TNR - January 2013 Real Estate Edition by The Niche Report

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Real estate agent & broker Edition

For the serious real estate professional

Issue 013/January 2013

The ART OF THE JUGGLE Managing Multiple Offers

Page 16

Real Estate in Cuba Buying and selling without Realtors速 or the MLS

Bank Loans on Investment Properties are Scarce

De-Stress Your Life and Business in 2013

Lower Trustee Sale Margins Push Investors to Short Sales

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CONTENTS

Issue 13

January 2013

Publishers Robert Pegg robert@thenichereport.com David Pegg david@thenichereport.com

MANAGING EDITOR

The Art of the Juggle

Managing Multiple Offers by Mark Shandrow

Rick Roque Rick@thenichereport.com

Associate Editor Cathy Johnson info@thenichereport.com

ACCOUNTING MANAGER Shawna Ingram shawna@thenichereport.com

8 12

Real Estate in Cuba Corey ann Curwick Buying and selling without Realtors速 or the MLS.

How to Film a Perfect Property Video

Your Life and 28 De-Stress Business in 2013 angela k. simanek

Rosemarie Pirio

iPhone App for Real Estate Professionals

Corey Ann Durwick HomeSnap raises over $7 MM in funding.

Bank Loans on Investment Properties are Scarce Corey Ann Curwick

22 26

Say Yes to Know! Gary Opper

Showing Instead of Telling adam packard Real estate infographic lessons

Where are the Criminals? Let MeTell You ...

Advertising sales Hilary Bateman hilary@thenichereport.com

Production Manager

Lower Trustee Sale Margins Push Investors to Short Sales

Production Assistant

DEPARTMENTS

10 33 35

Jessica@thenichereport.com

Brian Mahany

Daniel Beer

Advertising Director Jessica Grizzle

note from the Editor Market update & analysis service provider classifieds Advertiser DIRECTORY

Henry Suchman henry@thenichereport.com Dawn Exner dawn@thenichereport.com

Cartoonist Martin Bradford

COLUMNISTS & Contributing Authors Daniel Beer Corey Ann Curwick Brian Mahany Gary Opper Adam Packard Rosemarie Pirio Mark Shandrow Angela K. Simanek TheNicheReport.com

note from the Editor

Real estate agent & broker Edition

Although Many, We Are One. I intentionally waited two days beyond my deadline to write this article. On December 14th, the second-worse random open-space shooting act of violence in America occurred at Sandy Hook Elementary School in Newtown, Connecticut. As w approach New Year’s Day, nearly two weeks past my deadline for this article, as in most tragedies, our country is going through a typical grief cycle. With any tragedy, natural or man-made, we respond, although many, as one. After all, this is our national phrase, E pluribus unum. This isn’t simply a marketing phrase or something catchy that could be placed into a simplified mission statement; this is a philosophical statement of our belief system as a nation that through our common experiences of oppression, immigration and integration into a new society, and despite our differences and places of origin, we can come together as one. We have a shared emotional composition that we tap into when tragedy strikes. We walk in the other person’s shoes very readily; we feel their pain and struggles, experience their loss. This is what we do as a country very well. Although only less than 0.15% of the U.S. GDP is dedicated toward foreign aid – a paltry 19th in the world behind Sweden, Norway and Luxembourg who take the first, second, and third positions to top the list – it is American personal wealth that has change the global landscape of philanthropy, and when factored in, the U.S. is the leader in global financial and philanthropic contributions. What Makes Us Different? This is largely the most significant reflection of American philosophy as “Americans” are significantly more generous than “America,” reflecting an important point that culturally, it is more important for individuals to give philanthropically than to have such philanthropic pursuits done for you on behalf of a government or collective body. This important distinction is why Americans rally in support of their troops around ‘nation-building’ efforts so swiftly, depending upon the degree to which Americans feel impacted by the mission. This is the difference between the U.S. war in Iraq/Afghanistan, which Americans largely supported through eight years of George W. Bush’s presidency, and Vietnam, a war that saw four U.S. Presidents (Eisenhower, Kennedy, Johnson and Nixon), none of which served two successive four-year elected terms. What was the difference between these two nation- and democracy-building efforts? 9/11. The shared suffering that was experienced from the collapse of the Twin Towers affected the American psyche in ways that made the most anti-war democrat a hawk, the most libertarian of politicians to vote in favor of the Patriot Act, and the most anti-government Republican vote in favor of the fastest expansion of the Federal Government with the creation of the Department of Homeland Security. Emotional tragedy tends to tap into the inner layers of one’s human psychology, something that supersedes partisan politics and the ideologies of the right and left; after all, we are all human with common needs, and when such needs are attacked, we pull together. Sadly, it takes events like the violent acts committed that one day before Christmas to end a year and begin a new one, to remind us how important it is that we, although different, are one. Who You Are. What You Believe. So, what does this have to do with real estate, the housing market, the Fiscal Cliff and the road to economic recovery? In many respects, it has everything to do with not what we do occupationally, but who we are and what we believe. If there is a firm understanding of these two latter points, everything else falls into place. Successful and sustainable growth always revolves around core principles, and at the heart of this is serving one another in all ways possible regardless of industry. We are excited for 2013 as we intend to focus on market-based solutions to grow your business, be successful and serve consumers with the same heart and professional soul that binds us all together. Speak to Your Company or at Your Conference:. Remember, if you want to learn more about what we are doing, email or call me (408.914.5895) and I’ll jump on a plane and come visit with your real estate team! Thank you and I look forward to your hearing from you!

Rick Roque Managing Editor Official

MEMBER

January 2013

Published monthly by BODA Publishing, LLC PO Box 494, Bentonville, AR 72712 Phone: 866.964.2695 Fax: 703.991.2362 Email: info@thenichereport.com www.TheNicheReport.com

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Real Estate in Cuba

Buying and selling without Realtors® or the MLS

By Corey Ann curwick

ry to imagine a real estate market without real estate brokerages or an MLS. It would be like the Wild West all over again with no restrictions, no law, and no way to determine what your real estate is really worth. Welcome to the real estate market in Cuba. I was reading an article in the November issue of National Geographic when I stumbled upon a photo of how real estate is bought and sold in Cuba. The photo showed a group of people gathered around a tree with signs pinned to it, some of them holding their own signs. The caption read, “For the first time in decades, Cubans are able to buy and sell real estate. The makeshift real estate signage has converted the park into a bazaar of free-market real estate.” The government essentially legalized the real estate marketplace in Cuba last November, and since then there has been a frenzy of activity among buyers and sellers. 8

January 2013

Cubans are restricted to selling real estate only to citizens that live in Cuba, or to permanent residents of the island. But without any real estate brokerages or an MLS, it has been difficult to create a level playing field. There are real estate agents on every corner, but none of them has a legal presence or license. And without a way to value property in

Cuba, buyers and sellers have no idea what the value of the real estate is. In the U.S., the real estate market is a complex and sophisticated web of infinite information, and is also highly regulated. For those that work in the real estate industry in the U.S., it is difficult to imagine life without an MLS or licensed agents. In Cuba, the freedom to buy and sell property is so new to the country and its citizens that there are essentially no rules. Without an organized listing service or licensed brokerages to regulate the real estate market, Cubans have invented their own methods for buying and selling real estate. Some people will stand for hours in the local park or on a street corner holding a hand-written real estate sign. Others will simply nail a rudimentary real estate sign to a tree or a signpost in the city, or hire young children to pass out handwritten flyers. Take a moment to imagine a life in real estate without fancy signage, licensed agents, or a formal marketplace to buy and sell. This is the reality of real estate in Cuba today. Corey Ann Curwick is a private money consultant for Private Money Utah, a real estate lender based in Salt Lake City, Utah. Corey is from Austin, Texas and is an MBA Graduate of the prestigious Thunderbird School of International Management. An authority in the private money lending industry, Corey provides educational resources for investors who use hard money loans in their real estate investing activities. Before she joined Private Money Utah, Corey was the President of an investment education company in Utah called Bray-Conn Investments LLC. In this role, Corey organized classes that taught investors how to invest in five asset classes. In her free time, Corey enjoys skiing, snowboarding, and mountain biking in the beautiful Utah outdoors.

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Market Conditions and Analysis

market Conditions and Analysis By rick roque

Market Highlights as We Start 2013 The Fiscal Cliff: The Reality – Regardless Market Highlights As we start a new year with the impending fiscal cliff discussions, regardless of what is negotiated in the final hours of a divided Congress, specific outcomes are expected. The housing market will be impacted by the adjustments to the tax structure that will impact everything from the price of milk and gasoline to investments and personal income. As Bush-era tax cuts expire and Federal budget reductions are automatically put into place, the public debt will be reduced by $7 trillion over the next decade. This will largely come from increased taxes on every tax bracket as listed below: Annual income: $20,000 to $30,000 Average tax increase: $1,064 Annual income: $30,000 to $40,000 Average tax increase: $1,417 10

January 2013

Annual income: $40,000 to $50,000 Average tax increase: $1,729 Annual income: $50,000 to $75,000 Average tax increase: $2,399 Annual income: $75,000 to $100,000 Average tax increase: $3,688 Annual income: $100,000 to $200,000 Average tax increase: $6,662 Annual income: $200,000 to $500,000 Average tax increase: $14,643 Annual income: $500,000 to $1 million Average tax increase: $38,969 What is at stake is the mortgage interest deduction, and with an increase in taxes, even just $1,000$2,000 per year will impact whether or not a borrower rents or buys. But, allowing tax cuts to expire and slashing spending in the name of fiscal prudence is where Republicans and Democrats are both wrong, and share a significant part of the blame. The recovering housing market will take a hit, and the policies will take the air out of the sails of builders who build the homes and banks who finance the loans. "The best-case scenario is

a deal that avoids sharp tax increases and spending cuts next year," said Jed Kolko, chief economist at real estate website Trulia. "With that kind of deal, you would avoid stalling or reversing the economic recovery while at the same time creating a long-term path for getting the government budget more in balance." With the U.S. national debt over $1.6 trillion, many economists are suggesting stronger action on the deficit so as to embrace the challenges now rather than later. The latter 12-16 months of Obama’s presidency will be largely ineffective – otherwise known as the ‘lame duck’ part of the second, four-year term. Therefore, the time to act may arguably be now, but the real question is, which sectors of the markets should suffer? With the housing market nearly 15% of the U.S. GDP, should this be the sacrificial lamb at Obama’s altar? This isn’t a largely Democratic issue either. In the week of Christmas, former Federal Reserve Chairman Alan Greenspan said in an interview with Bloomberg Television that letting taxes rise would be a small price to pay to

Market Conditions and Analysis get Congress to okay spending cuts on entitlement programs, even if that produces a "moderate recession." This is the foundation for the December issue of our housing publication. This is the time for you to prepare for a 2015 housing recovery for your business and real estate practice, as it may be necessary to take two steps backwards (economically) in order to take the initial and sustainable steps forward.

What Happens Next? Most economists concede that something needs to be done to reduce the Federal deficit and balance the budget, at least over the long term. There is broad disagreement as to what should be done. If you think this is confusing for consumers, economists and their recommendations vary significantly. "Our main concern is that the tax reform effort be done in a more measured, careful way," said David Crowe, the National Association of Home Builders' chief economist. Crowe’s approach to the market is more cautious; he would like to see tax cuts extended until the economy is in a better position to withstand rising taxes. Predictably, such things like the housing tax credits, deductions and other incentives should be left in place. The fear is balancing the budget on the backs of various economic sectors which, in the end, will undermine economic growth. With an ailing economy, President Obama has demonstrated no sign of restraint in spending as we work our way out of the economic doldrums, which will in the end increase deficits, not reduce them. This is the catch-22 both in reality and in economic philosophy. It is the epitome of rationalizing one’s intent littered with unintended consequences.

Unfortunately and fortunately, to close out 2012, the housing sector had begun to exhibit signs of a modest and stabilizing recovery. This is reflected in the improving financial condition of various home-builder stocks – as listed below: IBD's Building-Residential/ Commercial industry group ranks No. 4 of 197 groups tracked, with its largest names — Lennar (LEN), Pulte Group (PHM), D.R. Horton (DHI), Toll Bros. (TOL) and NVR (NVR) — all up at least 3% through December 29th.

NAR & U.S. Housing Home Sales Are Up The National Association of Realtors reported that existing-home sales in the U.S. climbed 2.1% in October to an annual rate of 4.79 million units. This was above the forecasts of many economists, while the inventory of existing homes continues to decline to 2.14 million, the lowest level since 2002. Housing starts in October rose to just below 4% for an annual rate of 890,000, a 40%+ improvement year over year. This is exciting news for those of us in Real Estate and Housing. This, in fact, is exciting news for consumers as well. This could come to an end with more uncertainty in the minds of home buyers and sellers if Congress doesn’t implement a confident economic plan moving forward. Our economy can handle tax increases provided there is a clearly articulated plan, where consumers can be confident our economy is headed in the right direction. The challenge is, there is no singular and trusted voice in Washington – and this includes the President. "The current housing market recovery is being fueled by fundamentals like incredibly high

housing affordability. As such, it can weather the weak recovery in the broader economy we're currently seeing," said Stan Humphries, chief economist at real estate website Zillow. Where the uncertainty comes in is the market is not immune to political and economic shocks coming from the negotiations around the Fiscal Cliff. Extending the Bush era tax cuts could buffer this, which is unlikely given the administration’s confidence in its mandate from the 2012 Presidential elections. The reasoning behind this is to inspire Americans at all tax brackets to invest and spend money, which will keep the economy and capital flowing. But this trickle-down concept has been rejected by Obama and economists loyal to the Democratic creed. As the final details are negotiated and released, their impact on the housing market and all sectors that support and influence the real estate business in various markets around the U.S. will be reported and analyzed. The goal of this publication is to identify opportunities where you can grow your business and best serve consumers regardless of market (and tax) conditions. Homes will be sold; consumers will continue to move. Even if the market shrinks by 30%, someone will be funding that loan; some Realtor® will be representing the buyer or seller. It may as well be you. The difference will be what you know about the market and how quickly and effectively you can react to it. Any questions or feedback on this article, email Rick Roque, Managing Editor of The NicheReport Real Estate Edition at rroque@thenichereport.com or call him at 408.914.5895. TheNicheReport.com

How to Film a Perfect Property Video By rosemarie pirio

hen it comes to selling a home, you need every advantage you can get. Whether you’re a real estate agent or you’re selling your home on your own, one of the best tools at your disposal is the property video. Just like your other media offerings, a great video will reel in potential buyers, but a poorly done video will quickly send them looking for the next house. As important as a good video can be to showcasing your home, they are not difficult to make, even if you’re an amateur videographer. With a few simple tips, you’ll be producing videos that will make your home a star. The Camera – First, lose the iPhone camera. While it’s okay for taking video of your cat making a funny face, smartphone cameras produce odd aspect ratios and perspectives. Rent or borrow an HD camcorder or a DLSR camera that will provide a large frame shot and crisp video. Lose the Clutter – If you’re showing your home, the first thing you’ll do is to make sure that it is clean and 12

January 2013

presentable to your potential buyers. Your video should be no different. Remove clutter and personal items to help a viewer imagine that they could live in that spot. When you’re filming, make sure that your phone is turned off and that you’re not walking around in clunky boots making a lot of noise. By reducing distractions in your video, you allow the viewer to really see the house. Pick the Setting – You should film only during the day when you have abundant sunlight with the curtains drawn back to give your house a warm glow. Natural light can make your house look stunning, but make sure you’re not pointing the camera right at the light, just as with regular pictures. Don’t forget that light isn’t the only factor with your setting. “Many people forget some external factors when shooting their video,” said Matt Thomas, owner of the Thomas Group Realty, which specializes in homes for sale in Gainesville, FL. “You need to listen for heavy traffic, kids playing nearby or even the neighbors having an argument. Choose a time of day that will avoid these big distractions.” The Neighbors – Speaking of the neighbors, it’s a good idea to include some of them in your video. You’ll want

to be selective about who you interview, but add some local color by asking neighbors what they like best about the area. Neighbors are often an unknown element when buying a home, so introducing them early can help ease some doubts about moving into a new home. What to Show – Your video should show enough to get a potential buyer interested enough to come visit the house in person. Just because you’re showing the house doesn’t mean you have to show them the entire home, just the highlights. If you have a custom wine-rack in the kitchen molding, show it, but you probably don’t need to showcase the wire hanging racks in the garage. Offer enough to hook them, and then let your house sell them in person. Video Effects – Video editing software can let you add a lot of things to your video, but you should avoid most of them. Cheesy lens flares and page wipes make people think that the house can’t stand on its own merits, so it’s best to just show your house in its best light and let its merits speak for themselves. However, you should

make sure to (discreetly) have your phone number shown throughout the video, so people don’t need to search the video description for contact information. Video Description – This is an important step that many people may forget. If you’re uploading the video to YouTube, it’s important to include a few things in the video description: • The address of the home • A link to your home’s MLS listing so people can go right to the source • Important keywords in the title to promote it via search engines. Focus on your location and style or size of the home (ex., Dallas Ranch style home). Rosemarie Pirio is the Marketing Manager for New American Funding, a Fannie Mae and Freddie Mac Seller/ Servicer, FHA Direct Endorsement – HUD Approved, and VA Automatic mortgage banker offering a variety of home loan options, including loans for first-time home buyers, ARM Loans, Fixed Rate Mortgages, Jumbo Loans, and VA Loans.

How we see it

TheNicheReport.com

iPhone App for Real Estate Professionals HomeSnap Raises Over $7 MM in Funding By Corey Ann Curwick

recently found about a new mobile app for iPhone and iPad called ‘HomeSnap.’ This app is gaining popularity among Realtors and real estate investors. It allows you to take a photo or “snap” of any home with your iPhone or iPad. The app then spits out information about the property, including number of bedrooms, bathrooms, the square footage, when did it last sell, what is it worth, etc. The house doesn’t even need to be listed on the MLS for you to obtain this data! Pretty cool, right? This is a great app for real estate investors who drive around seeking out properties that are not on the MLS. There are currently 90 million homes in the company’s database and they are aggressively adding new cities across the U.S. Sawbuck, the company who launched the mobile app, has approximately 1 million visitors a month to its real estate website. Guy Wolcott, the company’s CEO, calls the HomeSnap application the “Shazam” for real estate. A real estate investor himself, Guy Wolcott launched HomeSnap to create a mobile experience like none other in real estate. The company just received another $3.5 MM in funding, in addition to previous funding of $4 MM. HomeSnap is free to download from the iTunes store, so download it and give it a try while driving through your own neighborhood. You can see the homes for sale closest 14

January 2013

to your own home and what they look like on the inside. You can also leave the application open as you drive around town and the app will automatically update itself with the homes closest to your location. And this is just one of many cool functions that this app has to offer! For real estate agents who are driving around with clients, this app can create a whole new experience. And for real estate investors who target specific neighborhoods, this app removes a lot of the tedious work involved with finding and researching homes. If you are a real estate professional, download and try this new real estate app for iPhone and iPad. You won’t be disappointed. Corey Ann Curwick is a private money consultant for Private Money Utah, a real estate lender based in Salt Lake City, Utah. Corey is from Austin, Texas and is an MBA Graduate of the prestigious Thunderbird School of International Management. An authority in the private money lending industry, Corey provides educational resources for investors who use hard money loans in their real estate investing activities. Before she joined Private Money Utah, Corey was the President of an investment education company in Utah called Bray-Conn Investments LLC. In this role, Corey organized classes, which taught investors how to invest in five asset classes. In her free time, Corey enjoys skiing, snowboarding, and mountain biking in the beautiful Utah outdoors.

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The Art of the Juggle Managing Multiple Offers

by mark shandrow

s home inventory and interest rates remain low in many parts of the nation, consumer confidence in housing is beginning to return. This is particularly true in California where supply cannot meet the demand of new homebuyers and investors. It is not uncommon that reasonably priced listings receive a deluge of competing offers. With the additional availability and attractiveness of owning a bank-owned property (more house for less money), some brokers have received more than 80 offers on one REO property. With the level of multiple offers at a record high, managing

and securing the best offers while maintaining quality service may prove challenging. While it might seem like a good thing to have so many people interested in a property, it can be exhausting to sift through the real offers, and those that are made simply to take the home off the market from competing buyers. There are several ways to approach this issue. According to Troy Capell, a RealtorÂŽ for more than 10 years in West Lake Village, California, â&#x20AC;&#x153;Discipline is a must. Brokers must develop systems and processes and follow them consistently in order to avoid

confusion and ensure success.” Here are some best practices for Realtors® and industry professionals on how to manage multiple offers in four easy steps.

Step 1: Providing Proper MLS Information The first step to making sure that you have a smooth offer and negotiation process is to properly use the multiple listing service (MLS). The MLS is the real estate industry’s standard and primary system of listing properties and is used to provide all the necessary information about a property for sale to both the buyer and buyer agent. It is critical that you keep this information updated on a daily – if not hourly – basis. To help ensure a smooth offer process, you may consider including additional information in your MLS such as: a. Clear directions on how your own offer submission process works Adequately explain your process such as directing agents to send offers via a website, fax, or email. Providing real estate agents with an online portal to submit offers can significantly decrease any conflict that arises from multiple offers. An online system keeps track of the time and date when offers are submitted, provides an email receipt to the buyer when an agent confirms that the offer was received and gives the listing agent a centralized location from which to review submitted offers. Sometimes REO clients manage multiple offers differently, so agents and their buyers should know specifically how the seller operates to ensure no assumptions, confusion or frustration occurs. b. Your (Clients’) requirements and standard practices • Do they require buyers to get a pre-approval from a specific lender? • Do you keep the property status updated with any changes within four hours, or have a process for agents to become updated via web, email or call center? c. Financing details • Do you list the available financing options for this property and provide multiple contacts of lenders who can finance this property based on their loan programs? • Ensure that if the property is only available to cash buyers, this information is stated in the MLS,

which avoids many unqualified offers. (Make sure this is cleared by your client first as there may be some prohibitions for various reasons.)

Step 2: Timely Notifications and Request for Highest and Best Offers Once the property has been exposed to the market for an adequate time period (at least over a weekend or a time dictated by the client), then it is time to send out notifications to all buyers that have submitted an offer or will be potentially submitting within the due date. This notification should include the specific details about the negotiating process to the buyer and buyer’s agent, including: • Date and time the highest and best offer is due back to the listing agent • Details of the terms of the sale including inspection periods, pre-qualification requirements, and closing date • Updated MLS reflecting the due date of the highest and best offer Any new offer that comes in for consideration during this time should automatically be sent the highest and best notification.

Step 3: Diligent Analysis and Review of Offers Once all offers have been received by the deadline, it is imperative that the listing agent review and analyze the offers carefully. It is not uncommon in this market of real estate scarcity and high demand to see fake documents and information from buyers. “I have seen documents ranging from forged bank account statements, to doctored pre-qualification letters from large institutional lenders, to deposit checks that are months old,” said Craig Finalyson, a Realtor® from Ontario, California. The documents were all submitted on some of his listings by both investors and homebuyers desperate to do anything to tie the property up in escrow. Another problem that Finalyson sees on a regular basis is a practice he describes as “shot-gunning”—where investors throw out multiple offers on hundreds of properties at a time, several times, often unnoticed. Many times, these same investors are claiming that they can purchase the property with cash but reserve the right, deep within the contract, to secure private money loans on the property. Cash means money is liquid – i.e., bank account, stock fund, etc. Private TheNicheReport.com

money loan is just that, a loan, and is subject to conditions that lenders sometimes enforce even when the contract has no loan contingency – but non-contingent does not mean it will close without the loan. It is imperative that the listing agent or his or her staff take the time to review all offers and ensure that the stated information is legitimate. Taking time to call and ask buyer agents several questions can dramatically reduce escrow fallouts down the road. Consider asking investor buyers these questions:

All signs point to a sustained housing market comeback. Now is a great time to review any processes or systems in place to determine if upgrades or improvements are necessary. You may find that you can streamline for efficiency and improve procedures—maybe even establish new ones—to minimize error and fraud. A quick audit and review of your practices can make a difference in successfully managing multiple offers on REO properties.

1. Has the buyer seen the property, and if so, when? (The presence of a certain number of days’ walk-through contingency is a red flag that the buyer has not seen the property.)

Mark Shandrow is CEO and Broker for Shandrow Group Real Estate brokerage in Long Beach, California, and a charter member of US REO Partners, a membershipbased organization formed in 2010 by industry experts who have experienced the servicing default cycles more than once. Shandrow Group is a forward-thinking real estate firm that uses the advances in technology and marketing to reduce real estate transaction costs while also providing superior service. Responding to current market conditions, Shandrow Group primarily focuses on REO disposition, short-sale negotiations and buyer-controlled sales. More information about the group can be found on their website at www.shandrowgroup.com.

2. Can the buyer purchase the property with cash on hand today, or do they need to secure private financing? 3. How many other properties is the investor making offers on right now? 4. How many properties has this investor closed, and in what time frame during the past 12 months?

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Bank Loans on Investment Properties Are Scarce By Corey Ann Curwick

n todayâ&#x20AC;&#x2122;s lending environment, a loan from your friendly banker on an investment property is nearly impossible to get. Many investors have held onto their income-producing investment properties through the meltdown in real estate. With only a small amount of debt left on their investment properties, many of these investors decided to ride out the real estate crisis and keep paying on their mortgages. Now that the real estate market is beginning to recover, investors are seeking to refinance their investment properties and even pick up new properties. However, finding bank loans for investment property purchases and refinances has become increasingly difficult. Even borrowers with perfect credit, good income, and consistent rental income 20

January 2013

are having trouble obtaining a bank loan on an investment property. For those who are looking to refinance at a lower interest rate, even the most qualified borrowers are being declined. Many investors who have picked up discounted, income-producing investment properties in recent years have been using their own cash to acquire the properties. With a large portion of their cash tied up in these properties, investors were hoping to refinance once the properties were stabilized. Unfortunately, many of these investors have been turned down at the bank and are unable to pull out their cash to reinvest. For those who have used hard money loans to purchase investment properties, finding a bank that will refinance has also been a challenge. Because a hard money loan is a short-term, band-aid loan, those who are unable to refinance at the bank have been forced to sell properties that were originally intended to be

long-term investments. Although banks are lending on owner-occupied residential properties, borrowers who need investment property loans on income-producing real estate are striking out. For this reason, investors are seeking out private lenders and hard money lenders to fill the void in investment property lending. Many non-bank, real estate lenders are now offering two- to five-year loans on income-producing investment properties, which has enabled many investors to hold onto investment properties until they can qualify at the bank. Although private money interest rates are much higher, investors are also able to pull cash out of their properties and reinvest it at a higher rate of return. If you are seeking to finance an investment property at the bank, get ready for a long, bumpy ride where you may never reach your destination. And if your exit strategy is a

bank loan on an all-cash purchase or a hard money loan, you may want to consider some alternatives. Corey Ann Curwick is a private money consultant for Private Money Utah, a real estate lender based in Salt Lake City, Utah. Corey is from Austin, Texas and is an MBA Graduate of the prestigious Thunderbird School of International Management. An authority in the private money lending industry, Corey provides educational resources for investors who use hard money loans in their real estate investing activities. Before she joined Private Money Utah, Corey was the President of an investment education company in Utah called Bray-Conn Investments LLC. In this role, Corey organized classes which taught investors how to invest in five asset classes. In her free time, Corey enjoys skiing, snowboarding, and mountain biking in the beautiful Utah outdoors.

How we see it

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Saying Yes to Know! by gary opper

"Ignorance is the curse of God; knowledge is the wing wherewith we fly to heaven." - William Shakespeare (1564–1616), English poet and playwright

n business, there are many concepts that are important to know. You should know the policies of your company, be sure to know your employees and also know your employer. Of course, you should know the laws (state and federal) for your industry. In fact, it’s wise to know a lot on a particular topic and a little about everything. Even knowing yourself will help you make better decisions. Say yes to know!

KNOW YOUR COMPANY A company’s vision is linked with the policies and procedures of the day-to-day operations. Knowing the policies of your organization will help you to understand your role and responsibilities. Having a greater grasp on the policies and procedures of your company will provide you 22

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with a better chance at offering strategies when issues arise and also allows you to assist with the growth of the firm. Knowing the company’s procedures and policies will offer employees a plan of action that is clear and easy to understand. By familiarizing yourself with them, you help to eliminate common misunderstandings that can come up in regards to job responsibilities. When you know the guidelines that are provided by the organization, you can perform your job with respect and dignity.

KNOW YOUR EMPLOYEES If you are management, get to know your employees. With a better understanding of your employees, you can learn their strengths and weaknesses. This information will help you understand how to bring out their best in order to better serve your organization. It also allows for you to know the best way to interact with employees that will assist in bringing out the greatest work from them. Listen to your employees. You want your employees to feel you are approachable and that you will listen to their problems and/or questions when they arise. Knowing that you are there to help, employees will feel that you have their best interest at heart and can assist them in any issues

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that arise. Knowing the best motivation for your employees is also important to help them put their best efforts towards meeting and even surpassing the company’s goals. Think of different ways to offer motivation to your employees so they are sure to give 110%. Treating the department or your immediate coworkers for lunch for bringing in new accounts may be a good starting point. Greater motivation may be earning commission for files that they help to close. Find the best way to get to know your employees in order to have them working at their best.

KNOW YOUR EMPLOYER In the same breath, employees should take their time to really get to know their employer. Knowing your employer provides you with a greater understanding of how to approach them should a problem or issue arise. If your employer does not handle a crisis well, then you will need to identify and utilize the best strategy in order to explain any complications or issues that you feel are important enough to be shared. If your employer appreciates honesty above all, knowing this will allow you the comfort of being blunt about situations that come about.

Knowing your employer will also help you figure out the right time to approach them with a suggestion or proposed solution to an ongoing issue. You might have figured out the best way to accomplish a task better and/or faster; however, knowing the right time to discuss it with them is key. By familiarizing yourself with your employer, you put yourself in a more comfortable work environment.

KNOW YOUR LAWS It is extremely important to follow the law when you are a part of a business. Not only will you be deemed liable for any laws that are broken, but your employer can be held responsible, as well. Keep any and all of your licenses up-to-date so that you are conducting your business under the letter of the law. Make sure each of your employees also maintain all of their certificates and educational requirements. Encourage them to read trade articles and magazines for additional knowledge. They’ll know more about their industry and will be able to better serve their clients in finding the best avenue to be pursued on their behalf. Take as many continuing education courses as you can. Knowing your industry will set you apart from others in your field. Staying informed on the rules and regulations can even earn you the right to be considered an “expert” in your industry. This will give you the opportunity to begin teaching others about what you’ve learned, which will bring greater attention to you and your firm. Make sure to stay informed of any and all law changes and of all new laws created that will apply to your industry. Share any new information you find with your coworkers to help them abide by the law and expand their knowledge. They may already be aware of the information, but there is a chance you might be teaching them something new that will be a great help. By making sure your employees have a full and wide range of knowledge of the laws, they have a greater chance to successfully and lawfully assist their clients. KNOW ONE TOPIC DEEPLY The English historian, Dame C. V. Wedgewood declared, “An educated man should know everything about something and something about everything.” In whatever field you work, it is best to have a wealth of knowledge about one topic. Make yourself an expert at one specific area by focusing your work on a certain subject. If you’re a mortgage orginitor, maybe you want to concentrate your on first time . If you’re an archeologist,

you might consider learning all you can about Mayan Indians or Egyptian rulers. A person studying to be a Mathematics professor might direct their full attention simply to perfecting the teachings of Algebra. No matter what field of work you are in, it is a smart idea to obtain a deep depth of information on one particular area. Having a vast knowledge on a certain topic will make you an invaluable asset to your company.

will better prepare you for identifying the right line of work and the right place for you in a company. If you’re good at customer service, maybe you will want to pursue a sales position. If there is a conference coming for your company and you’re good at public speaking, you’ll want to volunteer to be a presenter. Knowing your best attributes will help you locate the best suited place for you in the business world and help you excel in your organization.

KNOW MANY TOPICS BROADLY You never can have too much education and you can never know too much. Be sure you have at least some awareness of all different topics that relate to your industry. Should someone need advice, they will be able to count on you to at least offer an opinion on the matter. A base knowledge of various topics and notions will give you a breath of insight into the matter. Should your advice be sought, you’ll have at least an understanding of the item being discussed. A Math teacher may be terrific at teaching Algebra courses, but they should be familiar with other areas of the subject such as Calculus, Geometry, etc. An archeologist may focus their work on Mayan Indians of the Yucatan Peninsula and at the same time, they should be able to at least identify artifacts from other civilizations like the ancient Egyptians to be able to compare and contrast cultures. Knowing a bit of everything will make you a better-rounded individual, which will help to better serve your organization.

CONCLUSION Say yes to know! Know a little about everything and a lot about one concept. Know about your boss and the people who work alongside of you. Be familiar with your state and federal laws. Most importantly, know yourself. Knowing the person inside of you will help open the doors to your future and lead you toward a brighter tomorrow.

KNOW ABOUT YOURSELF Knowing about yourself is one of the most important aspects of “being in the know.” You know yourself better than anyone. You know when you are about to run out of patience, you know if you are an analytical person and you know if you study better with the radio on. Being familiar with your own strengths and weaknesses

Gary Opper is President of Approved Financial Corporation, Weston, Florida. Approved Financial Corporation is a licensed mortgage lender. Mr. Opper has been a Mortgage Lender and Note Buyer since 1984. He is the Managing Member of Levie-Opper, LLC, a mortgage fraud litigation support firm. Also, he does mortgage consulting. He has a CPA and a CFP license. Opper is Past President of the Florida Association of Mortgage Professionals - Miami Chapter and the Florida Institute of CPAs - Gold Coast Chapter. Opper is a member of the National Association of Mortgage Brokers, American Institute of CPAs, the FAMP and the FICPA. Mr. Opper was named the NAMB’s “Writer of the Year” and “Featured Writer of the Year” and the FAMP’s “Broker of the Year.” Opper is president of the FIU’s School of Accounting Alumni Affinity Council. Mr. Opper is available to speak to your group. Please contact him to arrange a speech for your event. He may be reached at (954) 384-4557, fax: (954) 384-5483, or e mail: Opper@ ApprovedFinancial.com. © Gary Opper. All Rights Reserved.

Showing Instead of Telling Real Estate Infographic Lessons

By adam packard

here is always a tool du jour in online marketing, and the real estate industry is not exempt. The big content of choice in 2012 has proven to be the infographic. Although the actual definition of an infographic should include something about being a visual representation of complex data, in practice they consist of any custom blog graphic that features a few numbers. But before you (or your agency) dedicate time and money to an infographic, I recommend that you pause to consider its value to the reader. There is one important question to ask yourself here: Does my infographic (idea) communicate valuable information in a concise, easy-tounderstand way? If the answer is “yes,” it is time to explore how to use infographics to convey complex data and why they are worth the investment.

Advantages of Infographics for Real Estate • Educating buyers. For an infographic at Heartland 26

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Homes, we gathered data from eight sources, and used industry insight to interpret it and report it in a way that the average home buyer would understand. It would have taken a consumer hours and hours to decipher the information’s hidden meaning: Now is the time to buy in several Western Pennsylvania markets. Instead, they were able to spend that time searching for property in the best locations. Consumer education is power, and it can be harnessed to help both buyers and sellers. • Variety of information in one place. For real estate in particular, infographics can bring everything together. In our example above that included eight data sets (from places like Trulia, Zillow and the Census Bureau), one image was able to communicate it all. Graphs showed population growth, maps indicated travel time and tables displayed average listing prices. The phrase “A picture’s worth a thousand words” has never been truer. • Appeal and creativity. While an article on a new

housing plan would certainly be useful, some may find the method to be a bit lackluster. Using an infographic, a home builder or real estate agency can put their artistry to use. Infographics incorporate color, fancy fonts and images to accompany text captions. All of that should keep the visitor’s attention.

• Internet friendly. The purpose of our website is to be there when buyers search for information. Infographics increase our ability to answer those queries by appearing in Google image searches, being pinned on Pinterest and shared on Facebook. All of those interactions build relationships that can quickly turn into leads.

Added Benefits of Infographics

If you take anything from me today, I would like you to remember two things. First, infographics must report something. A flashy, self-promotional graphic does nothing to educate buyers and sellers, which should be the primary goal. Equipping them with valuable information does great things for you and the entire industry. Second, a good infographic can be a great marketing tool. It builds on your brand, expands your online presence and attracts potential clients. And isn’t that what web content should do? My advice: take a look at your website or blog and consider how an infographic can help.

• Brand awareness. Let’s face it: we are always building our brand. Every time we meet with a potential client, write content for the website, or even punch in at work, we are attempting to build our brand. Infographics can help do this because they illustrate dedication to the consumer. You are invested in sharing your experience and knowledge about a complex industry, and that says a lot about your brand’s promise. • Building website authority. Infographics generate a lot of backlinks. Each link that your website receives increases overall site authority, and that leads to more traffic, leads and sales. I don’t claim to be an SEO guru, but I know enough to recommend building backlinks to your website. Each one has a significant effect on your online and offline marketing goals.

Adam Packard is the Marketing Manager at Heartland Homes in Pittsburgh, PA. To see if Adam practices what he preaches, check out his Greater Pittsburgh infographic and let him know what you think in the comments below. TheNicheReport.com

De-Stress Your Life and Business in 2013 By Angela K. Simanek

012 is the end of the current Mayan calendar. It’s the end of a huge 5,125-year cycle, specifically the cycle of the 4th sun. Moving into the cycle of the 5th sun is about transformation, a global shift of awareness, into a new consciousness. Taking this to a personal level, it’s time to clear the negative aspects of our lives and businesses. Bring ourselves into a new awareness and new consciousness. Dispel the darkness and bring ourselves into the light. Real Estate agents all seem to struggle with chaos and balance, the darkness and light of our world – and not just the business aspects of it. Real Estate isn’t the kind of job you get to leave at the office when the clock strikes 5:00 pm. It goes home with you, it interrupts your dinner, it pokes its head in to stare at you while you’re in the shower, it repeatedly taps your shoulder in the middle of the night until you wake up, and it definitely does not know the meaning of weekend or vacation. And if you have a family, or any kind of personal life, Real Estate doesn’t appreciate that or respect it in any way. Most agents deal with this by simply accepting it. 28

January 2013

Real Estate as a career has a lot of freedoms and can bring hefty financial rewards, so the stress and chaos that tends to go along with it is a small price to pay. But... what if you could have all the benefits of the Real Estate career without “paying the price”? What if you could de-clutter and de-stress and even de-chaos your Real Estate business? How would that change your life, your awareness, your consciousness? All change and happiness comes from within. That means it’s up to you to tell Real Estate that shower time is private time and a good night’s sleep is sacred. Are you up for the challenge? How to Dispel the Darkness: The Darkness is chaos and confusion and stress. So, what things in our real estate business create chaos, confusion, and stress? Being unprepared Not getting enough sleep Eating poorly Disorganization Lack of system and process Too many systems and services Too many financial obligations

Negative energy Lack of quiet time Your level of preparedness for each and every day truly is the sum total of everything on the list above. Being prepared means you’re ready for Real Estate to throw its curveball at you, you’ve practiced your swing, and you know that the curveball has no chance. You’re hitting it out of the park! You know how it goes... you hit snooze too many times so got out of bed late, then rushed around and skipped breakfast. You couldn’t find your keys so wasted a good 15 minutes hunting them down, then ran out the door. You had to stop for gas on your way to the office because the tank was empty. You finally got to the office, jumped on the computer to check MLS activity, and Facebook called you... you heard it... it quietly whispered your name until you opened up a new tab just to see what was going on, telling yourself that social networking is a big part of doing business nowadays. Two hours later, you snuck a glance at the clock and realized your buyers were gonna walk through the door any minute. Of course you forgot to clean out your car... You rushed to the parking lot and dumped everything from the floor of the front seat and the sign riders, files, and trash piled in the back, directly into your trunk – outta sight, outta mind. You met quickly with your buyers, took them to see property, then went back to the office to prepare for your listing appointment. On the way you realized you hadn’t eaten and it was nearly 3 pm. You pulled into a drive-through and scarfed down a burger, fries, and Coke on the way. The appointment went okay but the heartburn didn’t. Sound familiar? You just spent a day wallowing in stress and disorganization and chaos – and it was all because you didn’t prepare. Getting a good night’s sleep ensures you are ready to face everything your day throws at you. Sleep gives you focus and energy. Without it, you’re left dragging through your day in a zombie-like state. No, I don’t want you writing out my purchase agreement, working on my closing details, writing and posting the description of my property, and definitely not negotiating on my behalf when you are feeling zombie-esque. Want a better night’s sleep? Try restricting your caffeine intake to morning only, follow a regular bedtime routine, and avoid mentally intense activities directly before bed. Yes, that means close the laptop well before bedtime and no, the tablet does not get

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to come to bed with you. Preparing and/or planning your food in advance so you always have healthy eats available to grab and go will add to your energy and focus and prevent anxiety and stress. You want a healthy meal without having to think too hard? Try www.getmealplans.com. Brought to you by Happy Herbivore, Lindsay has weekly meal plans for individuals or families that include recipes, shopping lists, and nutritional information for an entire week’s worth of food, including the three squares, snacks, and dessert, all for 1,200 calories per day and only $5 per week. Her meals all adhere to the whole foods, plant-based, low-fat, low-oil diets recommended in The China Study by T. Colin Campbell, The Engine 2 Diet by Rip Esselstyn, and the Forks Over Knives documentary. It takes all the thinking out of the food game and lets you eat mindlessly but healthy. If you want to be really organized, plan one day a week to make all your food and pack it away in heat-and-eat containers. Gonna be in the car all day? Get a convenient little cooler that plugs right into your car’s outlet. Stock it with fresh fruit, water bottles, nuts/seeds, maybe some hummus with whole grain crackers... basically anything healthy that will stop the tummy grumblies, keep you out of the drive-through, and keep you hydrated and energetic throughout your day. Being organized prevents time wasters, makes you more efficient and eliminates stress and chaos. Organization doesn’t need to be difficult either. Find a home for your car keys. Make sure that’s where they live. You’ll never have to look for them again. If you have an iPad, use it – like, for everything. The Cartavi app will keep all your transactions together, BombBomb lets you stay in touch with clients via video email updates. Remember the Mlik, Penultimate, Skitch, Evernote, and iAnnotate PDF are all valuable apps to stay on top of things and not lose anything. Ever. Take

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the time to do things NOW, do not put them off for later. One of my favorite new organizer loveables is the Moleskine Smart Notebook that works in conjunction with Evernote. It’s a great little tool to jot down all your “aha!” moments, call notes, listing info, buyer specs, new contacts, etc. and then auto-load and file them in Evernote simply by taking a picture. Your handwritten note just became searchable data in your Evernote account. Whatever method works for you, just make sure you follow the rules: be as paperless as possible, carry as little as possible, and make sure everything has a home. Many agents get to a point where they feel they need to use systems and processes to accomplish everything that needs to be tackled in their life, their business, and their day in general. The problem is we tend to go overboard and adopt too many. This is just as bad, if not worse, than having none at all, and many times runs us right into having too many financial obligations. Take a good hard look at 2012. Check your credit card statements. How many systems and services are you signed up for? How many did you actually use? While I agree there are plenty of great services out there, only buy what you are going to use. Think minimalist and then use what you buy. If the services you signed up for were supposed to perform for you – think lead-gen systems here and SEO campaigns – how did they perform? Did you see a return on your investment? Was the return significant enough to warrant paying for it again? Eliminate all unnecessary expenditures. You’ll be amazed how much energy, and money, that frees up for you. Speaking of energy, what’s your work environment like? I had an agent who came to me recently with the very real problem of not being comfortable in his office. The split was good, the broker was fine, but the people there just gave him the creepies. He wanted to change offices but, during the interview process, didn’t know how to determine what it would feel like to actually be working there. Pay attention to the energy around you. How do you feel when you’re around a particular person or in a particular place? More importantly, what kind of energy are you putting out there? How do people respond to working or being around you? If you’re in an office where you feel like you need to check the nearby cubicles before making calls, probably not the best environment for you to be working from. If working from home fills your day with distractions and prevents you from getting anything

accomplished, also not the place for you to be working from. You want your working environment to fill you with positive energy. What things make you feel great? Is it a wooded view or a particular color on the walls or a quote that always inspires you? Think about your work space, the same way you would your bedroom space. Your bedroom space should relax you and give you the warm fuzzies. Your office space needs to inspire you and make you feel productive and energetic. If you have gossip hounds, anger-management candidates, and Eeyores in your office, you may want to consider a different location to work from. If you consider interviewing other offices, make sure you ask where you’ll be working and take a look at the desk. Go ahead and sit down in the chair, spin around, put your elbows up on the desk, look out the window, and be sure to take notice of how it all feels. Are you eager to leave? Do you feel awkward or uncomfortable? When you find the spot that makes you sigh, you know, that happy, “I’m home” sigh, you’ve found your office space. Now, keep it clean and clutter-free and watch your production level soar. The last little thing is probably the most difficult for agents to integrate into their lifestyle and that’s the quiet time thing. What do you do to relax? At the end of your day, when you’re ready to unwind, what do you reach for? If it’s your laptop or your TV remote, therein lies the issue. Personally, I prefer to get my quiet time in the morning, when starting my day. It puts me into a relaxed state that allows me to handle every little unplanned catastrophe with grace. I start with yoga on the floor in my living room. I light incense, breathe deeply, and meditate through the positions. Afterwards, I take a hot shower and really feel the water relaxing all the tension out of my muscles and skin. Then I curl up on the sofa and sip a cup of hot tea while reading for a bit. That would be out of a book. Email does not apply here. This is always a fabulous start to my day. Everything that happens afterwards is bound to be amazing. Now, before you tell me you don’t have time to be quiet, remember that you and you alone set your alarm clock each morning. We all have the same amount of time each day. What we have time for is based upon the priorities we set. If you have an 8:00 am meeting, then wake up at 5:00 am. If you’re not a morning person, then do your quiet time at night before bed. However you get it

in there, it needs to happen, every day, minimum. Make your plan for 2013. Always plan in advance, get a good night’s sleep, eat well, be well, put yourself into positive environments, minimize your expenditures, clear out the clutter, organize what’s left, enjoy some quiet time each and every day, love and be loved. Dispel the darkness, get rid of all the yuckies, and let the light in, both physically and metaphorically, to your life and business. Say good-bye to the chaos, stress, and confusion with the end of 2012 and bring yourself into the new consciousness of the cycle of the 5th sun. Now, share what you’ve learned with others and together, we can really jumpstart awareness in 2013. Good luck!

Angela K. Simanek is a 19-year real estate veteran, mother of four, and owner/founder of Master Agent Life. www.twitter.com/angelasimanek www.facebook.com/angelakcallaway www.linkedin.com/in/angelasimanek

How we see it

TheNicheReport.com

Where Are The Criminals? Let Me Tell You… By Brian Mahany

he lead editorial in Monday’s Wall Street Journal was titled, “Where Are The criminals?” The editorial that followed suggested that the Obama Administration wasn’t successful in prosecuting those responsible for the financial crisis. With that much, we agree. Some four years later, almost no one has been successfully prosecuted for the untold trillions lost when the housing market crashed. The Journal believes that prosecutors have met with failure because they were “trying to find criminality among bankers who were doing what everyone was doing.” That’s where we disagree. Justice Department lawyers are some of the brightest and best in the business. Virtually everyone there could make at least twice the money in private practice yet the government still is able to attract and retain great lawyers. So why can’t these great lawyers get convictions? Our answer is simple - Because the political interests in Washington have become too intertwined with the banking industry. When investment banks become “too big to fail,” they also become too big to prosecute. With a few exceptions – our friends in Preet Bahara’s office come to mind – most United States Attorneys don’t have the stones to take on the Wall Street titans and their leaders. Instead, we have a pattern of SEC actions that result in consent orders, large fines and absolutely no admission of wrongdoing. With the exception of some inside traders, no one really has gone to jail for their personal role in bringing down the nation’s economy. If you fail to pay $50,000 in taxes, expect to spend some time in prison. But if your name is associated with the

January 2013

other banking elite, the worst that may happen is your bank having to pay a steep fine. Perhaps, as the WSJ editorial suggests, the banking elite have not done anything wrong. We have seen too much fraud to believe that, however. While Washington’s political elite does share some of the blame, we think all the guilty parties should be held accountable. Whether a regulator, Congressman or banker… if you broke the law you should be held accountable. As long as the 94 U.S. Attorneys are essentially political appointees, don’t expect that too happen soon. We believe the only way to clean up Wall Street is through the courts where a jury can decide. And the best way to get cases before a jury isn’t waiting for the Justice Department, it’s through false claims actions (whistleblower cases) and shareholder class actions. It’s not a surprise that the largest pending civil case against a lender (and most of the other big cases) were initiated by whistleblowers; ordinary workers that had enough of the greed and corruption that plague Wall Street.

Brian Mahany is a lawyer that specializes in representing whistleblowers in SEC and false claims act cases. The opinions expressed in this post are his. Brian welcomes comments and questions and can be reached through his firm, Mahany & Ertl, or through his blog, Due Diligence. He can also be reached at brian@mahanyertl.com or by telephone at (414) 704-6731.

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Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. Apartment Bank’s flexible approach is key to freeing borrowers and brokers from the typical headaches and hassles of small loan transactions. Loan amounts from $250,000 to $10,000,000. Visit http://www.apartmentbank.com

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Apartment Bank Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. www.apartmentbank.com 877-442-4003 apartmentcustomerservice@apartmentbank.com

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- continued from page 38

There is tremendous frustration in the market right now from buyers who have made dozens of offers and can’t get them accepted. At this point we are working with multiple buyers who are making blind offers at full price or greater anytime a home comes on the market that roughly matches what they are looking for, because they know that viewing the property could easily turn into a waste of time for them. They have been through it many times before, and by the time they get to offer number six, ten, even fifteen, buyer fatigue tends to set in. That is a nightmare for any real estate agent who has just spent months showing a client property and is at risk of losing them due to the market conditions. Funny how only a short time ago we were praying that buyers would get off the fence and inventory was growing out of control. Now we can’t get to the property or write the offer soon enough. The other disadvantage that non-investor short-sale buyers have is that they are only buying one home, which means that if a seller chooses to get in bed with them over the course of a two-, four-, or possibly six-month waiting period

while the bank approves the short sale, the buyer could easily find another home and jump ship, leaving the seller out to dry and with no recourse. That is why we have always seen short sales come back to the market multiple times before finally finding a final buyer that closes escrow. On the flip side, when a strong investment group makes an offer on a short sale, they can typically afford to wait it out and also buy others along the way without affecting the one they had previously tied up. They are also better able to deal with repair issues since they often intend to gut the place anyway. A region that will be interesting to track will be the Long Island NY real estate market as it digs itself out of Sandy’s destruction and back to a functional state. We can probably expect to see a spike in distressed assets there, and it may very well be investors that help accelerate its recovery. Daniel Beer is a San Diego MLS agent and the head of the San Diego Home Finder team focusing on Carmel Valley homes for sale in San Diego. He is also an active real estate writer around the internet with a focus on providing transparency to the market.

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Lower Trustee Sale Margins Push Investors to Short Sales BY daniel beer

s the auction market at the courthouse steps for trustee sales has gotten more and more crowded, many investors are starting to turn their attention to the short-sale market. The increased competition is causing prices to be bid up to levels where reward no longer makes as much sense as it once did for auction buyers. Here is why. When you buy a home through traditional channels, including most short sales, you are able to view the property inside and out before purchasing it. You are able to inspect the property, you receive title insurance, and you get the benefit of working with an active San Diego real estate agent. However, when purchasing through a trustee sale, you do not get any of those benefits. You normally do not even see the home’s interior until after you own it. This could mean that there are major issues that you will not know about until you own the home and you assume full responsibility for them. This could include things like foundation issues, roof leaks, mold, and other material facts that would affect the property’s value. So why would investors subject themselves to this much risk? Because traditionally the reward was just as big.

You can normally expect a larger return for the increased risk of a trustee sale vs the market exposure of a short sale. Unfortunately for investors, the trustee sale market is now so crowded that the risk just doesn’t make as much sense as it used to. According to David Tal of Short Sale Agent Finder, “Investors are looking to short sales more than ever before.” I recently experienced this in San Diego when I listed a short sale in a below-middle-class sub-market of the city and I was bombarded with offers from the guys most well known for their auction investments. One of them explained to me that the margins have been squeezed so much by the level of demand that they now prefer the increased control of a short sale vs an auction. The tough thing for ordinary real estate buyers, most notably first-time buyers, FHA buyers, and VA buyers, is that as investors turn their attention more and more to the general market and away from the trustee sales, it makes it much harder for them to buy anything at all, regardless of how qualified they are. Most sellers will work with a cash offer closing in 10 days far before considering an FHA loan buyer that needs to close in 45 days or more because of how backed up the banks are. - continued on page 37

January 2013

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