Transcrip bubba mills

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INTHISISSUE:

HEADLINE NEWS WITH

Bubba Mills

www.ThePowerIsNow.com | Info@ThePowerIsNow.com 1

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HEADLINE NEWS WITH

Bubba Mills R

ecently, The Power Is Now got an opportunity to interview Bubba Mills, Chief Operating Officer and Managing Partner for Corcoran Consulting & Coaching who shared some great insights regarding the latest issues affecting the real estate industry.

It was a very informative interview and a lot of the listeners tuned in to the broadcast over at The Power Is Now online radio were able to learn a lot from the discussion.

Among the topics covered during the interview ranged from the state of the industry as a whole, the Mortgage Relief Act, home prices and the increase in rental demand, how holiday buyers are having a higher conversion rate and the Real Estate Dominance Bootcamp to be held from February 6 to 8, 2013.

Bubba Mills is a real estate expert who promotes best practices in the development of innovative ideas in real estate owned (REO) asset management. He is an outspoken advocate of compassionate REO disposition and corporate responsibility. He was a former REO Operations Manager for Financial Asset Services and has held positions as a High Risk Loss Mitigation Manager for Option One Mortgage, Mergers and Acquisitions for WJ Bradley, Wholesale and Retail Operations for First Magnus/Charter Funding and Pool Sales Department for four

major companies.

He currently serves on the Asian Real Estate Association of America (AREAA) Advisory Board, the National Association of Hispanic Real Estate Professionals (NAHREP) Board of Directors, Women in Default Services (WinDS) Education Committee and as a member of the Connecticut Mortgage Bankers Association (CMBA) Education Committee. He is also the Exclusive Five Star Institute REO Certification Instructor.

Part 1. THE STATE OF THE INDUSTRY Q: What is happening in real estate?

A: The September edition of REALTORSÂŽ Confidence Index published monthly by the National Association of Realtors (www.realtor. org) has some very interesting statistics. It states that the average number of homes sold every day in the United States is 13,205. Of those numbers, 31% are first-time homebuyers while 18% are investors and 27% are all-cash buyers.

This means that all-cash buyers are almost equal in number to first-time home buyers.

There are a lot of things happening in the real estate market including uncertainty with consumers, instability in employment and continued restrictive mortgage availability with tight underwriting standards which continues to

be a problem among real estate agents.

A quick look at the real estate market will reveal that the housing industry is in the biggest crisis that it has ever been in. First, there was a huge mortgage boom and then the industry went into an REOdominated marketplace. After the robo-signing scandal, the Mortgage Electronic Registration Systems (MERS) and now the Attorney Generals settlement, the industry is now in a short sale distressed market.

VALUE OF SALE BY CATEGORY Being in the industry for 24 years now, I’ve done the traditional, short sale, REO, property management and evaluation and the one thing we have to look back on are the indicators that show the value of the house which is something that banks look at, as well as consumers. The percentage of value for a house on a non-distressed sale is 100%. On the contrary, a house on a short sale is only 87% of value while a foreclosure is 81%

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They also don’t have to assume the responsibility with the home owners associations, the vacant property registration, eviction process, the SCRA and many other expenses associated with a foreclosure that is why short sales are getting easier and eaQ: Are these numbers based sier today than they were two on what has happened in years ago. the past or is this just an assessment of the situation?

Q: Do you think that real esA: These are statistics based on tate owned properties are the September edition of the going to go away completely REALTORS® Confidence Inbased on the fact that short dex report published by NAR. sales are getting easier plus In other words, a house worth the relocation assistance is $100,000 on a non-distressed becoming more attractive to sale is worth $100,000. On a more and more people? short sale it is worth $87,000 A: No, I don’t think real estate while on a foreclosure it’s worth owned properties will ever go $81,000. away. There were foreclosures in the 1960’s, 70’s and the 80’s.

Q: Why are a lot of foreclosuAny time there is credit theres being held up? re has to be bad debt because A: There are several reasons that’s just a part of life. Howewhy foreclosures are being held ver, we’re not going to see up, including the recent Presisomething like 2008 or 2009 dential election and the winter when huge amounts of propermoratorium among others. But ties were being released. at the end of the day, the banks The truth is that banks want are not in business to own the consumers to have a dighouses. They are there to make nified exit strategy that is why interest-bearing loans and that they are pushing for short sais where they get their money les. Banks don’t want to foreback on. The main reason why close because that is not their a lot of the banks are offering intent. They would rather help huge amounts of relocation assomebody with a dignified exit sistance or cash-for-keys is bestrategy out of the mortgage cause they know that a short that sometimes should have sale is worth a higher value to been funded. The banks want them vs. the risk of a foreclosuto be the preferred mortgage re or an REO. In addition to that, and lending institutions for the the property is also in a better communities and taking away condition than it is as an REO. look at, as well as consumers. The percentage of value for a house on a non-distressed sale is 100%. On the contrary, a house on a short sale is only 87% of value while a foreclosure is 81% of the value of the house.

people’s properties will not help their businesses.

Q: As short sales continue to grow, what is your advice to real estate agents who have significantly invested in REO business and how should they be transitioning their business?

A: COACHING My advice is that they do coaching on multiple pillars.

Corcoran Consulting and Coaching’s philosophy is we do not teach or coach on one pillar. It’s a failed model especially in the REO business. We require our clients to have multiple pillars in their business or that they let us coach them through multiple pillars of their business. We are the only coaching company in the United States that coaches traditional, short sale, REO, and property management with one coach for a client. We do not only coach our clients to become rainmakers or team leaders but we also coach all their buyers agents and listing agents. We are a very, very hands-on, high-touch coaching company.

ALL ABOUT PERSONALITY Transitioning from REO to short sale is not difficult, depending on the person’s personality.

Most successful REO agents are very detailed, analytical and task driven.

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The traditional agents however are not as task-driven and focus more on the aesthetics and the traditional side of selling, going to open houses and doing outreach. In today’s short sale market you need to have a blend of those two. You need the traditional side and the REO side to blend in the middle.

That is why an office is very successful when they have multiple pillars that they can rely on – traditional, short sale, REO and property management.

Q: Based on the statistics regarding the average number of houses sold everyday, what actions should agents take right now as they adjust to the current state of the industry?

A: CEO LEADERSHIP TRAINING To be able to adjust to the current state of the industry, agents must undergo CEO training. A lot of agents say that they don’t need to go through CEO training because they are just agents. But when asked if they are W-2 or 1099, majority of them will say they are 1099 which means self employed.

If an agent is self employed, it means he or she is the CEO of his own company even if the agent is working for a franchise. What that also means is that they need to do a business plan or a contingency plan.

PLAN AHEAD A prime example regarding the importance of having a good business or contingency plan is what happened after Hurricane Sandy. Those that had contingency plans had redundant backup systems. A lot of their data was stored in the “cloud” instead of just using backup hard drives installed locally.

They also have established relationships with people across the United States that they can turn to for office spaces in different states that were not affected. These businesses that had contingency plans were up and running in 4 days. So it is very important to plan ahead and work on your business. That’s how you make it through.

Second, an office must offer multiple pillars in the business plan. We saw the mortgage boom coming as well as the REO-dominated market. We also knew during the REO that short sales was going to come in. What’s going to happen after short sales? It’s called traditional. So it is very important to be working on all pillars to be able to cope with the industry no matter what the predominant real estate market is.

Third, all REO agents need to have a bi-side. Agents need to be able to have somebody handling the IVR leads or 1-800 leads. Take the leads that are coming off of them and quit giving them to other people for 25% referral. It’s imperative to work on your business and

what’s going to be happening in the next quarter because banks are cutting back as well as Fanny Mae and Freddie Mac. We went from 15 asset management companies from Fanny Mae to zero in one year. Bank of America went from 12 outsourcers to 8 and those numbers are just going to be a lot lower by the end of 2012.

GET CERTIFIED Before building a short sale department, the first thing to do is to get some type of certification. Multiple banks recognize different certifications. The four most popular certifications are Equator Short Sale certification, Short Sales and Foreclosure Resource (SFR) certification by NAR, The Five Star Short Sale certification, and Certified Distressed Property Expert (CDPE) certification. Fanny Mae and most of the GFCs recognize the SFR certification. Most of the banks and asset management companies outside of the GFCs recognize any of them.

And so the reason why I stated all of these is because the stressed property liquidation statistics show that year-on-year, short sales are up 12.4% from September of 2011 and foreclosures are down 16.1%. That is a swing of 28% which is a very big difference.

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Q: I think no one really saw it coming, but don’t you think real estate agents should have anticipated it?

A: When we coach our clients, we tell them that they should be able to see the writing on the wall today to be able to talk to their consumers.

INTEREST RATES Things are changing almost every day and one thing that has changed significantly is the interest rate. Statistics have proven that 1% interest rate change equals almost 10% of the value of a house on a 30year amortization. Basically, paying a 1% higher interest rate means that in 30 years, you’ve paid 10% more for that house.

So why aren’t customers buying today?

Eric S. Belsky, Managing Director of Joint Center of Housing Studies at Harvard stated, “The surveys consistently find that the overwhelming majority of young adults plan to own a home in the future. But many would-be buyers have stayed on the sidelines waiting for the job outlook to improve and house prices to stop falling. But as markets tighten, these fence-sitters may begin to take advantage of today’s lower home prices unusually low mortgage rates.”

Unusually low is not the word for it. If you look at 2003 compared to 2012 on a $100,000 mortgage in 2003 your princi-

pal and interest payment would it into the S&P, you will get a be $609 compared to $443 to- 3.3% profit. If you invested it in day based on 3.4% interest. the NASDAQ, you would lose 20.9%. If you invested it into SEE THE BIG PICTURE real estate, you would make a Projections are saying we’re 44.6% profit. going to go up 0.9% to 1.2% in A light example: I bought a the next year. What’s the cost of house in 2001 for $281,000. In waiting a year? On a $200,000 its prime it went up to a mid mortgage today at an inter- $500,000. About 9 or 10 months est rate of 3.5%, that would be ago, my next door neighbor did $898.09 principal and interest. a short sale for $399, so I got By the 4th quarter of 2013, that a $118,000 profit in 11 years. would go up to $1,025.96 be- The difference is that I didn’t cause market analysts predict use my house to bank a house that the interest rate is going like a lot of people did. When to go up to 4.4%. That’s a diffe- you buy a house, you stay in the rence of $127.87 a month on 30 home. Its longevity and interest years or 360 payments. will give you the bearing overtime. You’re buying a house as a HOME INVESTMENT AND home for you, your children and THE AMERICAN DREAM your family. Don’t look at interA lot of statements out there est rates. Don’t look at whether talks about home ownership as if the market is increasing or what the American dream is all decreasing because that is your about. Well, I disagree with that. home - your house over your The American dream is true - head where you raise your kids it’s freedom and the next Ame- and your grand children in. If rican dream is home ownership. you’re into the investment marTruly I would rather give up my ket then of course you’re going house and have freedom in the to watch for interest rates, price United States than I would be- values and everything else on a ing a home owner, so that’s my daily basis. Part of the American take on that. dream says “home” ownership.

Everybody talks about inves- It doesn’t say “investor” owting and how you lose money nership but “home” ownership on your but here is an example - not “house” because home is that I wanted to share. If you where you lay your head at. So took $100,000 and invested it look at the big picture. in January 2000, what would it be worth today? If you invested it into the Dow, you will get a 22.8% profit. If you invested

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Part 2. THE MORTGAGE RELIEF ACT Q: What is happening with the Mortgage Relief Act? A: There are 41 State Attorney Generals who are calling on Congress to extend the Mortgage Relief Act. There have been so many different statements made but basically the most powerful ones are, “Failure to extend this tax relief would hurt the very families we set out to help in the national foreclosure settlement. We need to do everything we can to encourage—not deter— struggling homeowners to seek help to stay in their homes,” said Illinois Attorney General Lisa Madigan.

Iowa Attorney General Tom Miller said, “Unless Congress acts, any debt relief to be provided in 2013 under the National Mortgage Settlement as well as other mortgage debt relief program will likely be considered taxable income.”

More than 4,000 homeowners have received mortgage debt relief for an average savings of $67,450 per home owner. There is already an extension filed and it’s included in the Family and Business Tax Cut Uncertainty Act of 2012. It has passed the Senate Finance Committee with bipartisan support.

you can look at but if this is not passed, people will stop paying for their mortgages. They will just draw this thing out for another year because they know that banks will not foreclose and then after that they can get money to get moved out of the house. There are so many different hypotheses that one can use on this but at the end of the day, it has given people more help. If this is passed, it just shows that the government is sort of giving back a little bit.

If the government quits giving back, consumers will also stop giving to the banks. That’s what it all comes down to because in a lot of situations it would literally be cheaper for a consumer to stay in their property, not make a mortgage payment because they know the banks are not going to foreclose. That will give them another 12 to 14 months and then after foreclosure, there’s the eviction process which would add another 3 -4 months depending on what state you’re in. Literally, they can live mortgage free for years and save all that money and pay cash for a house at that point. So I think the banks realize that and I think Congress realizes that too - that there is a benefit there.

I don’t see how the Relief Act is not going to be extended, eiQ: What do you think will ha- ther in whole or under the exppen to the market if it is not tension that was written in the passed?

Family and Business Tax Cut A: There are a lot of things that Certainty Act of 2012. There has

to be at least a forgiveness of the taxable income portion to be able to incent consumers to get out of their properties with a dignified exit strategy vs. draining the banks into this long foreclosure process.

Q: How long exactly does it take to get people out of their homes?

A: In some states it’s 600 days - that’s a year and a half and it’s getting longer and longer.

However, a lot of the banks don’t want to foreclose because they want to offer incentives to consumers. They give the homeowner an option to sell the house and not get taxed for the difference. In addition to that, the homeowner gets a $30,000 incentive to move out. That is a great deal for someone to move out of something that he or she is not paying for. But looking at the financial side of it, $30,000 is probably a third of the cost that it’s going to take to foreclose against the property because the bank can now get that debt off their sheet and use funds to be able to get interest-bearing loans vs. having to pay for HOA’s, tax violations, and the vacant property registrations, among others.

There are a lot of costs associated with an REO and that’s why financial institutions are increasing the amount that they’re giving to consumers and giving them a dignified

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exit strategy to be able to fulfill their debt to the bank. It’s not the bank’s fault that they can’t pay. There are a lot of people in the banks that are getting laid off because of the recession too and today’s recession is not based on FICO score. It doesn’t matter if you’re 480 or an 800 when there are no jobs, it doesn’t target a FICO score – it targets an industry.

in home prices. Until then, single-family rentals are capturing more consumers’ attention. In fact, rental leasing volumes rose each month for the past two years, according to CoreLogic.

On average 42,000 new rentals were added to the supply during that period. That’s double the average flow prior to the recession.”

That is why property management is an awesome pillar to have in the business. The report goes on to say, “Overall, data

by CoreLogic shows a housing finance system that’s experiencing fewer defaults and foreclosures overall. The share of outstanding mortgages recorded as seriously delinquent or in foreclosure fell to 6.7% of all mortgages in September. That is down 10.2% from a year ago and marks a full 23 consecutive months of delinquency declines. About 1.3 million homes, or 3.3% of all homes, went through a completed foreclosure in the yearlong period ending in September. That is down from 1.5 million during the same period a year earlier.”

In short, property management does several things for a real estate company:

to sell those properties.

3. It brings buyer leads. The people that rent in those properties are future buyers especially if you’re helping them with FICO score training, credit counseling among others. It is basically incubating your own leads while making money doing it.

Q: You mentioned that there are almost as many investors Part 3. HOME PRICES AND or cash buyers as there are AN INCREASE IN RENTAL DEfirst time home buyers. Where MANDS should agents focus their busiQ: What can you say about the ness at – cash buyers or finance current home prices and the buyers? What is your recomincrease in rental demands? mendation?

A: It has been about a year that A: We work on all pillars at the they said that there’s going to same time that is the reason be an REO for rentals, short sawhy Corcoran Consulting and les for rentals and investors will Coaching coaches 43 of the top be buying huge bulks of proagents on the Wall Street Jourperties. We kept hearing about nal list. Don’t focus attention all these things and really noanywhere. Work on a business, thing came into place. not in a business, that’s what it I’ve been reading articles that comes down to. When acting have been coming out because like the CEO of the company we do property management you have to work on the busicoaching along with short sale, ness and hire people to work in traditional and REO. I’ve got sethe business. Hire a sales manaveral coaches on this and we ger to run the traditional side, look at data analytics in a lot of an REO manager to do the REO different areas. aspect and get another license A housing report published in to be able to do property maNovember by Mark Fleming, nagement. Act like the owner chief economist with Corelogic 1. It gives monthly income of the company regardless of states, “A full housing recovery from the percentage of the whether you’re a stand-alone will be driven by a healthier monthly rental. agent, a broker-owner or a franeconomy, fundamental gains in 2. It gives future sales. When chise owner. income growth and consumpthe market comes back, a lot tion, and an ongoing increase of the investors would want

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Focus your business on a 4040-20 of the market. That’s 40% of the time on traditional sales, 40% of the time on short sale and 20% of the time on REO. Hire a property manager to run the property management portion and don’t be afraid to delegate and trust other people.

Run the company like a company and effectively delegate to be able to work on the business.

Q: What’s the typical excuse in your coaching experience, for people not wanting to make even a significant investment to bring on an assistant, a property manager or a buyer’s agent and how much are you really giving up when you do that?

A: The biggest excuse is that they don’t have time. Time is an acronym which means That Is My Excuse. A lot of people use that as a reason to not do something. The next excuse is that it costs too much. How much money does a buyer’s agent cost if you are the broker? That’s 50% commission if you sold and listed the property. You did not have any out-of-pocket expense because agents are paid on success.

Would you rather give 50% of your income to somebody else who’s going to do all the work on it and get 50% versus you getting a 100% but only being able to do so much? I’ll take 50% of 5 people vs. a 100% of me anytime. So there are no excuses. People allowed themselves not to do that business

adventure because they didn’t have time. They chose not to hire someone to work with them because they didn’t want to give up 50%.

Basically, people need to understand that they are the biggest problems and it’s all about letting go. Let somebody else do it, granted you have to train them and give them the tools and resources to empower them. If you can’t empower them to make decisions, you can’t hold them responsible for their actions.

Q: There are a lot of independent agents out there who are struggling, not making any money and getting discouraged. So why aren’t more agents teaming up? What is the philosophical world view issue?

A: Have you ever heard of the term “ego”? Ego stands for Edging Got Out. A lot of people let their egos get in the way. They can’t do business for an individual because they are either scared or threatened. Don’t let things get in your way.

You can individually change a community’s value by doing the right thing – implementing the right systems, acting the right way. Working with moral values and integrity are two of the most important things as well as doing the right thing not only for the consumers but for the community, the banks and for the investors. We can get through this together as long as we stick together and not po-

int fingers at other people. Take responsibility and play your part in the role.

Part 4. THE REAL ESTATE DOMINANCE BOOTCAMP Q: Lastly, what is the Real Estate Dominance Bootcamp?

A: The Real Estate Dominance Bootcamp is a 3-day educational bootcamp with an attendance of 300 people in one room with all the sponsors and the speakers. Attendees do not choose where they want to go.

The asset management companies and the banks all give one hour education and the attendees can interact with them and ask questions. There are no panels listening to three minutes of opinion from one bank versus another.

This year, we are teaching traditional, short sale, REO and property management. No matter what area of the country the attendees are in, the tools and the resources from this bootcamp is going to teach them how to dominate their competition.

It’s going to teach them how to put multiple pillars into their respective companies. Besides Corcoran, we are going to have banks, outsourcers and some of the leading industry speakers at this event.

All the food and networking reception with open bars for an hour and a half is included in the registration. The registration fee however, does not include airfare and hotel. This is going to be held at the South Point Hotel Casino and Spa and 9

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All the food and networking reception with open bars for an hour and a half is included in the registration. The registration fee however, does not include airfare and hotel. This is going to be held at the South Point Hotel Casino and Spa and Resort in Las Vegas, Nevada on February 6-8, 2013. Registration fee is $749. Visit www.corcorancoaching.com or call 1-800957-8353 for more details.�

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