David Welch’s Orlando Real Estate Blog

I may be the most stubborn man alive, my wife and daughters think so anyway. I saw a sign the other day that read “behind every man is a woman rolling her eyes.” I have further proof of my obstinence, a Bank of America short sale. This particular short sale has been my cross to bare for about 18 months now. We are on our third contract, and have actually received an approval for one of the offers about three months too late. The latest offer has been in the works since August, and you will not believe where it has been. I’ll skip the usual details about how many times I had to fax the package to them before they would acknowledge receipt, or the typical issues I had with getting them to acknowledge that the seller’s had authorized me to negotiate for them.

I will pick this one up two months into the short sale, when the file was moved to HRD. That is the Home Retention Department. This is where loan modifications are negotiated. I did not request the move and neither did the owners since they moved out of the area more than a year earlier. A loan modification package was reportedly mailed to the owners, which they never received because it was sent to the property. That did not deter HRD from continuing to work the file, while I was still working with the short sale department. In December, four months into this contract, I was told by the short sale department that the loan modification had been approved and the file had been taken out of short sale. This was actually the first time I had heard of the loan modification process going on behind the scenes. I requested the file be taken out of HRD and put back in short sale, and was told that would be taken care of when they discovered that the package had never been returned. (Keep in mind they approved the loan modification without receiving the request or the loan modification package?)

Late last month (January 2010), I was told the file was in HRD, and that I would have to have them release it back to short sale. I explained that I was already told that had been done. Apparently HRD has trouble letting go of these files. After being transferred to HRD, I was told they could not release the file because I could not verify the last four digits of the seller’s social security numbers. I was reading them directly from their tax statments, but HRD had something different. I had the sellers call, and they told me that they were successful in having the file closed in HRD. I called short sale yesterday to follow up on the file being moved back, and was told that it was still in HRD. They transferred me to HRD, and they promptly transferred me back to short sale since that is where the file was headed. When I got back to short sale they kicked it up a notch to a “supervisor.” The supervisor said the problem is that the seller’s and I had not registered in the new “equator” system. This system will make the whole process much shorter he said. I asked myself if they realized that the equator is the longest line of lattitude around the globe?

FYI another agent in my office is also working a Bank of America short sale, and she had to upload her file to REO Trans. She was told that was the new system they were using to track short sales. REO Trans is typically used for bank owned properties. After loading her file to this system, she received nothing. No confirmations, no updates, nothing. When she called to check on the status, the short sale department said that since she had loaded her file into the system they could no longer help her. I have not spoken with her recently, but I can only suspect that she is having similar success.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV’s House Hunters

Yesterday, I wrote that there are three keys to success in real estate: Contact, Contract and Closing. I shared some of my observations about prospecting, the first C which is really just about contacting prospective customers. There are two types of contacts active and passive. A lot of the typical advertising strategies are passive in nature, while actually reaching out to people; face to face, direct mail and e-mail are more active strategies to make contact. As I mentioned in the first part of this post, I feel that is the area that may require the most effort but have the biggest reward in terms of impacting your success in real estate. Today I am going to focus on the other two C’s.

Let’s begin with the end in mind, closing, afterall, that is why we work so hard at this business. It is also the last opportunity we have to make a great impression on our customers. You don’t have to give some terrific closing present to make a great impression.  I heard someone say that the real estate agent is like the shock absorber in the transaction. Get your customer to closing without too many bumps, making the process smooth and you can make a great impression. That begins from the moment you go under contract and continues right up until the keys are handed over. Expectations are a big part of transitioning from contract to closing. Staying on top of the details in the agreement is the other key to this aspect of the business. If you are not a detail oriented person, or you find yourself just too busy to keep on top of things, at this point a transaction coordinator can do wonders for your business. Most people are excited and more than a little nervous when the big day comes. If you handle the expected and unexpected bumps in the road and keep all the parties up to speed you can take a lot of the drama out of the closing room. The best part about this aspect is that transaction coordinators do not charge an arm and a leg for their services if you decide to go that route. If you want to improve on this and give your customers your personal attention, all you have to do is follow the contract and follow up with all the parties in the transaction. It really does not have to take a lot of your time to make the phone calls.

To get to the closing, you have to be under contract. The final C I am going to tackle comes at the heart of our business. It is also the aspect of the business where we probably spend the greatest amount of time and energy. Whether it is spent marketing and promoting our listings for our sellers or finding and showing homes to our buyers, this is the key to our ultimate success in real estate. In my opinion, this is the aspect that involves one of the toughest skills to learn, listening. You need to be able to listen throughout the entire process, but really understanding your customer’s needs is critical in helping to transition into the contract phase. Again, setting realistic expectations, understanding your customer’s needs and helping them negotiate a contract that meets those expectations and needs are the keys to success in this aspect of the real estate business. I know I am only touching the surface when it comes to this part of the business, because authors have literally filled books on this subject. Briefly, this is where knowing your market, and knowing your customer come together. Your marketing, pricing, people, listening and negotiating skills all converge at the point of contract.

I hope this at least helps you identify the area where you have the greatest opportunity for improvement. Hopefully, there are at least enough ideas here to point you in the right direction for making those improvements too. If nothing else, maybe there was something here to help you start a dialogue with your broker. A good broker either has the experience and tools to help, or can direct you to those resources internally or through your local Realtor association. Best of luck.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV’s House Hunters

If you are in real estate you already know there are three keys to success. I’m not talking about location, location, location. I am talking about the three C’s: Contact, Contract, and Closing. To be successful in real estate, you need to be working on all three aspects of the business all the time. In my career, I have come across many people who spend the majority of their time in only one aspect of the business. Some do a good job in two areas, while fewer are able to juggle all three successfully. I believe the real estate team concept can help a great deal in compensating for areas of weakness, but don’t go out and start a team just yet. There are other ways to compensate for those areas where you do not excel. The first thing you need to do is identify the area or areas in which you have the greatest opportunities for improvement.

My personal observations over the past 13 years lead me to believe that contact may be the most common area that needs attention. Contact is simply the act of prospecting which comes in two forms passive and active. I think most agents would say they do a pretty good job of passive prospecting which includes advertising, newsletters, calendars, magnets and of course everyone’s favorite recipe cards. Probably the most important passive prospecting tool today is the agent website. Nearly 90% of buyers say they use the internet to search for properties. Personally 72% of my business last year came from the internet including buyers and sellers. There are somewhat active aspects to internet marketing such as search engine optimization and blogging, but the internet is primarily passive. Active prospecting involves actually contacting people first, and this is an area with which many agents have the most difficulty.

The good news is that many agents do have difficulty with this area. If you just try to make an effort to improve, you should be more successful. A lot of the coaching organizations put a major focus on this aspect of the business. Again, in my observation, difficulties in this area can be the most expensive and frustrating to overcome. The good news is that improving this aspect of your business brings the greatest improvements too. I say this is expensive, because the most successful approaches to improvement involve either personal coaching or paying tele-marketers to make the contacts for you. Either of these approaches can be costly. Even more costly is doing nothing to improve, because of all the lost business you might have had. It can be frustrating though, because more contacts mean more rejection, which is the basic reason so many agents have difficulty with this aspect of the business. Eveybody has heard that Babe Ruth hit the most home runs, but he also struck out the most. No matter how many inspirational stories you hear, it is still no fun to be rejected.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV’s House Hunters

Phil the groundhog has a real future as an economist; both try to predict the future. Some things are predictable like Winter which, by the way, lasts until Spring every year so there are always six weeks left after groundhog day. People are somewhat predictable, but not completely. Psychologists try to understand why people do what they do, but are often surprised. One thing I have noticed is that people get tired of the bad economic news and pessimissm. I have written several times before that economics is about supply and demand. Supply is something you can easily inventory. You can go out and count your widgets, and you can measure the cost to produce that inventory. Measuring demand is a little trickier. Demand gets into the psyche of the consumer, and the only pure metric of demand is the actual purchase of goods and services. That only measures the past, so how do we predict the future?

There is no crystal ball that answers what future demand will be. If there was, I am sure the banks, wall street and the US automakers would not have been looking for bailouts this past year. We do have the consumer confidence index which has been a somewhat reliable indicator for future purchases. The latest index just came out last week stronger than expected at 55.9. That was the third month in a row marked by an improvement in a quarter that saw a 5.7% growth in the economy. Of course, much of the growth is not sustainable being fueled by federal stimulus money. The third quarter also posted a modest expansion as fiscal and monetary policy started taking hold. So, is consumer optimism helping create the expansion or is the expansion generating greater consumer optimism? Either way, with two quarters of growth behind us, it is time for the consumer to take the lead again. Consumer spending is the biggest and most sustainable driver of our economy, and I don’t want to wait six more weeks for Spring.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen On HGTV’s House Hunters

Ok, these may not be the best numbers in the world, but they could be worse considering the weather. These numbers are so off compared to the last several months, I am concluding the weather had an impact on sales. Since March of 2009 our prices have been in the range of $125,000 and $135,000. January took quite a tumble with a median price of $105,000 on 1,498 closed sales. I believe the number of sales will end up closer to 1,800 which is also off from the 2,000+ that we have had each month since June of last year. All three categories of sales, REO, short sales and “normal” were off with 690 bank owned at $70,000, 391 shorts at $118,000 and 418 “normal” sales at $169,945. Of course weather cannot answer everything. There may have also been some price cutting to get homes sold by owners who just want to be done with it.

As far as the inventory is concerned, Orlando remains pretty stable with 15,930 active listings. Of those 1,655 or 10.4% are REO, while 5,996 or 37.6% are short sales. So, nearly half of all active listings are distressed properties. Pending sales remain very strong with 8,583 made up almost entirely of bank owned and short sales. There are 1,630 or 19.0% REOs, and 5,627 or 65.6% short sales for a total of 84.6% distressed pending sales. Short sales continue to be long shots for closing with just under 7% of the pending short sales closing in January. Distressed properties overall are having a tremendous impact on our market with almost 1 in two active being distressed, more than 4 out of 5 pending are distressed and almost 3 of 4 closed sales are distressed properties.

Aside from the these numbers, I personally am starting off very strong this year with four closings in January and four scheduled to close in February. Additionally, I have a two short sales that appear to be nearing approval.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV’s House Hunters

I was fortunate enough this week to have two closings with the new HUD-1 settlement statement. The new form adds a section where the buyer’s good faith estimate (GFE) from their lender is compared with the fees actually charged at the closing. There are three types of fees on the GFE and HUD-1 that are compared on this extra page. The first type of fee cannot have any variance between the GFE and the final HUD-1. When you meet with a lender, they know what their fees are, so obviously their estimate of these fees should be exact. The second set of fees are those that can change by up to 10%. That sounds like a lot of fluctuation, but an example is the days of interest the buyer pays at closing which is based on the day of the month. When estimating this number the lender may expect to close on the 30th, but the closing could get moved up (most get delayed, not moved up) to the 29th adding a day of interest. The final category of fees are those that can vary by any amount. The reason they can vary by any amount is that the buyer can shop for these services, and the lender has no control at all. A great example of this is homeowner’s insurance. The buyer’s lender can only estimate insurance, and insurance quotes can vary widely. One of my customers who closed this week had quotes that ranged from around $1,200 per year to $1,800.

Of course, as you can tell from the title of this post it is a government regulated, mandated change. Therefore, there are some things that you have to laugh at. The new improved HUD-1 is being called the three page HUD (the old HUD was two pages), but the two I closed this week were five pages long including one blank page in the middle? One of my customers brought his actual GFE with him to closing, and several of the estimates on his did not match what the lender reported on the third page. In the end they were immaterial, and his actual costs were lower. It begs the question of how this is being enforced. I suppose the buyer could stop the closing, and they should if they are getting ripped off. I just wonder how many will when they have a moving van and are anxious to get into their home.

The way that the fees roll up from the details on the side is rather difficult to see, which added a degree of confusion. Also, here in Florida the seller pays for the title insurance. The new HUD-1 requires it to show on the buyer’s side of the ledger with a credit back from the seller on the front page. This added more confusion as the buyer questions why they are paying for it, and the seller questions why they are giving the buyer another credit. Both felt like it was a bit of a shell game. The other issue I have with the disclosure section (page three) of the form is that it shows the terms of the buyer’s loan. What is wrong with that you might ask. Well those terms are disclosed already in their note - which is private. Now they are on the HUD-1 for everybody to see. I don’t know that it is the seller’s business, or anyone else for that matter. Here in Florida the note is not recorded, just the mortgage. I just find this a bit of an invasion of the buyer’s privacy. The best part is HUD has a 48 page guide that you can download from their website on the shopping for settlement services and the new three page (five page) HUD-1.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV’s House Hunters

If you go to google and search “Orlando Real Estate”, Zillow comes up in the middle of page three. I am sure the folks at Trulia love to hear this, since they are and have been number one on that same search forever. My own webpage pops up at number 10 - that is page one - or number 11 most days. I pay about $400 a year for my website with Alamode. I can add all the content I want including advertising as many listings as I may have for no additional cost. I also make use of a Point 2 website for $9.95 a month for additional exposure. Between those two sites, my listings are syndicated across more than 40 other websites. The single most important of all these real estate sites of course is Realtor.com. There is a reason why all these sites offer free advertising. They are trying to amass content. Content is king on the internet, and if I am providing it, you should not be charging me $9.95.

It is true that virtually all of these sites have “premium” advertising packages. They like to call them partnerships, but they are really just offering to place you ahead of the crowd. I am a Remax agent, because Remax is already above the crowd. All the large brokers have inhouse tools to promote their agents and the properties they represent. I don’t need the premium sites. Just so Trulia does not get any ideas, outside the real estate community nobody seems to know who you are. A lot more people have heard of Zillow, but generally question their valuation model. Please don’t think I am bashing any of these tools. I am just quetioning Zillow’s choice during difficult times to start charging. I have plenty of other free options available. For me, it is not worth $9.95.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV’s House Hunters

google_protectAndRun(”ads_core.google_render_ad”, google_handleError, google_render_ad);

I find myself helping a lot of buyers looking at foreclosures these days. They are often the best deals at least from the perspective of purchase price. They can take a toll on you emotionally though if you are not prepared for multiple offers, long bank delays, even longer bank addendums and short time frames. Let’s start by looking at the multiple offer situation. The first thing you should know is that everybody is looking for the best deal. Everybody wants the home with the fewest problems for the lowest price. In Orlando we have been closing over 2,000 sales on over 3,000 new contracts each month with over 8,000 pending sales back logged. Every single one of these deals invloves a buyer looking for the best deal. Remember this when you find a nice house at a great price, and you find out there are multiple offers on it. It happens frequently in our marketplace. A foreclosure in Baldwin Park recently sold for $60,000 over the asking price. When I showed the house the first day on the market there was a line to see the house. Under pricing is a popular strategy on with these homes, so look at comparable sales before making an offer.

Because these homes are frequently garnering multiple offers, yours may not be selected. Be prepared to write multiple offers of your own, and keep an eye on homes that you don’t get. They frequently come back on the market when buyers are unable to meet the banks deadlines. You may get a second chance. Do not expect a quick answer from the bank on your offer, although some are very timely most take days to get back to you. When your offer is selected, you have to wait a little longer for the bank’s addendum. Typically, you will have one day to rewrite your contract, and signoff on the bank’s addendum. Fannie Mae and Freddie Mac have 15 page addendums. These addendums will freak you out if you are not prepared for them. Basically, they disclose that this property could have all kinds of scary problems like mold and lead based paint, and you should have inspections for everything imaginable. The contract of course is “as-is”, so do not expect the bank to repair anything or to be held liable for anything. They will also expect you to have these inspections and make your determination  as quickly as possible even if that means having inpsections on the weekend. Then they expect you to close on time or face stiff penalties for delays. They on the other hand will get around to it when they are ready. Expect delays for HOA estoppels.

In the end, you will be getting a good price. The banks just expect you to abide by their terms. Have your proof of funds or pre-approval letter ready, and your check for the escrow deposit. Best of luck, and let me know if I can help you.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen On HGTV’s House Hunters

This information provided by and posted with permission of Jay Buerck from YouServed.com.

google_protectAndRun(”ads_core.google_render_ad”, google_handleError, google_render_ad);

I really am amazed at the complete lack of reason at FHA, Fannie Mae and Freddie Mac. Last year they made condo financing impossible and tightened all their guidelines making it more difficult to obtain financing. Keep in mind the government was giving hundreds of billions of dollars to banks to improve their liquidity so they could make loans. The Fed also slashed their interest rate to zero, and began pumping hundreds of billions more dollars into the economy to prime the lending pump. Also, Congress passed the first time home buyer tax credit, then extended it, then extended and expanded it again. So, Congress and The Fed are pumping hundreds of billions of dollars into a system clogged by the very entities that are supposed to be facilitating lending.

Last year FHA was successful in outlawing the practice that allowed sellers to contribute money for the buyer’s downpayment, they raised the amount of money buyers have to put down and the implemented the use of credit scores as a lending criteria. Now FHA wants to require people with credit scores below 580 to put 10% down instead of the 3.5% down required right now. They also want to reduce the amount of closing cost assistance to 3% of the purchase price from the current allowable 6%. I don’t think these are necessarily bad ideas. I do believe the timing is wrong, and I believe they are contradictory to the other programs in place to stimulate demand for real estate. FHA has long been a program designed to help first time home buyers, and increasing the cash requirement makes purchasing more difficult for first timers. Don’t make loans to people that are too risky, but if you don’t take some risks you won’t make any loans.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen On HGTV’s House Hunters