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I am a proponent of realtors getting the word out, yet very few are willing to publish data or opinions to help consumers.  I don’t know if it’s because local agents live in Kris Berg’s shadow at her witty http://sandiegohomeblog.com/ or because agents generally have nothing to say?

But I support the agents who do blog – because consumers deserve more information, and every opinion is worth considering.

A few years back, Schahrzad Berkland, aka ‘powayseller’, a very vocal bear on the blogs, became a realtor.  Out of her commitment to help buyers and sellers, she runs her own blog:  http://www.californiahousingforecast.com/ 

I’ve been encouraging her to do more videos:

She has experienced how the homebuyers’ want and need for buying a house has been much stronger than she expected. We noted how hard it is to find the right house, at the right price – and how that difficulty makes buyers more determined, and more anxious. It takes everyone working together patiently to make smart, logical decisions.

Reader Susie sent in an article from msn.com called ”10 things your real estate broker won’t say”, which first appeared on smartmoney.com as one of their regular ‘10 things your ________ won’t say’ series.  Because the original only had seven comments, and msn.com’s has over 200, here is their link:

 http://realestate.msn.com/article.aspx?cp-documentid=21755590

My comments on the noteworthy items on their list:

1.”Your open house is really just a networking party for me.”

There are many myths about open houses, mostly made up by realtors who don’t like to work weekends, or those who just kick their feet up on the couch and watch the ballgame – and then wonder why they never sell anything.

If you are thinking of selling your home, ask the agents you are interviewing about how they feel about open houses.  Their answer will tell you EVERYTHING about whether they are the realtor for you. 

This is the right answer:

Buyers are energized by the internet, and gravitate to the fresh new listings. When they see a hot one, they’ll jump in their car and drive by – you’d be smart to have an open house to make it easy and convenient for them to see the property when it is hot. 

When done right, OPEN HOUSES INSTILL URGENCY IN BUYERS.  When the market is hot, like it is now, the only reason a professional open house wouldn’t sell is because the price is wrong.  Get the price right, and use the open house as a tool to incite urgency. 

2. “My fees are negotiable.”

They say you should shop around, but let’s be clear. You should compare the services provided, and then measure whether the corresponding fee is worth it.  You can list your house for $100, so if you just want to save money, just call one of those guys.  But don’t expect that their service, and sales price, will be the same as mine.

9. “My Web site is a dead end.”

Excellent idea to check the agent’s website, particularly for relevant content.  But I disagree with this quote they included by a sales manager, “If a broker has to advertise properties that are already sold, it tells you that he doesn’t have enough inventory to keep his (roster of houses) full.” 

The sold listings help identify the agent’s track record, both in the area you are looking, and how they did price-wise.  Plus, if they have a lot of active (unsold) listings, they are a lousy agent.

10. “You can probably do this without me.”

Absolutely true, but not for everyone.  Whether buying or selling, if you think you can do it yourself, I encourage you to give it a try.

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The smartmoney.com article was another one of these sensationalist pieces, whose intent seemed to be to rile up the reader into thinking all agents are lying thieves.  Speaking of thieves, their article sure sounds a lot like the youtube on broker tricks, which you’ll probably see in the sidebar if you click on my youtube at the bottom. 

One of msn.com’s own authors wrote this article, a much more balanced summary of what to look for in a listing agent:

http://realestate.msn.com/article.aspx?cp-documentid=13108430

If you prefer youtube, here’s one of my first videos, on interviewing listing agents from 2006 (back when my hair really was brown):

http://www.youtube.com/watch?v=N-9qpueJik8

(Almost 18,000 views – thank you!)

Listing agents are getting increasingly more cocky about how they conduct their business. They can’t justify the refusal of FHA offers, but they do it anyway.  In the end, while they feel quite righteous about it, they are actually damaging the seller.

A story written by Kate Berry:

Despite years of efforts by the Federal Housing Administration to cut back on red tape, a bias remains against borrowers using FHA financing.

Thousands of properties listed for sale on various Multiple Listing Services around the country say simply: “No FHA” under the description of acceptable financing, lenders and mortgage brokers say.

Some attribute the restrictions to outmoded perceptions about FHA, which in 2005 eliminated some of its strictest requirements on property repairs, home inspections and appraisals. Others say lenders are excluding FHA borrowers from buying short sale or real estate-owned properties because higher default rates on distressed properties could land them on FHA’s Credit Watch list.

“This is the worst-kept secret in real estate, that the MLS is full of listings that say ‘no FHA,’ ” said Scott Stern, the chief executive officer of Lenders One, a cooperative of mortgage banks in St. Louis.

Rodney Anderson, the executive director and managing partner of Rodney Anderson Lending Services, a unit of the Dallas lender Everett Financial, called the practice “buyer discrimination” and said that it is based on old ideas about the government program.

“There’s still a stigma from the old days when FHA required more repairs on properties,” Anderson said. “But now FHA works just like conventional loans, and there is a real lack of education out there.”

Steve Majerus, the director of retail lending at CMG Mortgage Inc., a San Ramon, Calif., lender, said there are “perceptions that FHA has roadblocks to the entire process.” The real roadblock, he said, is sellers who won’t accept FHA loans.

Mortgage brokers and lenders said the problem is most prevalent among sellers of homes that require significant repairs because many realty brokers think FHA borrowers will not have the money to cover these costs.

Raffi Tal, the chief operating officer at IShortSale Inc. in Woodland Hills, Calif., said many lenders are also refusing to accept FHA financing for short sales and REOs.

“When a property goes to REO, the lender is really discounting the price, and if the buyer has an FHA loan, it takes longer, so that’s why they’re discriminating,” he said. “The guidelines on FHA are tougher, and if they get multiple offers they don’t need FHA.”

Majerus said persuading sellers and their listing agents to accept FHA buyers is important because the housing crisis has catapulted FHA into the mainstream. In June mortgages backed by the FHA accounted for 35.9% of all applications, the biggest share since 1990, according to the Mortgage Bankers Association.

FHA mortgages currently are half of all new loans for home purchases, up from 10% in early 2008, according to analysts at Bank of America Corp.

Lemar Wooley, a spokesman for FHA, said the agency has not gotten any complaints from borrowers and was unaware that MLS listings forbid FHA financing.

But Brian Montgomery, a former FHA commissioner, said that during Montgomery’s tenure (mid-2005 to mid-2009) FHA reformed its appraisal requirements, shifting from an emphasis on minor repairs to those that endanger the health and safety of a home’s occupants.

Lenders also are concerned about the ability to close a loan, he said, since housing prices are still falling in many markets.

“If there’s something that comes back at the 11th hour and the borrower can’t use FHA, then the seller is left holding the bag,” Montgomery said.

Angelo Rhea, a first vice president of FHA underwriting at $16.4 billion-asset Flagstar Bank in Troy, Mich., said realty brokers may be randomly adding “no FHA” to MLS listings because they have not kept up with changes made by the agency in recent years.

“Many Realtors think it takes 60 days to close a loan and that the seller has to pay extra costs, which isn’t the case,” Rhea said. “If anything, it’s harming the seller not to allow FHA financing.”

The perception that FHA borrowers have lower incomes and credit scores persists even though the average FICO score on FHA loans has risen from 626 to 692 in the last year, said Brian Chappelle, a former FHA official and a partner in Potomac Partners LLC, a mortgage banking consulting firm.

“If you’re loaded up with REO properties and they’re putting ‘no FHA’ loans on the listing requirements, it’s because they’re concerned about the audit risk,” Chappelle said.

Lenders may be at risk of being placed on the FHA’s Credit Watch program if they have high default rates in certain areas such as California, Arizona, Nevada and Florida. The lender “would be worried about their liability and their FHA performance,” Chappelle said.

Kris Berg is having similar trouble:

http://sandiegohomeblog.com/2009/09/03/fha-no-no/

A reader asked the other day about listings being excluded from the internet.

Schahrzad has the story:

http://www.californiahousingforecast.com/commentary/2009/7/16/10-of-listings-are-missing-on-internet-search-sites.html

San Diego listing agents now have to choose ‘Yes’ or ‘No’ on whether or not they want their MLS listings to upload to other internet sites.  Schahrzad said that there are 10% of the listings not on the ‘net.

The change began on April 3rd – maybe the word has been slow to get around?

There have been 2,174 new attached and detached listings inputted in July.  Of those, there are 437 that are marked “No” or 20% of this month’s listings that are NOT being uploaded to websites like realtor.com, redfin, etc.

My guess is that it’s due more to ignorance, than blatant disregard for the power of the internet.  Why would a listing agent want to advertise to local agents only, and NOT to the general public?

In the Sandicor FAQ’s, they say that the change was due to “a settlement between the U.S. Department of Justice and the National Association of Realtors” that has prompted Sandicor to make some changes.

CA renter and I saw this new listing hit the market at about the same time yesterday, and had the same reaction – you gotta be kidding!

http://www.sdlookup.com/MLS-090037885-3302_Azahar_Carlsbad_CA_92009

It’s a 34-year old house with no upgrades on an 11,000sf lot in Old La Costa.  In January, 2004 the homeowners paid $580,000 using a 3% down payment, and then did a cash-out refi in 2005, bumping the loans to $657,000. 

They’ve made about $70,000 profit on the deal.

Now they are in foreclosure.

Yesterday the new listing pops up, and is marked ‘contingent’ immediately, awaiting lender approval of short sale.  It appears that the listing agent must have had their own buyer, and put the short-sale deal together prior to MLS input.

CA renter posted it on Piggington as fraud, because of the ultra-low price of $450,000.

A number of issues arise:

1.  Do the sellers and/or realtor have any legal or fiduciary duty to the lender, Wells Fargo, who is facing a haircut of approximately $230,000?

2.  What’s the real value of the house if it’s not exposed to the open market?

3.  Do taxpayers take a hit on these?  Or just Wells Fargo shareholders – or MBS holders?

4.  As a realtor representing a buyer, am I compelled to search out these deals?

The first three questions have the same answer – it’s up to the bank to protect themselves and their shareholders or MBS owners.  Just getting an appraisal done probably isn’t enough protection.

The fact that the agent inputted the listing onto the MLS must mean he represents the sellers too, which gets touchy if you ask me, especially regarding the potential liability of short sales.  Will the banks chase around old borrowers of recourse loans some day in the future?  They might, nobody knows for sure.

If the agent formally represents the sellers, then he should do what’s best for them - obtain the highest-and-best offer.  That way they’ll have the best chance of getting bank approval, and minimize the loss that the bank could try to collect in the future.

I think we’ll agree that it’s not likely that any agent puts much thought into these, they are just looking at picking up a 5-6% commission in the next few months.  There hasn’t been any guidance issued by any government entity, and, of course, nothing from NAR, CAR, Sandicor, or local boards on what is acceptable, or how to properly handle these cases.

Let’s drop down to point #4 – aren’t buyer’s agents compelled to search out these deals?  The house in question is offered at 2000-2001 pricing, doesn’t every buyer want that?  CA renter said she’d pay $450,000 for it, and that’ll tell you something right there!

The buyer-agents have a fiduciary duty to their buyer to get them the best deal possible. These are some of the best deals, if you can get them closed. 

There are hundreds of these happening now – I know of one agent alone who has 32 of these in process currently.  He inputted all of them as pending listings, not contingent, and he also marked that he is representing the buyer too.  Since November he has only closed four and had at least three get foreclosed, so getting them done must be a challenge when you have 32 on your desk.

This type of guerrilla salesmanship is where the realtor profession appears to be heading - to find these deals for their buyers, secure them at favorable pricing, and get them closed.  The REO sales are just as challenging – wait until the frenzy breaks out over seeing bank-owned SFRs in Carmel Valley listing for $300/sf!

For those who are wondering about the effect of banks holding back REO properties, let’s review some of the other reasons why the downturn will continue, regardless.

1.  Still no mention anywhere about neg-am recasts getting waived.

The powers-that-be may not figure this out in time, or not care enough about the California market(probably more of the former).  If you thought the subprime loan payment adjusted a lot higher, wait until you see what a neg-am payment looks like after a re-cast.

2.  The robot realtors aren’t helping.  These listing agents now have their own websites so the buyers’ agents have to go there to download ’special’ forms, which are usually just their version of the CYA.  This week one of the websites was down, so we couldn’t submit an offer.  But you can’t call them, you can only email. 

Magically a few hours later the website was back up, and we got the forms – one saying you must pre-qual with their lender in order to submit an offer.

An email to the lender gets returned, undeliverable, and his voice mail is full – can’t leave a message.  Here we have a viable offer to submit, yet the system is in the way.  By the way, they said all offers must be submitted within 24 hours after listing too. 

3.  Some of the agents doing short sales are killing me.  Check out short-sale listing #090013568.  I called this lady because she listed this house for $299,000, which is $100,000 under three good closed comps which I was using to price a model-match Countrywide REO down the street.

She tells me that she already has an offer of $350,000, which only tanks my value by about 10% to 15%.  But over the next 3-6 months, hers will be sitting there as an active listing, and buyers will think the values are $299,000, not $350,000.

The Countrywide’s appraisers will hang me out to dry around $399,000, and I’ll have my hands full trying to sell it.  The price will have to drop steadily until I can convince a buyer that the other listing will close much higher, and it’ll probably still mean that my price will have to go substantially lower to compensate.

Check her listing – no photos, no remarks, even the occupant’s phone number is wrong, and I checked – she doesn’t have another listing.  What is she doing??

The environment is bad enough, and how some are handling their business are making it worse.

(Sorry, rant over)

Rob Dawg said, “Jim, I know you are too ethical for this but I can imagine a desperate realitter™ posting the worst possible pics and a real low ball BPO and making a killing with a silent third party.”

How many shenanigans are going on out there?

How many listing agents are tilting the table?  It doesn’t matter how you tilt it, if you give any agent or buyer a clean shot at buying a property to the detriment of others, you have breached your fiduciary duty to your seller.

It’s easy to find them too – they are happy to input the listings into the MLS!

A check of the listings that went pending in the three North County sections in February showed that 19 of 1,320 properties found a buyer the first day.  A couple were re-lists, so they probably already had a buyer coming in, and two were short sales – the agent probably brought the buyer to the table.

The others?

Ten were bank-owned, and for those of you who have tried to buy a bank-owned property, you know how hard it is to get any answer from a bank, let alone in one day. 

Sure, there has to be times when a bank will move quickly, but let’s face it, unethical things are happening out there.  A check of the listings that sold the first day is the tip of the iceberg.

What can you do?

So you know, both Countrywide and Wells Fargo have the agents upload the data from the purchase offers onto their custom system.  The manual labor is intensive, and if you have a hot listing with multiple offers, the mere inputting of offers can take a day or two. 

Listing agents who have a winner in mind are tempted to shut down the process before it turns into a freak show – especially if they have their own buyer.  They’ll mark the listing ‘pending’ to thwart more offers.  It’s doubtful that the bank clerks are verifying whether the property is still active in the MLS, so it’s easy for the listing agents to get away with it.

If you really want the property, keep sending in your offers, but they’ll have to be good.  A full-price or higher offer will probably guilt the agent into submitting it too, and you just might get lucky.

Another thing you can do is contact the broker/manager.  He/she has the legal duty to adequately supervise their agents, and if you think shenanigans have blocked your shot at buying their listing, the broker will give you some attention.

Contact the bank directly?  Fat chance that’ll work, but if you’re going to go, go all the way. 

Contact the CEO or president but you’ll have to be be unrelenting.  It’s working on an REO assigned to me; even though the former owners have moved out, they are still fighting.  I received a call from the president’s office of Countrywide, telling me to expect that it’ll take a while for their fraud case to work its way through federal court (They are accusing C-wide of fraud, even though they have already vacated?).  Not the same as getting your offer accepted, but an example of what happens when the president gets involved.

What about short sales?

There are no rules, no regulations, not even a set of suggestions when it comes to short sales.  Think listing agents are manipulating the system?  Bet on it. 

But look at one of the main contributors – Sandicor.  Last year the California Association of Realtors issued a mandate that all local associations mark their listings as ‘pending’ once a buyer is determined.  Sandicor blew them off, and still to this day allows agents to leave their listings in the active bin, even though they have an acceptable offer or two.

It’s not in anyone’s interest to have hundreds of listings stay active when a buyer has already been determined. 

Or have they been determined?  That’s where the unethical behavior kicks in – if the listing agents can field offers for months, what’s stopping them from waiting until they find their own buyer, and plugging them in at the finish line? 

The short sale environment is ripe for manipulation, sanctioned by Sandicor. 

Though this is another look at the sausage-making, I’d rather get it on the table so folks know what they’re dealing with. 

I urge listing agents to mark their short-sale listings as pending, which encourages the buyer to stick around and also give the marketplace a truer sense of reality.  What if the buyer bails?  Then marking the listing as a BOM renews the attention on it – if the listing was never marked ‘pending’ in the first place how will anyone know that the deal fell out?

It looks like PruCa has a new president and CEO.  He was featured in Sunday’s UT touting the benefits of value-range marketing:

From coast to coast, range pricing has changed the face of real estate.  The approach, an alternative to the traditional way homes are bought and sold, markets properties within price ranges, rather than at set prices.

One advantage of range pricing is that it allows interested buyers to focus their negotiations within a minimum and maximum price span, rather than trying to guess the price at which the owner will sell.

Another benefit of range pricing is that the seller promises to entertain any offer within the set price range.  That assurance opens the door to negotiations and, most likely, a transaction.  With a fixed-price listing, the seller is free to refuse any offer, and negotiations may not even begin.

Range pricing gives sellers the privilege of determining their home’s market value.  It also enables them to obtain the maximum price possible while keeping their property competitive in the market.

Homes listed with range pricing routinely sell in a fraction of the time it normally takes to sell traditionally priced homes. 

For real estate professionals, range pricing eliminates the listing agent’s two greatest fears: underpricing, which results in the sellers leaving money on the table; and overpricing, which attracts the wrong buyers to the home.

Guys who are president and CEO of a big real estate firm aren’t on the street every day selling homes – they are administrative folks, running the corporation from the ivory tower.  So I won’t blame him for waxing on about their little niche without knowing exactly how the buyers feel about range-pricing.

But I can tell you that buyer view range-pricing with great skepticism, and if they do make an offer, they look at the lower price, and want to go down from there.

A review of the homes in Carlsbad and Encinitas:

Currently pending:

196 not using range-pricing, 77 days on market

32 on range-pricing, averaging 85 days on market

Closed since January 1:

120 not using range-pricing, averaging 73 days on market and 96% SP:LP

28 on range pricing, averaging 78 days on market and 93% SP:LP

Of the 28 that closed, ONLY SEVEN SOLD ABOVE the original low end of the range. 

While the range-pricing might have appeared to be beneficial to sellers in a hot, rising market, today it is one more hurdle thrown in the path.   Today buyers are looking for any reason NOT to buy, and range-pricing gives them another one. 

It should occur to those touting the range-pricing that if some buyers are turned off by range-pricing, that is bad for the sellers! 

Check the stats, it isn’t producing the benefit you think it is.

75% of recent solds closed below the original bottom of the range!

Range-pricing is the lazy man’s way to pricing a home.  Don’t risk alienating any buyers, hire an agent who can pinpoint the value.

Hat tip to Chuck for noting this house for sale, which proudly displays the listing office’s sign (against the rules) and yet not much else. 

Is there anything here that makes you want to jump in your car and go for a look?

Recently a blog reader asked me to help him sell his home. I had been communicating over the previous few months with my thoughts on the market, and price, and they were considering their options.

Once they were ready, I visited the home and gave my assessment of value. They wanted to start higher, and because the market is tough, I politely declined.

He sent in this follow-up:

Hi Jim,

I just wanted to give you an update on the selling of our home. We took the property off the market as of yesterday after we found a renter and signed a one year lease. Your read of the market was spot on and I think it was smart of you not to be our agent because there was very little chance to sell at the price we wanted.

They only wanted to go 5% higher than my price, but this market is unforgiving. I will list your home at the top of the range, but no higher. It is wrong for agents to take listings too high, it’s a disservice to everyone.