What Makes Mike Tick? What’s In It For YOU?

21 Questions to ask a Realtor 

mike.

(CLICK ON PHOTO FOR VIDEOINTERVIEWER:

INTERVIEWER:

  • I see one of the most popular blogs you have written is 21 questions to ask a realtor. Why did you write this?
  • Most people select an agent based on a non-real estate relationship.  I recently talked to a hard-money lender who had foreclosed on a local property. He said he had a friend from out of town who would sell the property at a discounted commission. My response was: “If he is truly a friend, he will recommend you list the property with a local expert who will get you the best price and least risk and stress rather than saving a few bucks on commission.”

How would you answer your own questions?

  1. Who do you work for? Most agents will say, “ABC Realty” or XYZ Real Estate. I say, “I work for my clients, the company I associate with works for me.  You have to look at who is writing the check. Who is paying me?
  2. Will he be genuinely focused on your property?  Agents spend most of their time looking for more business. I once had an officer manager who just signed up listings, put them in contract, then relied on the other agents, loan brokers and escrow officers to get the deal done. This made him a lot of money. But did it really serve his clients’ best interests?
  • I don’t work with a lot of listings or buyers. I also have bought and sold lots of property for myself When I represent someone else, I tend to get the thinking my customer.
  1. Does he have sales skills?   An agent will rarely talk directly to the other principle. The only sales skills will be in talking to you, the client, into compromising or accepting less service than you need or deserve. I like my clients to make wise decisions based on information.
  2. Does he have a good solid real estate education to protect your best interests?    Education comes in 2 ways: academic and experience. Current academic real education comes from online courses, most of which are in marketing and sales with little to do with protecting and serving the client. Mine brokers courses came from actual University of San Francisco coursework, such as Real Estate Law, Contract Law, Appraisal, etc. My experience is not just lengthy, but wide in variation, giving my clients a large resource of solutions and ideas to maximize their profits.
  3. Is his education current on recent marketing and legal aspects to protect you?
  • The Board of Real Estate requires 45 hours continuing credits every four years to maintain a real estate license in California. Any education most agents get on top of that is all about marketing and sales, and getting clients to do what we want. The last time I did this, I did it online in 53 minutes. This is shameful.
  1. How does he maintain his education?
  • ARTICLES I have written for real estate insider magazines for the past few decades and have been interviewed on radio stations. This takes lots of research and understanding of the topics. I also own property. Staying at the cutting edge of real estate issues is not just a passion, but protects my real estate, and is a huge resource for my clients.
  • What is his experience?
  • Experience comes from years of working in the industry but also varies over locations, and different markets.
  • What do you mean by different markets? There is a National Market, California Market, Bay Area Market, Marin Market, City Market, Neighborhood markets. Your house’s value will fluctuate reflecting all of these markets. And then you have residential markets, commercial markets.
  • How can location experience make a difference in an agent’s performance?
  • There are so many little differences between counties, cities, neighborhoods … and many of these can be overlooked by an out-of-town agent. And these little mistakes can be costly for a seller or buyer. Or worse, cause legal problems.
  • Can you give me an example?
  • Sure, just on closing instructions, who pays the title insurance varies from county to county. Mandatory city inspections vary from city to city. If an agent doesn’t know the requirements of a sewer inspection, the seller may get held responsible for not just the inspection but repairs even after close of escrow.
  1. Will his company provide support and be flexible for your needs?
  • This is a conflict of interest I have run into a few times over the years. The company I worked for would get very successful. The bigger they got, the more procedures they placed upon us agents.  It would get to the point the procedures were in conflict with my client’s best interests –I call it regulation strangulation. I always go back to question number 1 to “Who do I work for?” I choose based on who will support MY CLIENTS interests. I need a company who is flexible to let me do what I need for my clients.
  1. Are testimonial and referral letters available?
  • Since my testimonials are pretty out-standing, and I have quite a lot of them, I can’t really shoot down this one. But I would look to see what they say. Are they just glorifying the agent or do they relate actual experiences?
  1. Does he have a written marketing schedule customized to your needs?
  • Most local agents use the same “put the property on MLS on Tuesday, brokers open weds or thurs, brokers open on Sunday. Look at offers Monday or Tuesday. The problem comes in if the schedule doesn’t fit, or prove to be successful.
  • I use a spread sheet. I sit down and go over the schedule with the sellers to make it fit into their schedule.  Leaving time to deal with problems doesn’t get on marketing schedules.
  • What do you mean?
  • EXAMPLE San Jose Property, agent had all the right features on his “Getting Your House Sold in Five Days” program. On the Friday before, a slightly over-priced offer came in before offers were to be looked at, and he signed another listing who wanted an open house on Saturday. Then a nasty letter came in from a neighbor about a tree and a fence issues. This eliminated our open house on Saturday. Then on the Sunday open house he told buyers we already had an over-asking price offer and that there was a pending issue with neighbors over a tree and fence. This scared off the other buyers eliminating our chance for multiple offers to bid price up even more. He just didn’t know how to handle 2 listings. The tree and fence issues just overloaded him.
  1. Is he capable of getting your property staged? Staging used to be a method of arranging current furniture to make the house presentable to buyers at minimal cost to the seller. The process was “Clutter, Clean, Color.” Now staging hasn’t gotten to be “remove all your furniture, paint a certain color, bring in new furniture and decorations.” Its great if you have an empty house and several thousand dollars extra cash. But there are several levels of staging to meet different budgets.
  2. Is he internet savvy with his own website? When websites first became popular, I had my website ranking, organically, on top of even the local major companies. I got lots of leads. But maintaining this site and ranking took so much time I didn’t have time to serve my clients. Now my websites and internet presence is to display my listings in a custom manner not necessarily offered by MLS templates, and provide information to all to help them make informed decisions.
  3. Will his web site provide information and expose buyers to your property? That’s an easy one. Just look at their website. Most agents simply use their companies’ template site. Others mostly use sites to glorify themselves. But do they actually provide you information to help you make wise decisions or market your property?
  4. Will his websites get your property on the top real estate search engines? Nearly all property search websites pull data directly from the MLS. Other search engines have no accountability for accuracy and will maintain defunct and inaccurate data just to boast they have more listings. Sites like Zillow and Trulia have been a curse to the consumer filling them with inaccurate data and delusions of confidence in their knowledge.
  5. Will there be a custom PropertyAddress.com website? The objective of this is to get information on your property to directly to buyers. This saves the agent time. But, it eliminates the agent having a chance to talk with buyers. My objective of marketing is to get qualified buyers to look at the house, not give them the ability to pass judgement on your house based on limited data.
  6. Will there be a flyer box on the sign? Again – no chance for agent to consult with buyers. Most buyers don’t get everything they want. It’s all about compromise. A good agent may show the house does in deed offer what the buyer needs. I found with flyer boxes, the calls almost disappeared. This saved me a lot of time, but did not serve my clients need to sell the house at the best price.
  7. Are samples of his marketing efforts provided? Most content in listing packages is aimed at impressing sellers. I would want to see examples of real MLS listings, craigslist ads and flyers. How does he write ad copy?  Does he use agent slang or chopped words to save space? – can be confusing. The purpose of ad copy is to entice buyers to look at the house, not flood them with information.
  8. Does he have an assistant or escrow coordinator or will he personally handle your transaction? Friends and clients call me a “control freak.” I look it as you pay me a lot of money to manage your real estate transaction. How can an assistant do a better job than someone who knows and understands your situation? Disclosures are an excellent example. Assistants (and frankly most agents to save time) will email disclosures to clients to fill out themselves. I insist on sitting down in person, or at least going over each statement on the phone. Disclosures can save or hang you. Making these statements wisely justifies a “control freak” as a seasoned guide.
  9. Will he have a team of a buyer agent, selling agent, maybe marketing?  If you have an agent who runs a team, you are probably better off with a team member. The agent you signed with is what the industry calls the “Rain Maker” and out charming and signing up the next customer. But wasn’t it the experience and savy of your Rain Maker who you hired?
  • Me, I am a control freak. You are paying for ME. I am hands-on with all my deals as if they were my own properties.
  1. Is there a SERVICE GUARANTEE?  Guarantee or what? The agent will give you back all the commission you didn’t pay him? My favorite version of this is “If I don’t sell your house, I will buy it myself.” Of course the agent picks the list price, the guaranteed sales price includes a discount.”
  2. What is the biggest mistake sellers make when chosing an agent?
  • Creating a “who can get me the most money” bidding war.
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The “F” Word in Real Estate

The “F” Word in Real Estate – Part 1 (2013)

I mentioned I was writing this article over lunch with another real estate agent.387423_2296648532087_2115868583_n

The “F” word?” He said. “You can’t publish that.”

“Fiduciary,” I replied.

“Fiduciary? What’s that?” he said.

Fiduciary duty of utmost care, integrity, honesty and loyalty…”  Remember that line? Lost in the small print in the agency disclosure? Maybe some of us remember; we certainly have forgotten what it means.   We have forgotten who we work for.

The U.S. financial structure has become a hierarchy of scandals. Real estate agents marched buyers into houses well beyond their means. Loan brokers used the house price to determine the income stated on the loan application, and white-out for the rest.  Appraisers fabricated their “opinion of value.” We joked that M.A.I. meant “made as instructed.” Mortgage companies bundled these toxic loans.  Wall Street packaged the bundles in confusing investments like derivatives, manipulated ratings and investment insurance, and swindled the world.  And everyone relied the fact that ‘U.S. real estate values always goes up.’  The “F” word had become “fraud.” The rich get richer, the poor go homeless, and everyone in between picks up the tab for both ends.

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Blame the government.  Our government was originally set up with a system of checks and balances. Sure. Our tax payment checks going into the balances of Big Money. Did anyone see what was going on? Sure, they all did.  But they were too busy playing games of lobbyists, pork barrel, and ear marks. TARP, HAMP, HAFA? The government is smoking HEMP and making me LAFA.

 

When Obama used the word “trillion” in early ‘09 describi1939964_714640705233197_666681642_nng the “bail-out.” I had to count the zeros. That’s a million-million. I can see a new chapter in future history books: “The Abomination of the Obama Nation.” And I am still charmed by his charisma. But that is the problem. We elect our officials something similar to a high-school cheerleading election. Now we are in regulation-strangulation mode, and drowning in bail outs. I guess with a budget in the trillions, wasting billions seems insignificant.

Our judicial system is supposed to protect us.  The “justice” system is a game of interpretation, manipulation, and exploitation. A game played by attorneys, overseen by judges (attorneys), and the rules are made by politicians (attorneys), and all simply work for the highest bidder. There is no justice in the justice system. No fairness. No right or wrong, truth or integrity, just a war zone for professional soldiers with no accountability.  Shouldn’t the truth simply be the truth?

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Skyler White (Anna Gunn) and Walter White (Bryan Cranston) – Breaking Bad – Season 5, Episode 8 – Photo Credit: Lewis Jacobs/AMC

The banks will sort things out. Banks are hording bail-out money to pay their own salaries and bonuses. Banks are no longer in the banking business. They buy and sell paper, gobble up smaller bankrupt banks at cents on the dollars, then get reimbursed from the FDIC–all in the name of “keeping people in their homes.” They bundle up loans and homes and sell them off with inside deals to their buddies at huge discounts for them to flip for a profit.

 “The market will regulate itself,” Alan Greenspan. Read Michael Lewis’s latest book “The Big Put” on how some clever bonds traders smoked the engine in the world economy. You won’t feel so bad about yourself next time you blow a couple billion in cash.

DRE will regulate us.  ATTENTION REALTORS: DRE HAS LEFT THE BUILDING. I recently took my 45 hours of continuing education online. It took me, in all, about 45 minutes. When I exposed this to other agents, they didn’t moan at the demise of our profession, they asked me for the website address. To test this, I took a friend’s license number, my visa card, and my email address, went through the test, and handed him his continuing education credits.

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Agents are professionals. Agents take listings completely out of their area of knowledge. Offers for buyers are written on property the agent has never seen. Agents choose between getting paid and integrity daily.

Certifications.  Being enticed to (1) gain entrance into the cult of REO agents, I took the foreclosure specialist and short sale expert courses.  (2) I didn’t expect to learn anything. (3) I knew I could greatly cut the time with the online course over the normal 2 day courses. Two out of three ain’t bad: I didn’t learn anything; the internet courses took only a couple hours; I didn’t get any REO leads.

Let buyers and sellers beware. We already let them search our big treasure box: the MLS. We bury them in disclosures to limit our liability. Buyers rode the wave of real estate speculation with no ‘skin in the game.’ They took cash advances on their credit cards to pay their mortgages.  Then they took out equity lines to pay off their credit cards. But, bless their hearts, people still need the help of a real estate professional.  We better have something to offer besides a lock box key and a tank of gas.

But what can we do? If we want things to work, fixing them is not enough. We need to stop breaking them.  The problem started with us. Without sub-prime deals, there would have been no subprime loans. We need to start the solution. Tune in next month to find out how to save the world in 9 easy steps that you can do at home.

Michael Williamsen is a real estate broker and free-lance writer in Marin County California, on the “Golden side of the Gate Bridge.”  Michael is often radio talk shows’ guest for his over-the-top direct approach to current real estate issues. This article comes in response to the “Real Estate Hangover of 2009.”

16 Questions to Ask An Agent Before You List

16 Questions to ask a Realtor.

  • 1) Will he be genuinely focused on your property?
  • 2) Does he have a good solid real estate education to negotiate for you and protect your best interests?
  • 3) Is his education current on recent marketing and legal aspects to protect you?
  • 4) Does he have substantial experience over up and down markets?
  • 5) Will his company provide support and be flexible for your needs?
  • 6) Are testimonial and referral letters available?
  • 7) Does he have a written marketing schedule customized to your needs?
close-to-home
  • 8) Is he capable of getting your property staged?

Real-estate-agent-humor-of-Santa-Monica-real-estate-agency

  • 9) Is he internet savvy with his own website?
  • 10) Will his web site provide information and expose buyers to your property?
  • 11) Will his websites get your property on the top real estate search engines02a3b189f96f001723110e04b4b300be
  • 12) Are samples of his marketing efforts provided?
  • 13) Will he market your property directly to potential buyers?
  • 14) Does he have an assistant or escrow coordinator or will he personally handle your transaction?
  • 15) Is there a SERVICE GUARANTEE providing you with the ability to cancel the listing agreement if you are not satisfied for any reason?
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 16) Has he asked you to review all your numbers?
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Don’t be surprised if Michael Williamsen gives you different answers than most other agents.

5 Reasons to be a For Sale By Owner

Selling Your House? 5 Reasons to be a For Sale By Owner

With homes selling quickly and prices rising, some homeowners may try to sell their home on their own, known as a For Sale by Owner (FSBO). There are several fun issues for the vast majority of sellers. Here are five:

  1. You Can Negotiate With A Wide Selection of Fun People
your-house-as-seen-by-you-and-your-lender-buyer-appraiser-tax-assessor2

You will meet many types of buyers and professionals, all can mess with your price:

  • Buyers want the best deal possible – want the commission too
  • Buyer’s agents solely represent the best interest of the buyers
  • Buyer’s attorneys usually mean you need your own
  • Home inspection companies get paid to find problems with the house
  • Appraisers most often don’t know the immediate neighborhood
  1. Exposure to Prospective Purchasers

Recent studies have shown 90% of buyers search online for homes. Only 20% looking at print newspaper ads, mostly at the agents. Real estate agents have internet strategies to promote the sale of your home. Do you?

  • Results Come from the Internet

Where do buyers find the home they actually purchased?

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  • 44% on the internet
  • 33% from a Real Estate Agent
  • 9% from a yard sign
  • 1% from newspaper
  • (nearly data comes right off Multiple Listing Service)

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

  1. FSBO Offers Wonderful Challenges
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The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people  going FSBO has dropped from 19% to 8% over the last 20+ years. The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

  1. You Can Negotiate the Saved Commission with Buyers

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission. Studies have shown that, nationally, the typical house sold by the homeowner sells for $210,000 while the typical house sold by an agent sells for $249,000. This doesn’t mean that an agent can get $39,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer. Maybe they will buy you coffee!

Stock Market or Real Estate – Which Roller Coaster Are YOU Riding?

Skyler White (Anna Gunn) and Walter White (Bryan Cranston) - Breaking Bad - Season 5, Episode 8 - Photo Credit: Lewis Jacobs/AMC

How Does the Stock Market Affect Real Estate? … and My BIG TIP.

Has the stock market peaked?

Is it time to cash out?

Where do you put the money?

Historically, the stock market and real estate market were regulated separately and investors would go back and forth in the markets. When the real estate market peaked out, investors moved their profits into the stock market which had been fairly flat the past couple years. Then when real estate profits peaked, they moved back into the stock market.

386067_2296611651165_468581461_nIn the past decade, rather than riding one roller coaster to top, getting off and jumping on the other roller coaster at the bottom, both markets were combined into a giant twisty-twirly roller coaster.

In 1999, deregulation signed by President Clinton, allowed banks (banksters) into the stock market, and stock traders into real estate. Not quite so simply or directly, but through bonds witch-like secret potions called derivatives.

Greenspan said, “I’m a math guy, and even I don’t understand derivatives.” He then went on to say, “The markets will regulate themselves.”

“We need to find more ways to get people into houses,” said President Bush.

Previously, banks were allowed to give out mortgages on funds limited by their cash holdings and government-backed programs such as FHA, Fannie Mae and Freddie Mac. Wall Street genius traders recognized deregulation as the new Wild-Wild West with the opportunity to create more money for real estate loans, packaging them into bonds and many new security devices to sell to the world. This flooded the real estate buying market with loose money for loans.

Real estate values are base on the simple premise of supply and demand. High demand and low supply creates higher value.

389905_2336916178753_162814143_nWith lack of regulation, lack of responsibility, lack of accountability … basically legalizing corruption … the stock market created a huge demand by buyers on a limited supply of real estate, resulting in the crazy appreciation of the early last decade. Lenders, recognizing the end had come, halted their lending  resulting in instant elimination of demand, dropping-off-the cliff of real estate values, then massive loan defaults, foreclosures, short sales, and the collapse of many banks and financial institutions.

untitledRealtor.com gave me an award for “Online Marketing Excellence” in 2009 for my viral article “Real Estate Hangover 2009” — sort of like sharks awarding the sheriff in “Jaws” for posting “Shark Warning” signs on the beach. They knew no one would read the signs, and by this time the roller coaster rides had crashed into the shark-infested water.

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So now, rather than the historic see-saw of investors moving back and forth from stocks to real estate roller coasters, the financial markets have become blurred.

Financial bloggers debate:

“Stock market investors are fearful of a correction and will return to the safe harbor of real estate.”

“Sellers, recognizing they have recovered losses of the last decade and the frail economy, may want to move their equity into smaller and safer investments.”

“Buyers will hold off on real estate purchases weary of their job security.”

“Concerned the real estate values have peaked, interest rate increases will chase buyers away, and a weak economy will prevent buyers from buying, sellers are asking if it is the time to sell.”

“The younger generation watched the destruction of their parents retirement do to the real estate crash. They want nothing to do with real estate, happy to be renters and simply enjoy their lives.”

“The new generation has seasoned stock options and investments. Worried over the safety of these investments, they will return to the traditions of real estate.

“Sellers will hold onto to their property as of buyers continues to drive prices up.”

shark bedroomMy BIG TIP? Don’t take stock tips or any short cuts with your future. Do your own homework. Use a calculator. It doesn’t matter who is to blame. Your life is based on your decisions. Make decisions based on financial common sense. Stocks have many indicators – ignore them and say hello to the sharks. Buy a house to call home, a place of your own, to be in control over your housing expenses, to raise kids and for them to call ‘home,’ flowers, pets, a place to use in your retirement. Stop pretending to be and investor or speculator, and be a home owner.

You may ask the common question about your real estate holdings: should I stay or should I go? Please look for the next article I am working on called: “Real Estate Roller Coaster.”

Is real estate safe?

Will real estate continue to go up?

Will real estate go down?

Should I sell my house now?

—–

“Why fool around with realtors that don’t understand the complexities of Marin real estate. Mike’s experience can make a big difference when buying and selling. He has smart clients who rely on his expertise and trust his advice. He has made a lot of money for a lot of people.” L. Nibbi, Investor/developer

When asked who he works for, people are expecting him to say a real estate company. Michael Williamsen’s patent answer: “I work for my clients, the company I associate with works for me.”

Would YOU like a no-cost, free, no commitment or obligation chat about YOUR real estate thoughts with Michael Williamsen? YOU can reach him at

Michael Williamsen, Real Estate Broker # 00839110

415-713-2223 cell

mikewilliamsen@gmail.com

https://www.facebook.com/MarinRealEstateInfo

https://mikewilliamsen.wordpress.com/

http://marinrealestate.info/

Real Estate Hangover 2009

THE REAL ESTATE HANGOVER OF 2009

By Michael Williamsen — Published by Pro/Agent Magazine June, 2009

378743_2336916098751_806416874_nReal estate values are in a free fall, Wall Street icons are crashing, banks are imploding, businesses and jobs are disappearing. New subdivisions sit like ghost towns while REO’s and short sales compose most of the real estate market. Realtors are hiring homeless people to babysit their vacant REO’s in high crime areas. How could this happen to the American Dream? Let’s look at the basics.

Supply. Demand. Value. A simple economic balance, but it certainly applies to real estate. High demand and low supply yield higher prices. Low demand and high supply result in lower prices. Not exactly that simple when the balance gets messed up.

The Cycle of Real Estate Life. As paychecks and family sizes increase, so does the demand for bigger and better housing. Higher demand pushes up prices. Watching friends make money in real estate, new buyers jump into the market greedy for a piece of the appreciation and fearful to lose this opportunity. Prices shoot up and exceed the sanity level. The media announces a “real estate crash.” Values correct back to a sensible level, and there is balance once again.

cowgirlTo Regulate, or Not To Regulate.

Not Too Long Ago to Forget. Banks loaned their depositors’ money to help homebuyers. The government printed money but was limited to the gold standard: one dollar of paper money for every dollar in gold reserves.

Cure For Depression: Government Regulation. 1933 – Responding to the Great Depression, the Feds created the Glass-Steagall Act and the FDIC to regulate the financial markets. Maybe leaving the money of the naïve and greedy public in the hands of the greedy and ambitious financial industry wasn’t such a good idea.

In One Pocket and Out The Other. lady and duck1938 – The government created the secondary loan market and FNMA (Fannie Mae) which buys up bundles of real estate loans, then sells them to investors on Wall Street in the form of mortgage backed securities. Great! Now homebuyers don’t have to stop buying just because the banks are out of money.

More Is Always Better. Out of the 1970 Emergency Home Finance Act sprung the FHLMC, Freddie Mac, a new secondary mortgage market for conventional loans. The act also opened up conventional loans to FNMA. In 1971, the US government unshackled itself from the confinement of the gold standard. The printing press is a limitless source of money.

388454_2400067117487_1759920535_nDon’t Try This At Home Kids. Towards the end of the 70’s, interest rates went ballistic. To stimulate demand, the real estate industry came up with a wonderful solution: creative financing. Owner financing and silent seconds up to, and over 100% of the sales price, helped buyers with down payment woes. Savings and Loans got real aggressive with new loan programs. Remember the RTC, (Resolution Trust Corp), the government organization that liquidated foreclosures from the failed S&L’s?

Don’t Need No Stinkin’ Regulation. 1986 – The Feds start repealing bank regulation. In 1999 – President Clinton signs the Gramm-Leach-Bliley Financial Modernization Act which virtually wipe out the regulation imposed in the 1930’s.

fire_hydrant_pees-12102“We Have a Problem” President Bush said in 2002. “Too many Americans don’t own a home.” Greenspan said “We need more options to the fixed loan.”

Subprime Feeding Frenzy. Wall Street can’t resist the huge unregulated mortgage industry inhaling mortgage backed securities. Loan brokerages, getting paid on volume regardless of quality, and with non-licensed, un-trained mortgage consultants, sign up any homebuyer with a social security number, and shovel off the loans to Wall Street. Financial Engineers create collateralized debt obligations (CDO’s) which Wall Street sells off to the world. The world is hungry for the high returns secured on the forever appreciating “American Dream” and with the investment grade AAA stamp from the rating agencies. The rating agencies vie for Wall Street’s business and fees by competitively reducing their standards for the AAA rating.

The Inventory of Intoxication389905_2336916178753_162814143_n

Roll With It Baby. Fixed loans require long term bank investment forcing interest rates to remain high. Fluctuating rates of variable loans, mean less risk for banks, and lower initial rates.

Be Anything You Want To Be. Stated income loans, now dubbed “Liar Loans”, allow the self-employed, and hard-to-document income earners to simply their state income without verification. Requiring 20% down payment reduces lenders’ risk.

No Cover Charge. Would-be buyers with great income and good credit but no down payment are offered zero-down loans. Banks rely on verifiable jobs and good credit.

Just A Quick Fix To Get by. Re-financing and equity lines of credit allow homeowners to take advantage of all that unused appreciation.

377273_2296648092076_1732615845_nParty Now, Pay Later. Negative amortization loans are available for buyers who simply can’t afford the house they want. The homeowner can simply borrow some more money to make their payments and add the advance to the loan balance. Appreciation will protect their equity, right?

Just Try A Little At First. Teaser rates offer drastically lowered interest rates for the first six months or so. Buyers can qualify at the lower introduction rate to get into more house than they can afford. They can just re-fi into another teaser rate loan.

NINJA LOANS – No Income, No Job, No Assets. Everyone is making tons of money, why stop now? No reason. Buyers can buy property on stated incomes, AND no down payment, AND forget the credit scores and security. Throw in teaser rates, just to be safe.

 

De-Regulation Gone Wild387423_2296648532087_2115868583_n

The Party That Never Ends. First time buyers come out of everywhere. Move-up buyers up-grade with their hyper-inflated equity. Home buyers buy as much as twice the house they canrealistically afford. The market over-saturates with under-qualified buyers pumping up demand well beyond a normal real estate cycle.

I Promise I’ll Never Party Like This Again. A market correction is long overdue. Wild appreciation stops. Rates adjust up. Homeowners can’t make their payments – and don’t. The banks freak and stop making new loans, turning off the fuel for any demand. Wall Street sees not only their portfolios evaporate, but their companies. Credit-based spending strangles itself, businesses disappear, and jobs everywhere vanish. The housing supply floods, drowning demand, as buyers wait to see the bottom through the murk. Without bank loans, even willing buyers are not capable. Values plummet far below where they should have leveled out.

Real Estate Rehab.What about all the poor people who are now losing their homes? Most of those ‘poor people’ speculated on real estate valued much more than they could afford, without any of their own money, risked bank money with little accountability for failure, and certainly wouldn’t have complained if appreciation had made them a small fortune. For their mistake, they are offered a bailout through a loan modification or short sale, while their neighbor who actually could afford their home and put up some cash gets no favors. And what about all the profits sellers made selling at the top of the market? When the balance of supply and demand gets out of whack, so do values, and the distribution of value.

So why didn’t anyone see this and stop it? Economic prophets predicted the real estate crash. The SEC thought the banks would regulate themselves. Analysts knew this wouldn’t last forever. The big blinder was AIG who gave everyone the excuse that these investments were insured. All the research persistently pointed the finger at one word: greed. Greenspan said regulation wouldn’t have, and won’t save us next time – greed is just part of human nature.

316895_2296646972048_2073526376_nWhere do we go from here? FHA is offering loans with 3.5% down. Tax credits of $8k are being offered to first time home buyers. Cities are offering interest free loans to reduce the liability of so many vacant houses. Jumbo lenders are tip-toeing back into the market requiring solid down payments, good credit, verified income, just like the old days of a balanced market. Will the real estate industry get carried away again with the white-out? Maybe the question should simply be “when”. Certainly future real estate and economics books will have a new chapter about these times.

Follow-up media publicized videos:

Former Countrywide Whistleblower: Mortgage Fraud — Huffington Post December, 2011 http://www.huffingtonpost.com/2011/12/05/countrywide-whistleblower-mortgage-fraud-systemic_n_1129637.html

The Fed Grants $7.77 Trillion in Secret Bank Loan – Now Do You Understand Occupy Wall Street? https://www.youtube.com/watch?v=oUpXDZFtEHw

Foreclosure Fraud – MSNBC w/ Cenk & Matt Taibb

60 Minutes, April 2011 : The Next Housing Shock

http://www.cbsnews.com/videos/the-next-housing-shock/

“Why fool around with realtors that don’t understand the complexities of Marin real estate. Mike’s experience can make a big difference when buying and selling. He has smart clients who rely on his expertise and trust his advice. He has made a lot of money for a lot of people.” Len N. Investor/developer

When asked who he works for, people are expecting him to say a real estate company. His patent answer: “I work for my clients, the company I associate with works for me.”

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