13%. So, when I say “Real” what do I mean. The U-6 rate is by far the broadest and most accurate depiction of that the unemployment rate truly is in this country. The reason I believe this is because the U-6 number includes the unemployed (those getting unemployment insurance benefits), the underemployed (those who are working but, only part time or for considerably less than before they became underemployed) and finally, the discouraged (those who have given up on looking).

My point is, the U-6 number includes a larger spectrum of what is really happening to the unemployed in this country and in my opinion, it’s why main street America isn’t feeling this economic recovery that the White House is telling us is going on. As a Realtor, I am faced each and every day with the stark reality of America’s hardship in this economy. You see, I specialize in helping homeowners try to keep their homes from foreclosure. Sure, the White House and media want to broadcast the word “recovery” but, the volume of homeowners that call me, looking for help, hasn’t slowed since 2008. In fact, it’s been rather steady.

From looking at this U-6 number, I can only summarize it’s because more and more people are just giving up. They see no hope, no light at the end of the tunnel. The number of discouraged people who have just stopped looking also explains why we see such a massive increase in the number of welfare recipients. Let’s face it, if you have given up and you feel hopeless, all your savings is gone, you used all your retirement, if you had any in the first place, you lost your home due to foreclosure….where else are you going to turn to?

All said and done, the next time you hear about the “unemployment rate” of this country, stop and take a second look at the U-6 unemployment rate, it may give you a much better understanding of what is really happening out there.  

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Are you paying attention to the Federal Reserve?

Realtors, be warned. The Federal Reserve announced that it will begin drawing back the bond purchasing program called Quantitative Easing. This is extremely important for us Realtors to know and understand because; this will have a dramatic impact on buyers or those considering buying a home. Let me explain.

In the past few years, we have seen traditionally third world countries see a huge growth in development. For example, did you know that Mexico is now one of the worlds largest producers of aircraft? Yeah, I didn’t know that either but, it’s true. In fact, countries Africa may be one of the continents with the largest expansion of unprecedented wealth. South Africa, Nigeria, Angola, Ghana and Ethiopia were all named 2013’s countries to watch and invest money in due to rapid expansive growth.  So, you may be setting back and wondering, what does these countries have to do with Mr. Jones’s property down the street….well, just keep reading.

The growth these countries have been seeing has been unprecedented and I wanted to know how this was all happening so, I did some research and found that it’s in large part due to the US Federal Reserve. The Quantitative Easing policy of the Federal Reserve has been blazing a trail for the other central banks across the world by essentially manufacturing trillions of US Dollars to buy bonds and drop interest rates around the world. By doing this, the US Federal Reserve has made it easier and more attractive with larger returns to allow investors to move money into third world countries. Investors like those large retirement firms that hold the cash of American retirees. Ok…, are you seeing it now, are you starting to understand where I am going? If not, no worries, just keep reading.

So this week, the Federal Reserve announced it was going to draw back and end Quantitative Easing in 2014. It will taper off the amount of purchasing it does monthly and in effect, buying less and less bonds. So, in other words, you are going to see less developed countries that saw huge developments in the past two years begin to have much less cash flow coming in. You will even see Investors pulling out of these countries because, instead of developing more sound political and economic infrastructures with governmental policies, these countries did what any other country would do when they all of a sudden were rich from a windfall, they partied like it was 1999. In short, these countries will not be prepared for the withdrawal of funds and will do one of two likely scenarios. Either they will simply watch their country “ease” back into third world status or the will put in place protectionism policies that will strangle further growth and severely limit investors from moving cash out of the country. In essence, locking up American retiree cash in a third world abyss. I predict that the first two quarters of 2014 will see dramatic cash pull out of third world countries, currencies and, bonds. This will be the start of a mini global recession due to a lack of demand for goods and services.

If that isn’t enough, let’s not forget about inflation. Oh yes, the big bad “I” word. Inflation is the elephant in the room that most people are trying to desperately ignore. Even the Federal Reserve stated that the QE (Quantitative Easing) drawback would have to be timed perfectly to negate the real risk of inflation. In fact, the Federal Reserve said that the reason it’s thinking of doing this drawback now is because, they believe the timing is correct. Now, how they come to that decision, I don’t really understand but, it’s primarily based on the ideology that our economy is growing and the country if financially doing better as a whole. Well, try telling that to the 53% of Americans who are on some form of government assistance right now.

So, just a quick note on inflation, we get inflation when we have too much money in the system. In short, when everyone has a tone of dollars, how much is a dollar really worth? Well, it’s not worth much if everyone has them. So, it takes more dollars to make a gallon of milk or loaf of bread and thus you have inflation. Remember me talking earlier about all those trillions of dollars that the fed has been pumping out into buying bonds….well, those trillions of dollars have got to go somewhere and guess where they are likely to go, right back home, here in the good ole USA. In fact, we are already seeing it happen. Why do you think the stock market has been on FIRE, lately. Those dollars are coming home to roost. When all that cash starts looking to escape Mexico, Rwanda, Honduras, South Africa, Angola, etc… it’s going to all come here and the value of the US Dollar will start falling. In fact, the dollar has seen some of the most recognizable loss of value against the Euro since 2011. Back then, 1 Euro was worth 1.29 dollars, in August of this year, it was worth 1.33 dollars and right now, as of today, it’s worth .73cents. Are you stumped? It took years for the euro to rise .04 cents from 2011to 2013 but, it only took months for it to lose almost half its value…wonder why? You know why, I just told you, all of those dollars….those trillions of dollars through the Federal Reserve QE program is coming home and like any bubble, it’s got to bust at some point. The Federal Reserve is gambling that our economy will be strong enough to handle it when it does but, I am not so sure.

When this bubble burst, it will mean run away inflation and we as a country aren’t ready for that. 2007 will pale in comparison and in fact, I have read many analysis say The Great Depression will pale in comparison. Unfortunately, it isn’t like we are navigating uncharted water here. This has happened before around the world just ask the Weimar Republic….or what used to be the Weimar Republic.

Go visit this wiki site, about the Weimar Republic and then ask yourself, do you now understand how this will impact Mr. Jones’s house down the street?

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REO isn't Over and I have the Proof.

I have written articles on the drought of REOs and many of you are experiencing the drought personally and have shifted your business but, make no mistake, it isn't because foreclosures have slowed, stopped or the economy is getting better. In fact, most of these banks are moving their REO inventories off their books to hedge funds, bulk portfolio buyers or even worse, shell companies like (fill in the blank) which then dispose of the property directly. Don't believe me? Well, here ya go, read this!


Now, after reading that news article, tell me how great this economy is.

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Many people have no clue what happens or if anything happens to their credit when they complete a short sale. Truth is, many people just don’t know however, some really great articles are out there about this very topic and yet, so many questions still exist.

The first article I want to draw your attention to is notably an older article however, based on all the chatter I hear on a daily basis about how a deed in lieu or short sale will impact your credit, I really think this article should be revisited.

As published in the Washington Post 8/30/2011 by Michelle Singletary she stresses the fact the actual credit score it’s self, also known as the FICO score may be impacted differently by a short sale or deed in lieu however, that impact is so marginally different that, claims a short sale is less negatively impactful than a deed in lieu seem a bit farfetched, when strictly referring to impact of the FICO score. If you want to read her article yourself, click here.

A 2nd article I think you should read is by Linda Ferrari on 6/9/2009 on her blog, Linda Ferrari Your Credit Score Expert. She wrote an article titled The Mortgage Crisis and Your Credit Part Three: Deed in Lieu of Foreclosure. This article is really good from the stand point about how your credit score is impacted by how the deed in lieu is reported. Many people don’t realize that the bank can report your deed in lieu three different ways and of those three different ways, the negative impact will vary from most negative impact to lest negative impact. I would strongly suggest you read her article to learn more about how it’s reported. It was a huge eye opener for me.

Finally, I found a great article, maybe the best one on what the future may hold for those of you who have completed a short sale vs a deed in lieu. Now this article is very recent, in comparison to the other two, it was written back on 7/8/2013 by Alanna McCargo and even better, it’s posted on the Equifax forums giving it credibility. It’s titled “Can I buy a Home After a Short Sale or Foreclosure” and, the best part is her approach to credit fundamentals and how important it is to do all you can to protect your credit.

All in all, after these I read these articles and did some further investigation on my own, here is what I learned.

  1. Your credit will be negatively impacted by a Short Sale, Foreclosure or Deed in Lieu.
  2. The negative impact to your FICO score will be marginal at best between the Short Sale, Foreclosure or Deed in Lieu.
  3. When you agree to participate in any of these default disposition options, CONSUMERS MUST READ THE TERMS AND CONDITIONS OF THEIR PARTICIPATION and watch out for how their action is being reported to the credit reporting bureaus. The truth is, some reporting options are much more negatively impactful than others. Consumers need to know they have options they can negotiate here for a less negative impact to their credit.
  4. Finally, benefits like, relocation assistance, no risk of future deficiency judgments are not guaranteed and once again, CONSUMERS MUST READ THE TERMS AND CONDITIONS OF THEIR PARTICIPATION as these additional benefits are NOT guaranteed. Consumers have options here to negotiate a better deal and should be aware they have options.

If you are considering a short sale, contact me, Jesus “Jesse” D. Gonzalez Jr. Realtor / Principal Broker of Liberty House Realty LLC. I would be happy to discuss your options with you and how we can help. 615-424-0961

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What the Public Thinks About Realtors

Are you a commission hungry, investment greedy, out for the kill, selfish, only interested in your own bottom line, completely lacking any real professionalism Realtor?

Well….sure you are, didn’t you know that?

Most of us, can all agree, the public’s idea of what a Realtor does and who we are isn’t all that great. In fact, I am sure most of us have likely heard things like, “Realtors are part time professionals”, “Realtors are just over paid house wives and,  my personal favorite is, “The requirement to get a license is so low, anyone can be an agent”. Granted, perception is often times reality so, regardless of how true these statements may be, we as an industry have a problem….a big problem.

Sad to say though, I myself kind of agree with some of these perceptions. I have myself run into Affiliate Brokers who absolutely had me banging my head up against a wall. In fact, one time, after talking with an Affiliate Broker with another company, I was so exhausted, so battered by stupidity; I thought I was trying to corral cats.

My biggest problem with perception of what we do is the perception that we do nothing. This absolutely bothers me to no end but, truth be told, a vast majority of us literally stick a sign in the yard and wait…..wait……and wait some more. A majority of us don’t do much of anything to pro-actively market, advertise and network our client’s homes. In fact, it’s a bit of an epidemic however, we really aren’t the only ones to blame. How many times have you been to a listing appointment where you haven’t given your clients at least a Comparative Market Analysis, with verifiable comparables sales, in the last 3 months, within the same subdivision, within 10% or less of the subject properties square footage, within + or – 1 bedroom, bath, half bath and finally, within 10% of the subject properties acreage? Chances are, you haven’t done all that work for the majority of your clients because, your clients don’t ask for it. They don’t even know to ask for it. They just assume you did your homework or better yet, they will dictate to you what they will list it at and you don’t have any say either way.

We have all heard, “buying a home is the biggest investment you will ever make” however, how many of us, when working with our client, actually do the same due diligence we would do for ourselves when looking to buy our own home? Oh…did I just touch a nerve? I think I did.

We have a public that is so in sensed on moving quickly, that they have completely given up on moving smart. We have an industry so full of “professionals” that we have completely given up on being professional and become so in sensed with cashing that commission check. So…who is to blame for this debacle? Better yet, maybe we should ask ourselves, do we really have a problem with this perception? Maybe this is just the way the real estate business works?

I am here to say NO, this isn’t the way it’s supposed to work and we owe the general public better. I have seen Affiliate Brokers working with clients and as I pass the door, I hear an offhand remark that makes my blood boil. I get so ticked off because the Affiliate makes such a huge mistake that I can imagine myself in the court room swearing to tell the truth, the whole truth and nothing but the truth….if you know what I mean. For example, when you get a new listing, how many agents call you to ask you, “What kind of condition is the home in?”, “What kind of repairs are we looking at?” or “How much do you think it will cost to fix it up?”??? Now, the funny part of this article is, some of you just read those last couple of lines and thought to yourself…..”what is the problem with answering those questions?” and then some of you read those couple of lines and cringed. I got a questions for you, what category are you in? Did you cringe or did you stop and think back to this morning when you answer all three of those questions about that new listing you got at 666 Money Pitt Ln?

To see change in this industry, each individual will first have to become that change. A very famous man, Mahatma Ghandi said something very similar within a different paradigm however, the truth behind the statement rings true here and now.

The next time you take those mandatory CE courses, actually take something with you and implement it in your daily business life. Expand your skill set, you are much more than just a Realtor. I would go so far to say, if that is all you think you are…if that is all you know….then maybe this profession isn’t right for you in the first place.

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The Reasons Why We Do Not Have High REO Inventories

The business head lines today read, “US Labor Participation Rate at Lowest Level in 30 Years” or “US Labor Participation Rate at Lowest Rate Since Carter Administration” and yet, I am trying to figure out why my REO inventory this year has shrunk to pre 2007 bubble bursting levels. To make this point a little more pointed, let me share a little statistic from the Bureau of Labor Statistics. Our current unemployment rate is 7.3% and the last time we were at 7.3% was December of 2008. Now, think back to December of 2008, think of your REO inventory….are you at that level today? I would venture to say, likely not. Are you still confused as to what my point is? Well, let me say it this way. If you add in the participation rate with the unemployment numbers, you get a “real” unemployment number of 9.4% and the last time we were at 9.4% or higher was May of 2009 thru November 2010 so, think back to you REO inventory then….are you at those same levels today? Once again, I venture to say….likely not.

So, how is it that we have a “real” unemployment rate at or higher than the worse unemployment we have had accordingly to the Bureau of Labor Statistics in the past 4-5 years and yet, we don’t have a correlated REO inventory?

Well, I am no economist however, I have some speculative theories, let me share.

  1. Obama Administration Homeowner Assistance Programs: Obama has directed HUD and the US Department of Treasury to stop the foreclosure crisis by implementing several foreclosure avoidance programs through joint department efforts like the Making Home Affordable programs. Do you know how many entitlement programs there are? Likely you don’t so, let me share…..
    1. HAMP (Home Affordable Modification Program)
    2. PRA (Principal Reduction Alternative)
    3. 2MP (Second Lien Modification Program)
    4. HARP (Home Affordable Refinance Program)
    5. FHA2LP (Treasury / FHA Second Lien Program)
    6. UP (Home Affordable Unemployment Program)
    7. EHLP (Emergency Homeowner’s Loan Program)
    8. FHA Forbearance
    9. HECM (Home Equity Conversion Mortgage)

So, you had no idea…did you? Granted, my blog isn’t long enough to go into details on each of these programs with you however, for more information you can call the NSC at 1-877-622-8525. The Obama administration has used all of these foreclosure avoidance strategies in a very similar way the Community Reinvestment Act set up , built up and ultimately collapsed our economy in 2007 with the bursting of the real estate bubble. Oooops, “did I say that?” HELL yes, I did.

That’s right, the reason we don’t have REO inventory as REO Professionals is because our President has decimated our industry by artificially and manipulatively used foreclosures as a political tool for re-election of himself and his party. Sadly, most of the American public don’t understand what this does to home values……so, let me explain. It artificially inflates home prices by restricting legitimate inventory from hitting the market place. It sets up our country for a 10(+) year trickling of these vacant, distressed, properties to the market place. Ok..sure, it can be argued that by doing this we are stabilizing the housing market and sure, I will relent and say….it does however, only for the short term. In fact, it makes things a little worse because, we end up sitting on inventory and God forbid, another economic crisis hits or the current one drags on for longer than expected and we end up with more and more and more and more water behind an aging, over burdened, crippled, dilapidated damn that is ready to blow.

Think of the housing crisis as a man mad lake with one side plugged up by a huge damn. Think of the water in the lake as all of the houses that are distressed, under water, risk of foreclosure. Right now, our lake is so full, we have foreclosures literally spilling over the top. Our economy…the damn, is barely holding and with a growing “Shadow” inventory of REO homes, high unemployment, high “real” unemployment and these continuing foreclosure avoidance / rescue programs……we will have a seriously problem, eventually.

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Are the banks holding back... I have proff

I have a client who hasn't made a payment in two years. His loan mode was to crazy to accept. So they agreed that they would do a short sale. Well the client decided not to move forward with the short sale till he at least got a notice of default. Its been now 4 month that nothing has happened. Then in the last month the client got a call from the bank offering to give up the property for $5,000. The client said NO. I want at least $10,000. The bank has not responded. No this is Wellsfargo. Not  small potato. Just figure. They delay is something that shows the banks hand in the game. I have two other REOs that have been sitting empty. They where going to put them on the market and nothing in the last 7 months. I have contacted the asset company and no response what so ever. Now why is this happening? The story about the banks are holding off is the reason. Now this bank is US Bank. Again not a small potato. One last one. I have a listing with PNC bank. Its vacated 3 months ago. And waiting for a clean out approval. And nothing. The old owner is suing them stated that they took her property in the from her.  So its tied up until they clear it out but the funny thing is that they got a lock out on her. Just figure. Everything is tied up with attornies who are still making a fortune with the legal battles and the banks not wanting to pull the trigger. Time will tell. I just seam on CNN that the word on the street is that the housing market increase is in jeopardy. Now do your homework. What is that about?


Paul Conti

Legacy Real Estate

San Jose, ca 

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Busy business owners, executives and professionals sometimes have a hard time coping with their workload and get overwhelmed by all the tasks. There are times that they feel swamped and because of that feeling of helplessness, nothing gets done in the process. If this is the kind of feeling or atmosphere that you have, it might be time to hire an assistant or a virtual assistant to ease up on your busy schedule and for you to be more productive.

Now, finding the perfect assistant might seem easy at first glance seeing that there is an increase of virtual assistants in the web but it really is not as easy as you think. You will need to find one that fits your criteria and requirements and your budget as well.

Here are some helpful tips on how you can find the perfect VA for yourself or for your business:

1)    Figure out your budget and how many hours of work you need. It is very important to figure out how many hours of work done per week you need for a VA and how much you are prepared to pay. This ensures that you don’t go over budget and your VA can work on the amount you provide.

2)    Check what type of work you need done. You need to figure out what kind of work you need from the VA so that you can explain to your VA what tasks you want and therefore prevent wasting the VA’s time or yours for that matter.

3)    Gather as many candidates for VA as you can. Receive as many applications as you can and prepare a shortlist for your interview based on the VA’s qualifications and experience. Spend adequate time in recruitment for your VA since you want someone who can work with you well, so invest the time. Be sure that even if you have chosen the successful applicant that you also keep in mind 1 or 2 next to that applicant if in case the successful one does not work out well.

4)    Make sure that you and your VA agree on a trial period for work. Having a trial period ensures that you are really sure of the fit of the VA and your needs. Also this is sort of an adjustment period for the VA and you and will show or somehow predict the kind of work relationship you both will have.

5)    Agree on scope of work and specific terms of the VA’s contract. Agreeing on specific terms of employment and the scope of work will ensure that all needs are met and expectations are covered both on your side and the VA’s as well. This bodes well for everyone concerned and prevents miscommunication and disagreements for a better working relationship.

Sometimes finding the perfect VA is easy and sometimes it is not. The tips above are designed to be helpful in guiding you to meeting the VA that can satisfy your needs, if not exceed them. Sometimes also it could be a trial and error method. Different approaches work as well.

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Property Management, Rentals and Short Sale: The New Niche

From the time we sign up for real estate school, to the most experienced agents with 30+ years under their belt, we have all heard that to be successful in real estate, we need to find our niche. Well, I am here to say that’s a bunch of hog wash. I would go as far to say that by “finding your niche” you’re a signing, your own business’s death certificate. Many of our colleagues found out in 2007 – 2008, when the real estate bubble burst, having a niche meant you didn’t know how to work in a shifting market place. I understand that for most all of us, real estate was steady and predictable so, this niche thinking was rampant, accepted and promoted amongst our ranks however, now we have learned that being a niche Realtor means certain death as real estate become more and more volatile each day.

Now, I say all this but, let’s be honest, REO is definitely a niche, I like to think of it as being the undertaker of the real estate world. Yes, by extension, that means I am a housing mortician. As such, we see highs and lows and we are extremely sensitive to fluctuations in the market place. For some, that’s just fine, we have learned to work with these convulsions and have shielded our lives and business from times of drought however, a vast majority of us ended up in the foreclosure lines ourselves when the real estate market heard those fateful sounds, snap, crackle and finally….POP!

As a Realtor and full time Broker, I have found that taking a more diversified approach to my business offers me and my family a more stable outlook to my career. This means, I have done away with the niche and expanded my income streams to include things like; Property Management, Rentals and yes, Short Sales. I do have some other things I do in real estate like, investing however, that is another conversation for another time. Let’s stay focused on the whole “niche” thing.

True, you can say that each of those three I just wrote about are niches amongst themselves and, you would get no argument out of me here however, all together as a part of your service portfolio, they become more, much more. All together they become an inoculation of sorts, from the market place unpredictability. By adding more services you can offer, you are riding out the waves of instability in the market place by being able to quickly and effectively shift your business to more profitable ventures. Ok…yes, you are still working the “distressed property” niche so…..yeah, it’s still a niche but, it’s a niche with diversification.

Right now, many markets are seeing short sales take over and even outpace REOs however, we don’t see a flood of agents clamoring to do short sales like we did with agents clamoring to get REO assignments and, why is that? Have you thought about that? If not, why not? My argument is, the skills you learned to be a kick ass REO agent are really the same skills you need to be a kick ass Short Sale Professional. I would go as far to say, no real difference exist between the two required skill set that would stop any outstanding short sale agent from being a outstanding REO agent and vice versa.

Granted, short sales are much more time consuming and require much more paperwork but, these things shouldn’t scare you away but, should entice you to add short sales to your service portfolio. Let’s face it, if you can close a complicated short sale, you can close any REO. My bigger point is, due to the complex nature of a short sale, becoming a Short Sale Professional will build on skills you already have or at least, develop skills you don’t have and therefore, making you better in the long run.

Don’t be afraid of short sales, they are fast becoming the new REO. As REO agents, you already have the basic and even advanced skills to be a great Short Sale Professional so, grow a pair and get to work. Your area has hundreds or even thousands of homeowners who need the help of an experienced distressed property agent who knows the front and back of the foreclosure process so that they can avoid the foreclosure if at all possible.

As an idol of mine says, “You beda weeerk!”

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The Golden Era of REO Came and Went with Nothing More than a Whisper.

Since 2008, I have been hearing that banks and lenders are going to flood the market with REO inventory and spark a “gold” rush of sorts in real estate. In fact, I distinctively remember huge parties and networking events around this whole “REO Tsunami” idea however, what we have learned is history repeats its self.

At that time, I like many others, wondered just exactly what was going to happen to all the REO inventory we knew the bank were holding. I like many others asked around and gleaned as much information as we could and ultimately I saw two different schools of thought forming.

The first school of thought or the Tsunami crowd was throwing lavish networking events, hosting charities parties and even organizing education conferences around this whole crowd mentality that the banks and lenders were going to inundate the markets with non-performing assets. I was never a part of this crowd but, honestly…..I did start asking “what is going to have to happen to all this inventory?”

The second school of thought was a more controlled response where the banks and lenders were going to trickle the inventory on the market. The argument here was, banks and lenders aren’t able to flood the market because it would collapse the American economy. Now, this sounded more reasonable to me and this was the camp I was in however, I knew that in the back of my head, somehow, someway, inventory was going to have to move but, I just didn’t know when.

2009 – 2012, agents across the country saw banks clamoring for their help to unload REO inventory. We could put an application in with a non-traditional REO disposition channel and be approved for listings in a couple weeks and in some cases a couple days. Now, granted, getting in direct with organizations like Fannie Mae or HUD was still a nightmare and impossible for most, none the less, the REO Agent ranks started swelling with over puffed up agents claiming to be local experts and before you knew it, every city was swollen with rank and file amateurs selling REO. I remember one large…very large, national outsourcer tell me that they DNU’d (Do Not Use) categorized more agents in 2008 than they accepted applications.

During this time, many could argue we had a “REO Golden Era” but the truth of the matter is, it never lived up to the hype….or better yet, it never lived up to what many of us saw was actually happening in our markets. Just because we had a record number or REO agents out there selling a record number of REOs, we still had homes setting on the market, with no agent sign in the yard, just setting vacant, abandoned and on the banks books as a non-performing asset. In fact, it was so rampant that many of us, myself included really was starting to believe a REO tsunami was definitely on the horizon however, it never came.

Instead of a Tsunami, we got a short sale bonanza or in some areas a property management nightmare. Those professionals who had been around the block in the 80’s knew we would never see a tsunami and they were right….are right however, like I said earlier, it left us all wondering just exactly what was going to happen with all this inventory. What we didn’t know was that the largest holders of REO inventory, HUD, Fannie Mae, Freddie Mac, Bank of America, Wells Fargo, Etc… was going to end up as political punching bags and political puppets for the attempted socialization of the American housing industry. Instead of letting the free market run it’s course, we found ourselves at the mercy of politicians who used the crisis to help re-elect liberal or progressive politicians that promised housing reform. This housing reform was just a guise to put in public welfare policies which would keep people in homes longer even though, it was incredibly obvious these homeowners were never going to be able to keep the home.

Finally, the tsunami will never come because of the push to property management. Many politicians are starting to see the writing on the wall and are realizing that these banks just can’t keep people in the home for an indefinite amount of time and because of such, they now have to rent these homes to the same people who can’t pay the mortgage. Well, at an extremely reduced rate, that is.

You end up with a market place that is overly burdened by government / political influence and that is creeping along (regardless of lame stream media reports) because it’s directly tied to unemployment rates. You end up with high fraud levels because distressed homeowners have no idea what is all happening and turning to less than reputable agents or predators to save their homes and worse of all, you end up changing the homeowner mentality from one of “homeownership is a privilege” to “homeowners his a right”. Once this fundamental transformation of the real estate industry is complete, we will have another entitlement program in this country….housing.

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Is The Real Estate Market Really Rebounding?

I have been asked by both my own clients, members of REOPro and the Mather Network, as well as my vendor partners about my thoughts on the real estate market rebound.

My first reply is always to remind people that real estate is directed correlated to unemployment and therefore, as long as unemployment is high, we will NOT have a rebound in real estate.

Normally, I get a lecture about how local real estate prices are on the rise and inventories are down so, isn't that proof enough that we are in a rebounding real estate market?

Sure, real estate markets, like any market, is a servant to the law of supply and demand and yes, when supply is down and demand stays the same, prices go up. Yes, that is happening so, if that is all you measure a rebound against, sure we are rebounding. The problem is, it's foolish to not ask why. Why is supply low?

With a continually high unemployment rate, shouldn't we be seeing the same amount of foreclosures? Sure we should but, why aren't we? I checked with my own local Sheriff's department to see how many foreclosures they did in 2013 so far. I was told, "We have done more foreclosures in 2013 than we have any time before." So, where is all the inventory....why do we have a inventory shortage. In fact, how is that possible when unemployment is at 2008 levels, the height of the housing crisis and when the Sheriff's department is reporting record evictions?

These are all important questions and really need to be answered because, from what I can tell, it appears housing is going through another bubble of sorts. Obviously something is artificially holding inventory off the market to manipulate the law of supply and demand but, for what purpose, what end game?

So, I had to look and see who are the largest holders of default property, HUD, Fannie Mae, Freddie Mac, FDIC, VA, and Bank of America. Well, what do we know about these companies / quasi government entities......all controlled by the Federal government. I had an insider over at Freddie tell me that they have all of these different programs now....namely, deed-in-lease, to keep homeowners in homes and therefore, avoid the foreclosure all together. She went further to tell me that even though they are avoiding the foreclosure, it has no...ABSOUTELY NO, reflection on the ability or inability of the previous homeowners, now renters capacity to pay a mortgage or any of the actual debt due on the mortgage.

She was just speculating but, she went on to tell me that in her opinion, it's likely that 85% or more of those in the deed-in-lease program and others like that, are just buying time because they will never be able to buy the home back, pay off any of the debt or be able to go out and purchase another home any time soon. She and I agreed, it was just a way to keep property off the market even though, without any intervention, it would have been on the market months, if not years ago.

Why would this be happening, why would the government want to artificially inflate prices by keeping property off the market?

1. Raise Property Values: It's not even a question amongst the minds of those in the know, the government wants to inflate prices. The reason is because they are losing so much money through Fannie and Freddie because of foreclosures and short sales that, it's just simply best for them to hold the property, decrease inventories, manipulate the law of supply and demand, raise prices and trickle the REO holdings back on the market so that they can sell for more than the debt owed.

2. Elections Have Consequences: Whichever political party can go out to voters and say that they are responsible for housing prices being on the rise, they will get least that it the thought.

All in all, the housing rebound isn't real, it's artificial for a variety of reasons, not just the two I gave above. The truth of the matter is, many feel this heavy handed control by the government of housing markets is absolutely necessary to prevent the further collapse of the US economy. Others see it as a prolonging of the inevitable and a violations of the free markets. Either way, with increasing debt, increasing unfair manipulations of the market, higher taxes, higher cost of living and higher energy and commodity prices, housing will begin becoming more and more volatile. I believe the days of housing being a safe investment are over. So many outside factors are now playing in the market, regardless if they are suppose to be there or not, it's just not as simple as it was just 10 years ago. Buyers are going to have to be much smarter before the purchase and understand that a minimum of 20% down and staying in the home for a minimum of 5 years might be the only way to get your money back, let alone make any money.

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Many REO Realtors who were closing a record number of deals in 2012 may not be able to close that same number of deals, or anything close to it in 2013. This really shouldn't come as a surprise to anyone considering, we have been noticing on dramatic pull back in REO now....for about 6 months or so, This all cumulated for many of us when Fannie Mae decided to fire all of thier outsourcers...or at least, the vast majority of them. None the less, this has many speculators out there talking up the "Rise and Fall of REO" and yes....make no mistake, it is definitely in declined however, let's not forget one, simple, truth. Home sales are directly correlated to jobs. No jobs = REO.

Now, it's true, short sales are playing a much larger role in the default real estate fact, as the article outlines, they seem to be up....much more than REO. In fact, from what I am hearing in the industry, many of these lenders and participants in "community stabilization" programs are seeing that short sales do a much better job at maintaining home values than REO ever could and as such, are holding back from foreclosing and giving bank directed short salesa much stronger look.

I have heard, the word on the street is, Fannie Mae and HUD are very likely going to be coming out with their own "Pre-Approved Short Sale" .... which isn't anything new however, it will have one dramatic change and that is, it will be bank directed. What that means is, instead of waiting on a homeowner, desperately trying to save their home, holding onto it from either desperation or flat out resolve, banks will hire their REO agent to go out, make contact, discuss options and give the REO agent a "Pre-approved Short Sale".

If you want to read the article, "The Rise and Fall of REO" I referenced it below however, make no mistake people, REO isn't going to fall....untill unemployment falls. These two are one in the same and as long as we stay over 7% unemployment, REO will, at the very least, level out but, it will stay strong.

By the way, for all you agent out there who are just hating the idea of doing a short sale, won't do a short sale or simply think its too much work for the might want to be changing that attitude because, as Corelogic reports, short sales had a banner year in 2012 and no one expects anything less in 2013.

To learn more about short sales, maybe even attende the industry's only Short Sale Symposium, you need to attend the Short Sale Specialist Symposium at Sea.

Link to: The Rise and Fall of REO

Link to: Short Sale Symposium



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The Short Sale Tsunami.

The Short Sale Tsunami.

If you have been waiting for the REO Tsunami since 2008 - 2009 but have been a little down that no "Tsunami" ever surfaced...well, you're not alone. In fact, many of us (Experienced REO Agents) would say it's not a Tsunami we are waiting for, it's the end of the REO Drought that we are hoping for.

Well, I wrote a blog yesterday about some chatter I have been hearing about banks wanting to create a preferred short sale agent list and don't exactly know how to go about it and this blog is a follow up to the one yesterday.

Banks and other default real estate portfolio holders are burdened with so much government regulation that they are almost completely abandoning REO. Now, I am not saying REO is dead, let's face it, it will always be with us but, it isn't going to look like anything any of us will be able to recognize in early 2013. This is because these banks are being told that if they don't "save" more homes or at least give the impression that they are truly trying to "save" more homes from foreclosure, they can expect more stress testing, more political demonization and possibly a closer look from the FDIC. Now, this may sound like something straight out of cold war Russia or Eastern Germany but, it's a fact and scary enough, it's backed up by law. Now, I won't go much into that at the moment because this blog isn't focused on that but, look it up yourself, study the Community Reinvestment Act and you will get the point.

What we end up with is a stressed, overwhelmed banking industry who is settling multi-million dollar lawsuits, from all over this country, trying to bow to political regulation (Note I didn't say government regulation) while trying to make a profit.

One of the biggest contributors to why REO has dried up is because of the moral hazard this country has been playing with since the housing bubble burst and that is, "how do we save people from foreclosure?" Yes, I called it as I see it and that is a moral hazard. The truth is, you can't "save" someone from foreclosure unless you plan on paying their mortgage for them. Otherwise, the mortgage holder is going to have to have an income, prioritize his debts and start paying them off. If he can't do that because of whatever reason......then foreclosure is the hard, stark reality.

Granted, in a normal market place, foreclosure would be fine, in fact, here in Tennessee, we have laws that specifically protect former owner occupant equity in foreclosure action however, we aren't in a "normal" market in the fact many of us are upside down and thus, no money to be had in foreclosure...only expenses. This is what brings banks to the bargaining table because now they are forced into loss mitigation regardless if they want to or not. Hence, short sales.

What many people just don't get is that a short sale is simply the most cost effective disposition of a non-performing asset in a negative equity market place. For this reason,  and others previously discussed banks are holding back REO.

Now I have painted the picture, you should understand that the REO drought is from...

1. Political Pressure

2. Government Regulation

3. High Unemployment

4. High Cost of Foreclosure

5. Negative Equity Marketplace

6. Loss Mitigation Strategies Implemented by Banks (keeping people in their homes even though they haven't made a payment in 12+ months or better yet, putting them on temporary loan modifications that are supposed to be only 3 months but end up being 24+ months or better yet, holding onto vacant abandoned properties and not proceeding to foreclosure.)

So, what is the solution, how do we get banks and agents together to dispose of these homes? Well, it seems no one really knows...

 (Refer to my earlier blog:

Now, I do have a suggestion and that is because it's working for me here in my service area.

I work very closely with local non-profit housing crisis centers who sole responsibility is to "save" people's homes. These non-profits are contacted daily by ready, willing and able defaulted owner occupants who need help. These non-profits do all they can to help but, about 73-76% of the time, the people they work with either default off their programs or just can't qualify for help due to lack of income and as such, are sent to me for short sale.

Granted, my cooperating non-profits can't come out and just say, we recommend Jesse but, they do give the struggling homeowner about 3 preferred Realtors and on that sheet of paper, we provide our service areas and then the homeowner gives us a call accordingly. After that, it's on us to make the best impression and win the listing.

From that point, we work very closely with the housing counselor over at the non-profit because most of the time, they have collected all the necessary paperwork I need for the short sale and in fact, have already contacted the bank telling them that the homeowner will be short selling. This way, the bank is informed, knows exactly what is going on, expect to hear from me and by the time I call, it's all good.

Using a non-profit is a great way to reduce agent liability, manage risk, educate the defaulted homeowner and keep in the good graces of the bank. Yes, we have some unique challenges in the area of risk and liability in our cooperation but, nothing we were able to conquer or reduce by disclosing in writing and getting all appropriate signatures.

None the less, this industry does have very specific needs and I truly feel that some companies out there who specialize in default customer contact (if you don't understand what I am hinting at, let me know, I will be more clear in a reply) will likely lead the way but, even these procedures can be umbrellaed under a legitimate non-profit.

All in all, my point is, I really think we are going to start seeing the development of non-profits to truly reach out and initiate short sales. This will be a strange but, positive movement for our industry and I think it will really have a great impact on homeowners. Now, I know some of you are already doing this in your local areas and are seeing a lot of success. In fact, some of you have even created very robust networks of professionals, much like I have done here locally so, when this industry shifts, we are ready. For those of you who didn't see this coming or even now, can't imagine this every happening....I challenge you to keep a very open mind because, it's a great business plan, with or without bank participation, you still end up making really good money, helping out your community and offering a free market solution to a crisis that already has too much government / political regulation.

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The Liability of a Preferred Short Sale Agent.

I had a conversation with a friend and colleague today that I want to share with you. As always, all of my conversations are confidential so, the names and vital details will be changed in order to protect the identity of everyone involved....except myself, of course.

So, she calls me up to tell me that she has been speaking with executives from the top banks, GSE's and largest default real estate portfolios holders in the country and as a result of those conversations, she had some questions for me. Flattered of course, I obliged and let her know I would answer any questions she had to the best of my knowledge and experience.

She starts by telling me what she was doing and why she was talking with these executives and as I am following along, I begin to understand why she is calling and realize, flattery is far from her mind and she needs real answers. She begins telling me that out of these conversations she was having, she has gotten the impression that many banks, GSE's and holders of default real estate portfolios are not only have trepidations about developing a "preferred short sale agent" list, much like how they have a "preferred or REO agent" list....they have outright hostility to the idea.

In order to further my understanding and get a better sense of the fear they have, I asked some probing questions and fortunately, I got some good answers...of which, I want to share with you. In no specific order, here is what I go....

Question 1: Why wouldn't the bank want a preferred short sale agent they can recommend to their default occupants / homeowners?

Answer 1: Liability.....too much liability.

Well, as you can imagine this answer wasn't good enough for me so, I had to break it down a little. Now, our conversation was nearly 2 hours long and I didn't record it so, I am going to summarize here for you.

The banks issues of liability revolves around some key problems that they can't seem to correct, fix or better yet, feel that they want to even be involved in fixing, those are...

1. Lack of Quality Agent Training:

From what I took away, I was impressed that many banks (let's use the word "bank" to refer to all of them....banks, GSE's and Default Real estate Holders, alike) know our industry has developed good education however, they have a few problems and they are...

                A. OUTDATED: Current education always seems to be outdated or not updated timely enough to positively impact the quality of the actual work completed by the agents.

                B. NO RETENTION: Even though the education may be good on paper, the retention of the agent is poor and by the time they need to use what they learned...they lost it.

                C. NO QUALITY ASSURANCE: You may have an agent who took the course, passed the exam but, has such poor operating processes and procedures that they fail to implement the best practices they were taught.

2. Severe Inexperience:

Now, for many of us who do short sales regularly, this was a bit of a surprise but, after I really thought about I came to accept that sure, a lot of agents out there just don't know how to do a short sale. What got me thinking was how this breaks down from a banks point of view.

                A. INCREASED PROCESSINGTIME: Due to lack of experience errors like, documents that aren't fully executed or not doing a preliminary title report, it ends up creating increased processing times, waiting for corrections.

                B. UNECESSARY ESCALATIONS: Because the agent hasn't completed enough short sales, they haven't worked through the common practices, procedures and processes of the bank or the short sale in general and end up getting frustrated and escalating which creates a back log for the bank.

                C. LACK OF PROMPT AND OR ACCURATE COMMUNICATION: Agents who don't understand the jargon or worse, set unrealistic expectations due to simply not communicating or not knowing how to effectively communicate cause delays and end up resulting in lost deals.

3. Fraud - Nepotism:

Sometimes it's not what you know or how well you work but, who you know and what they can do for you. Sad but, its true and yes, the banks see this as a problem they want to conquer however, not as easy as you may think.

                A. SAME DAY / SHORT SALE FLIPS: Regardless of how you come down on the same day short sale flip, the reality is the bank know this is happening and consider this a fraudulent act. I am not going to get into the details just why this is fraud however, its a problem for the banks and they are afraid that having a preferred agent list, they may open themselves up to this happening more often.

                B. UNQUALIFIED AGENTS: Have you ever wondered how that agent got that REO when you now beyond a shadow of a doubt they never worked a REO in their life? Well, it's likely because they made a great connection through a friend or at a conference and BAM, fast tracked to becoming a REO agent. This wouldn't be allowed but, not exactly sure how to stop it or prevent it seems to be the issue.

4. Severe Incompetence:

You can be the most trained and you can even be experienced but, we have all met those agents who just simply don't get it, completely, utterly incompetent and we are left scratching our heads and asking ourselves, "Who did they pay off?"

                A. BEST INTERSEST OF THE CLIENT: The banks have found that many agents just don't know what is truly in the best interest of the client or better yet, they don't know the law requirement or risk management strategy that will protect their client from any future liability.

All in all, my conversation was a good one however, it seemed to me to be a little late because for those of us who have been doing short sales for at least 4-5 years now, we have had these issues ourselves dealing with other Realtors or the banks themselves.

I don't really know what has spurred the action by many of these banks to finally look a little closer however, I am all for it. The reality is, this business is all about change and the moment you can't or don't change, you die. Truth is, I thrive in the changing environment because I have built my business around conservative fundamentals that have kept me nimble and flexible while others have retired early or simply gone bankrupt. Granted, I do believe competition is good and in a free market necessary but, I also believe a free market competitive environment gets rid of the wasteful, lazy, and propels the hungry and innovative to the, let's bring it.

Not sure what the result of my conversation will be but, I have a feeling you may end up seeing a survey from me shortly and if that is the case...please respond, let's us know your thoughts because, we may be able to effect some change.

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Where is all the REO inventory?


Like many of you active REO Brokers, I too have found my REO inventory has shrunk....dramatically. In the past 6 months, I have seen 2 of my 4 AMP's layoff almost all of their Asset Managers and send out notifications that they have had their inventory re-assigned to another AMP. I have spoken with AMP CEO's who tell me that inventory is down across the nation and the market is more competitive than it has ever been. All in all, the golden year of REO is over.

Now, this flies in the face of some vital statistics that should be driving REO and keeping us REO Brokers busy as little bees. Let's look at one particular vital statistic, unemployment. Per the Bureau of Labor Statistics, since February of 2009, the nation's unemployment has remained above 8%, peaking at 10% back in October of 2009. Keep in mind, this number doesn't account for the millions of people who drop out of the unemployed workforce but, would still need a full time job. It's speculated that this number, the "real" unemployment rate is 14 - 18%. With 4 years of high unemployment, and a saturated market, most areas see a DOM (Days on Market) of a 6 months or more. So, if just using unemployment numbers and a minimum 6 months DOM, we should still be seeing the same REO inventory as we did at a minimum back in 2009, considering we are still at a unemployment rate above 8% and a "real" unemployment rate of 14%....right? So, where are all the REOs?

Finally, to further this point, I will make one last observation. In the Monday Jun 11, 2012 issue of National Mortgage News, it was reported in the article written by Paul Muolo that Fannie .....Fannie Mae alone, has an estimated $20 BILLION....yes, you heard me correct, $20 BILLION, in mortgages that are in the arrears. So, where are all the REOs?

It was just 3 years ago or so, I would walk into a struggling homeowners home and he would tell me that he was past due 5 months and the bank is threatening foreclosure. We would talk about short selling and he would likely list. 2 years ago, I would walk into a struggling homeowners home and he would tell me that he was past due 8-10 months and the bank was threatening foreclosure. Most of the time we would talk about short selling and he would list. 1 year ago, I would walk into a struggling homeowners home and he would tell me that he was 15 months past due, doesn't have any job prospects, on unemployment and was reading online that he could save his home with some government program. We would do the paperwork for a loan modification and, he would get on his trial payment for 6 months. After the 2nd month, he would default off because he didn't have any money, the bank would foreclose and he would be there for another 6 months till eviction. Now, I can go into a struggling homeowners home and, he tells me he has been past due now for 36 months, worked on a loan modification, was told he doesn't qualify, and now the bank has set a foreclosure sale date in 3 weeks so, he wants to know if he puts his home up for short sale, how much time would that give him before he has to be out. My point is, banks aren't foreclosing within a reasonably time frame after default. My 2nd point is, it seems that government influence, these "save your home" programs have done nothing but create a atmosphere where banks either can't or won't move forward aggressively with foreclosure.

The larger picture here is, we have a lot of homeowners who need to be foreclosed on....yes, I said it. We have a lot of homeowners who are living in homes they no longer own yet, banks aren't evicting. Instead, we have a lot of homeowners who are being feed lies from our government that they can save their homes. It seems to me that these banks are then forced to cooperate, even at their own peril, because some politician wants to win at the ballot box by telling homeowners....."YES WE CAN".

Once the pipe dream has ended and reality sinks in, America the Beautiful is going to become more of America the Broker and the really sad part is that because we refuse to tackle this tragedy of Government gone wild, individual Americans are going to find themselves with nothing more than burdensome debt and a handful of I.O.U's that read, "should-a, could-a, would-a"

Make no mistake, the REO inventory is a really big way however, it's hidden...away from the sight of most people because politically, it's just not something you can run on and get re-elected if you expose it to the light of day.

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If any of you are wanting to get into REO but don't really know what to expect....well, I have a story for you.

Saturday morning, January 21, 2012 I get a call from my field services agent telling me that they have gone out, secured one of my listings however, put their lock box on the front door because they didn't know who placed a lock box on the front door. Well, after a little investigation, come to find out, the lock box on the front door belonged to no was a rogue lock box. None the less, I call my field agent back, tell her I am heading out to do my personal property evaluation and that I would cut the front lock box off and move her lock box to the front door. For some reason, her team doesn't carry bolt cutters on them...but, I DO!

Well, it's a busy Saturday morning, people are everywhere in this neighborhood, walking dogs, doing some yard get the idea. In fact, the neighbors angry little miniature overweight dachshund was harassing me the moment I drove in the drive of my property. None the less, I get out of my car, open the trunk, grab my bolt cutters, walk up to the front door and cut the lock box off. My partner walks around to the back, opens the back door (with the key), walks to the front door through the house and lets me in. Well, I grab my camera, start walking through the home, taking pictures. As I walk into the master bedroom upstairs, I hear a booming voice yell, "HANDS UP, STEP OUT OF THE HOUSE, KEEP YOUR HANDS UP". I look out the Master Bedroom door and I see my partner with his hands up, walking down the steps. He is telling the officers at the door that he is with me, the Realtor and we are doing a personal property evaluation. Well the officers sees me step out of the bedroom, orders me to put my hands up and to walk out of the house. many of you know, I have my conceal carry permit and the first thing out of my mouth is, "I am armed"...telling the office I am packing my gun. All of a sudden, I notice that 4....yes, 4 officers have their guns trained on me as I am walking down the stairs, out of the house. I repeat myself because none of them confirmed they heard me so as I am walking down the stairs, I am yelling, "I AM ARMED". Finally, one of the officers says, "We hear you, we see it, keep your hands up", as I am walking down the steps, I am telling the officer that I am the Realtor, that's my name on the sign in the yard, that's my name on the occupancy notification on the door, and my real estate license and my ccp are in my wallet in my back right pocket. I am, 4 loaded guns, trained on my chest, I have a gun on my hip....officers don't know who I am, what I am doing there and all they know is they got a call from a neighbor saying someone was breaking in......ROFLMAO! exciting as the start of the ordeal was, the end of the ordeal was actually pretty funny. As I step out on to the porch, with 4 guns pointed right at me, the officer in charge reaches for my hip, grabs my gun and ask me who I am. Now, during this whole time, no one has touched me other than to take my gun, yet.....I have now, 5 guns trained on, I guess they were confident that they were in I tell him I am the Realtor, I am here doing my personal property evaluation and I didn't break in. Well, during this whole time, I see a officer at my car, running my plates....which by the way is a National Association of Realtors plate that says,, says SELL. Well, by this time, the officer at my car motions to the officer holding my gun and before I know it, all the guns are in holsters and I am talking to the officer in charge having a polite conversation about how I obviously listened in my CCP class because he was impressed that I announced I had a weapon on me and that I had my license on me. He thanked me for cooperating, we shared some jokes about how I carry 10+1, which means I carry 10 rounds in my magazine, which is it's limit and then I carry a round chambered. He was impressed and said it was smart to do so.

All in all, I ended up talking to these five officers (one I didn't see, till I stepped out on the porch, he had a gun pointed to my back the whole time. ) having a cool conversation about how I was a good steward of my CCP, I was a good steward of my weapon. They packed up and left....they only stayed with us for about 10 minutes at most.

So....just one of my experiences as a REO's always fun!

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