where (3)

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 there.....in 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.

Read more…

Where are all the Realtors at?

4359162012?profile=original

 

So, how many agents are leaving the industry due to lack of
work? Have you ever stoped and asked yourself that question? Most likely not
but, I did this week because a friend of mine who owns their own real estate
brokerage told me that he is expecting that by the end of this year, his office
is going to shrink......so much so, that he may actually close his doors.



You see, many, if not all brokerages are built around
reoccurring revenue streams brought in by the agents. Obviously, I am not going
to go through every single office business plan I know of but, ultimately they
all revolve around either one of two...or both of these ideas.



Idea # 1: High
monthly fee and little to no commission split. These offices charge agents a
high monthly fee....like $500.00 a month or so and, yes...that is high in my
area. Now, these offices don't really care if the agents on their roster do any
business at all because, the broker is paying bills and making money off the
monthly fee. Normally, in these offices, the broker isn't making any money on
commissions anyways so, he is working for just that monthly fee.



Idea # 2: Low to
no monthly fee and high or graduates commission splits. These offices make the
bulk of their money on the performance of the individual agent. These offices
will typically charge little to no commission splits however, they typically have
a skeleton staff and expect the agent to be able to handle most all issues with
little to no broker involvement.



Now, as you can
expect, plenty of pros and cons with either major model however, what happens
to these models when the number of agents in the industry or in local markets
begin to dry up?



Well, the
competition for agents becomes more fierce and these 100% or low monthly fee
offices begin attracting a lot of agents. Much like we have now in my market.
The problem is these office typically attract the type of agents that most
people should steer clear of. Now, granted, this isn't true in every market and
this is strictly my opinion however, my experience is that before a agent truly
gives up on their business they go into the Realtor Death Spiral. Yes, this is
a phrase I just thought up.



So, what is the
Realtor Death Spiral? Ok...so, here it is. It's when you have a Realtor who has
been struggling the past few quarters and is now having to make a decision. Do
I stay in the business or do I go back to do what I know how to do? You see,
most Realtors, 99% of us, didn't grow up thinking...oh, I want to be a Realtor.
We grew up thinking, I want to be a fireman, a police officer, a marine or in
my case, a secret service agent...yes, that is true. My point is, we all came
from another industry and we either fell into real estate because we had a
friend who was selling their home or it was a part time "job" for
vacation money or...whatever reason you can think of other than, I want real
estate to be my career.  With all that
said, it means that many of us....almost all of us thought to ourselves, well,
if I can't make it big and live like Donald Trump, then I will go back to
teaching, being a stay at home mom or steel worker.



Now, let's look
at the graph above...yes, I pasted that in here for a reason. The graph is the
latest information I could find from the National Association of Realtors on
the number of Realtors by year. Look closely at the nose dive in the past 4
years. You see, the graph clearly shows that when real estate was good.....or
easy, people were becoming Realtors left and right. In fact, if you look at the
graph just a little closer, see how we doubled the amount of Realtors from2000
to 2006. That's right people, in 6 years, we doubled the number of people in
our industry. Now, consider that when I tell you that back in 2007, NAR release
a statistic that said something to the effect that 93% of all Realtors, DID NOT
CLOSE MORE THAN 3 DEALS A YEAR! In fact, I read at one time that the average
income of a Realtor was like $26,000.00....that's not even a million dollar in
sales in my area.



Well, I will
leave it up to you to come to your own assumptions and conclusions however, I
am of the mindset that our industry does need to do some "house cleaning"
if you will. In fact, I venture to say that as the housing bubble was blowing
up so was the rank and file Realtors and now, as the bubble is busting....those
same agents are looking at themselves in the mirror and saying, "Damn,
this is much harder, much more expensive, much more involved than I thought or
ever experienced it really was". Yes, we are going to start seeing a mass
exodus of agents from our industry, in fact, many of us in the industry have
noticed this for the past 2-3 years. I must admit, I am glad to see it.
Personally, I am sick and tired of dealing with agents who have been in the
business for 3,4,5 years, sold 3-5 homes a year, has a full time or part time
job in another industry and then complains that they want to do REO and no one
will help them get into the business or that they attended some conference but,
they had no ROI.



Our industry
needs to purge the part time agent. These agents don't do much for our
industry. Yeah, maybe they have a place and time but, it's not now. Now, we
need to get back to professional standards, common sense and the Realtors who
are here, participate, contribute and improve our opus.



Now, don't get me
wrong, people got to pay bills, people got to do what they got to do in a
country with an unemployment rate of 9.1% but, let's make sure we are all
looking at this with an ounce of perspective. Let's make sure when we see
brokerage office closing, or agents retiring their license that we stop and
realize, fortunes are made in times of recession and those who can survive
deserve to be here and reap the rewards of their commitment.

Read more…

Where are all the Realtors at?








  
   
   
   
   
   
   
   
   
   
   
   
  
  
  
 
  
 


 


 



So, how many agents are leaving the industry due to lack of
work? Have you ever stoped and asked yourself that question? Most likely not
but, I did this week because a friend of mine who owns their own real estate
brokerage told me that he is expecting that by the end of this year, his office
is going to shrink......so much so, that he may actually close his doors.



You see, many, if not all brokerages are built around reoccurring
revenue streams brought in by the agents. Obviously, I am not going to go
through every single office business plan I know of but, ultimately they all
revolve around either one of two...or both of these ideas.



Idea # 1: High
monthly fee and little to no commission split. These offices charge agents a
high monthly fee....like $500.00 a month or so and, yes...that is high in my
area. Now, these offices don't really care if the agents on their roster do any
business at all because, the broker is paying bills and making money off the
monthly fee. Normally, in these offices, the broker isn't making any money on
commissions anyways so, he is working for just that monthly fee.



Idea # 2: Low to
no monthly fee and high or graduates commission splits. These offices make the
bulk of their money on the performance of the individual agent. These offices
will typically charge little to no commission splits however, they typically
have a skeleton staff and expect the agent to be able to handle most all issues
with little to no broker involvement.



Now, as you can
expect, plenty of pros and cons with either major model however, what happens
to these models when the number of agents in the industry or in local markets
begin to dry up?



Well, the
competition for agents becomes more fierce and these 100% or low monthly fee
offices begin attracting a lot of agents. Much like we have now in my market.
The problem is these office typically attract the type of agents that most
people should steer clear of. Now, granted, this isn't true in every market and
this is strictly my opinion however, my experience is that before a agent truly
gives up on their business they go into the Realtor Death Spiral. Yes, this is
a phrase I just thought up.



So, what is the
Realtor Death Spiral? Ok...so, here it is. It's when you have a Realtor who has
been struggling the past few quarters and is now having to make a decision. Do
I stay in the business or do I go back to do what I know how to do? You see,
most Realtors, 99% of us, didn't grow up thinking...oh, I want to be a Realtor.
We grew up thinking, I want to be a fireman, a police officer, a marine or in
my case, a secret service agent...yes, that is true. My point is, we all came
from another industry and we either fell into real estate because we had a
friend who was selling their home or it was a part time "job" for
vacation money or...whatever reason you can think of other than, I want real
estate to be my career.  With all that
said, it means that many of us....almost all of us thought to ourselves, well,
if I can't make it big and live like Donald Trump, then I will go back to
teaching, being a stay at home mom or steel worker.



Now, let's look
at the graph above...yes, I pasted that in here for a reason. The graph is the
latest information I could find from the National Association of Realtors on
the number of Realtors by year. Look closely at the nose dive in the past 4
years. You see, the graph clearly shows that when real estate was good.....or
easy, people were becoming Realtors left and right. In fact, if you look at the
graph just a little closer, see how we doubled the amount of Realtors from2000
to 2006. That's right people, in 6 years, we doubled the number of people in
our industry. Now, consider that when I tell you that back in 2007, NAR release
a statistic that said something to the effect that 93% of all Realtors, DID NOT
CLOSE MORE THAN 3 DEALS A YEAR! In fact, I read at one time that the average
income of a Realtor was like $26,000.00....that's not even a million dollar in
sales in my area.



Well, I will
leave it up to you to come to your own assumptions and conclusions however, I
am of the mindset that our industry does need to do some "house
cleaning" if you will. In fact, I venture to say that as the housing
bubble was blowing up so was the rank and file Realtors and now, as the bubble
is busting....those same agents are looking at themselves in the mirror and
saying, "Damn, this is much harder, much more expensive, much more
involved than I thought or ever experienced it really was". Yes, we are
going to start seeing a mass exodus of agents from our industry, in fact, many
of us in the industry have noticed this for the past 2-3 years. I must admit, I
am glad to see it. Personally, I am sick and tired of dealing with agents who
have been in the business for 3,4,5 years, sold 3-5 homes a year, has a full time
or part time job in another industry and then complains that they want to do
REO and no one will help them get into the business or that they attended some
conference but, they had no ROI.



Our industry
needs to purge the part time agent. These agents don't do much for our
industry. Yeah, maybe they have a place and time but, it's not now. Now, we
need to get back to professional standards, common sense and the Realtors who
are here, participate, contribute and improve our opus.



Now, don't get me
wrong, people got to pay bills, people got to do what they got to do in a
country with an unemployment rate of 9.1% but, let's make sure we are all
looking at this with an ounce of perspective. Let's make sure when we see
brokerage office closing, or agents retiring their license that we stop and
realize, fortunes are made in times of recession and those who can survive
deserve to be here and reap the rewards of their commitment.

Read more…