Lending Supply and Demand

If you were among the multitudes calling your lender last week when mortgage rates dropped, you may also have been disappointed when you finally got through. On the heels of the FED’s historic 3/4 point rate reduction mortage rates temporarily dropped to as low as 5.125%. [See the LA Times Article "Interest-rate drop spurs frenzy of refinancing calls".]

But something happened while you were on hold listening to elevator music. The calls were coming in unprecedented volume. In the past, mortgage lenders would rejoice, taking down names and requests and go about hiring new personnel to handle the volume. This time, the lenders view the volume with great caution. They will do the deals they are equipped to handle, but are unlikely to start hiring back all the people they just layed off over the last 6 months. Why? There is no long term solution/replacement to the loss of the sub-prime and/or non-conforming securties market. What this meant to the callers that didn’t get through first was the steady climb in fees and rates throughout the week. This is the lenders’ way of slowing down the flow to that which they can handle AND raising the profit margin for the deals they put together.

Right now, after 6 months of attrition and downsizing, lenders are not about to start looking for additional office space and employees. They will try to earn more per transaction. As such, shopping around is now more important than ever. The differences in rates and fees may be dizzying, but worth sorting through.

Diana’s Opinion Published in the Seattle Times

The “Letters To The Editor” section of the January 19 edition of the Seattle Times featured Diana MacDonald’s opinion regarding Elizabeth Rhode’s prior article “RealEstate Anxiety: What’s Next in ‘08?” from Dec 30, ‘07, which I also panned here under the title “Not The Sharpest Tool” (see Selling Concerns under categories, about 3 articles down from the top). Read Diana’s published opinion, the 4th one down titled “Indulge in moderation”. Rhode’s insinuation that ALL sellers are “out to get” unsuspecting buyers is an unfair characterization of the majority of sellers that just want a fair price, nothing more. 

Professionalism Lacking Among Local Agents: Cost To The Sellers…..

Diana and I thought we would take advantage of a nice day to preview some of the listings being held open in the Madison Park and Broadmoor neighborhoods. We viewed some nice listings, but were taken aback at how we were, or were not, greeted by the respective listing agents.

Listing No. 1: A beautiful $1.8M home in Madison Park. We were there for about 15 minutes. The Windermere Listing Agent hosting the broker’s open house did not greet us, did not introduce himself, and did not acknowledge our presence aside from a slight nod as we were leaving. Thus he obtained no feedback regarding his expensive listing, has no idea if we might have a customer looking for such a property, and did nothing to explain or demonstrate any of the features of the property.

Listing No. 2: An interestingly remodeled home in Madison Park reminded us of something one might see in a nice neighborhood in Los Angeles. The asking price is $1.9M. We were not greeted or acknowledged by the Windermere Listing Agent. She spent most of our visit speaking on her cell phone discussing with a friend her workout schedule. Aside from her pointing out that there was a guest house at the rear of the property, there was very little communication. Again, this Agent has no idea why we were there, whether or not we have a client for such a property, what the features and benefits of the property are, or what our opinion of the listing might be given that there were several similarly priced properties in the area open today.

Listing No. 3: Onto Broadmoor we ventured. Surely we would witness a more professional presentation from the heavy hitters that are fortunate enough to have a listing in the vaunted neighborhood behind the manned and gated entrance. It was not to be. While the broker’s open house flyer referenced “lunch” as an inducement to agents to attend, the pickings were less than lightly considered. I’ll leave it at that. The first listing visited we were again ignored by a very poorly dressed agent wearing her Jackie O’ sunglasses indoors. It was gross. The listing, at $1.375, was worse. It was unclean, poorly finished, poorly furnished, and poorly presented.

Listing No. 4: This was funny. About three doors down from the prior Broadmoor house we ventured inside the “time capsule”, as the Listing Agent described it. This was the only agent that actually spoke to us, but in an apologetic way…for the house…for her disorganization….for the fact she had brought no flyers describing the property. This would be fine if she were showing a 1972 Ford Pinto, but a $1.3M house? The excuse for having no flyers was that the property was “just listed”. Well, if was just listed, why were there about 40 real estate business cards on the counter? It appeared she hadn’t been there in a month and came out to open it up because of the advertised brokers open, of which she was not a part. Also, we were never introduced, and other than the price, have no idea what the property entails.

We are far from perfect, but there are some fundamentals to presenting real estate on behalf of sellers:

1. Provide good signage to the property to make it easy to find. The signage today was poor to non-existant.

2. Dress professionally, as the image presented is part and parcel of the property represented.

3. If food is advertised as an inducement, don’t throw it together as an afterthought. It is insulting to visitors.

4. Greet every visitor at the door if at all possible.

5. Introduce yourself in a professional manner with a hearty handshake, and thank the visiting agents for coming.

6. Explain that you wish to hear any comments the vistors may have…sincerely.

7. Most important, always ask, “do you have someone that might be interested in this home?”

8. That every agent as they leave, using there name. Everyone likes to be acknowledged.

The impression made might be one of cordiality and sincerity which spawns a showing and possible offer from an agent that WANTS to work with you, and your seller, because you showed them professionalism respect.

The City, The Burbs, or The Sticks: What Are the Real Costs?

Location, Location, Location. The oldest cliche in real estate. How does one determine the real costs associated with the location of a home purchase? It is one of the most common, and challenging, aspects of satisfying home buying needs.

She wants new. He wants close in. To get new means living farther from work. To get close to work means buying a house which may need repairs, or is smaller. But there is more to this decision process than how many minutes a day are spent on the road commuting and whether the house has a 2 or 3 car garage. With the increased cost of fuel, it is now imperative to consider what the commute costs in real dollars.

We have found a pretty handy commuter’s calculator that we have integrated into the PenguinHomes.com website. [Remember, if the music bothers you, click the "Off" button above our photo on the right.] The link was sent to me, unsolicited, by a very creative real estate agent located in Boulder CO. He and some talented programmers cooked up this elegant bit of software to help home buyers answer one of the most difficult decisions in real estate: what is the true cost of location?

This calculator is a little tricky to use at first. After entering the loan amounts for “House A” and “House B”, the current fuel price and your interest rate, click the ”add” button.  The next screen allows you to input your commuter details. Then click “add/edit” and you will return to the first screen where you will see that “Commuter 1″ has been added. You may add additional commuters in the same way. After entering the required information, click “calculate” to see the results.

Please let me know what you think of this utility by adding your comment(s) to this post.

Bank of America Acquisition of Countrywide

Bank of America agreed to purchase the remaining 84% it didn’t own for $4.1 Billion Dollars last week. Aside from a few regulatory hurdles it appears to be a done deal. The acquisition follows B of A’s August, 2007 investment of $2 Billion for stock in the company in an effort to stabilize Countrywide amidst looming foreclosures and credit woes. Hindsight points to B of A’s savvy decision in August to position itself for either (1) a significant stake in an important and very well run company for a bargain and (2) pre-position itself for the eventual buyout as occurred last week.

People that have experienced the mortgage process with both Countrywide and B of A may be few, but we have, on many occasions, witnessed first hand the ineptitude’s of B of A’s mortgage underwriting processes vs. Countrywide’s streamlined processing of loans on behalf of our clients. It seems that B of A rarely grasped the importance of transparency when it came to mortgages.

Borrowers, and their respective real estate agents, do not appreciate being put upon to provide pay stubs twice because the first copies were lost, or to produce the last 3 years income tax returns 5 days prior to closing on their new home. These are the types of hiccups we have commonly encountered when folks go to B of A for a residential mortgage. When we have warned clients about such pitfalls we have commonly heard the lamenting after the fact: “we wish we had listened to you. It was a mess……”

Countrywide “gets it”. They have long understood that it is not their place to add stress to what is already a stressful process, that of buying or refinancing a home. They are quite proficient at achieving the transparency that real estate agents need to effectively manage the many other issues faced by their clients in form of negotiations, contracts, contingencies, inspections, repairs, packing, school registrations, moving, job changes, etc. When a loan rep is calling every few days for another piece of paper because they didn’t know to ask for it when the client applied, it jacks up stress level, and as Countrywide has prov-en over the years, it is unnecessary in a well organized and well run entity.

In my opinion this is a good thing. Partnering the muscle of the nation’s largest bank with one of the pre-eminent mortgage processing and servicing companies should be a benefit to consumers, while at the same time bring a sense of relief to the mortgage and credit industries. But we must hope that B of A won’t mismanage Countrywide into the dysfunctional bureaucracy that is it’s own mortgage department.

Related Stories: Associated Press   Wall Street Journal Blog  Bloomberg News

HOTEL?

Think “hotel” when fixing up your home to sell. What an awesome concept! I sure wish I had thought if it, but credit goes to others from this article in the Sunday Times. What a wonderfully simple concept to convey to our clients. For years we have tried different explanations, often getting puzzled looks in the process.

Who hasn’t stayed in a hotel, and who would want to stay in a low rent hotel?

New Domain Name for the Redmond Real Estate Blog: WINDERBLOG.COM

I have expressed to “the powers that be” at Windermere for some time the importance of business blogging. As it is done by General Motors, the many sites devoted to Microsoft, and even Boeing, corporate blogging is an important part of any successful corporate image policy today. Perhaps it will be replaced by something else tomorrow, but for now, if a company wants to sincerely convey good will to the public at large, a well run blog is an important component of every top notch public relations firm.

Since Windermere appears complacent in this regard, I have taken it upon myself to coin WINDERBLOG.COM. Not much will change from what you are accustomed to seeing here, but in the vacuum that is the Windermere corporate interest level in blogging I have apparently assumed this mantle. (I expect a threatening phone call any day now from someone that will be quite upset over something about which they know very little. “They’re coming to take me away, ha ha…..”) Here’s some insight for the person that will call me: read this book, Naked Conversations by Robert Scobel and Shel Israel.