The Real Estate Rebel

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2010-07-06T09:50:00.001-07:00

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JUNE RANT: More about the CA DRE letter on short sale fraud

2010-06-03T14:10:00.000-07:00

Ok, rebels, I think it’s time you saw another side of me.

You know me as an off-the-cuff, kinda crazy, lovably rascally rebel.

All true.

But I’d like to turn on my serious side for a minute. I think it’s important, sometimes, to get kinda serious, maybe even (gasp!) fairly rational in my arguments. And NOW is that time. You’ve heard me rant about the misinformation, logic-gaps, and rumor that exist out there in the world of real estate brokers and agents. A few weeks ago I wrote a bit about the DRE’s recent letter about short sales.

Well, I’ve been re-reading it, and I have more to say.

As a reminder, this is the California Department of Real Estate’s “Short Sale fraud Warning to Licensees”, co-authored by the DRE’s Senior Counsel and Senior Deputy Commissioner. You can get the text here.

Wow. Is it any wonder that most real estate agents won’t touch a short sale listing? Hell, even most of the brokers under whose license they work don’t really understand the ins and outs of the short sale process. Is it so much easier to present an example of a brew of multiple fraudulent or illegal practices than to give licensees a more specific list of the things that must be present than to throw together a concoction of practices that are questionable, fraudulent or illegal? I suppose it is.

So what is it that has me so wound up? Let’s start with one of my favorites, “Is a Real Estate License Required to Represent the Parties to a Short Sale?” And the DRE’s answer, “YES, with some extremely narrow and limited exceptions and exemptions.” They spend six paragraphs explaining their answer. In those six paragraphs, they devote all of one sentence to say that it is ok for the buyer to negotiate on his own behalf. Is this an attempt to drive all of this activity into the hands of licensees, or is it just an attempt to minimize the significance of the buyer in this transaction? As an investor, when I back up and look at a transaction at the simplest level, there are only two parties, the seller and the buyer. The real estate agents come in second, as those who are responsible for looking after the interests of their clients. And, by the way, insinuating that the listing agent somehow owes a duty to the lender is, in my mind, VERY dangerous ground.

As an investor, I insist on negotiating with the lender myself. And why not? It makes no sense to me to leave that in the hands of either the seller or their agent, neither of whom have my interests in mind. And yes, I am always represented by a licensed real estate agent in these transactions, one who understands them. But I talked about this last time, so I won’t keep beating away at that point.

There’s plenty more to tick me off in the letter.

There’s what appears to be a “tip of the hat” to the poor lenders. Yes, the same people who hold out a hand in the form of a short sale but make it so difficult and inefficient that most buyers lose interest before an approval is obtained. Why is it that only an estimated 20-25% of short sale approvals actually close? These are the same "poor" lenders whose collection tactics manage to milk the last dollar of savings from people on fixed incomes, knowing that they will never be able to resume a normal payment. They know this because they already have their financial information. And the best one of all? Some of these poor lenders are actually talked into believing that the property in question has a much lower value that it actually does. This type of “fraud” really has to stop. To suggest that all offers should be sent to the lender is absolutely ridiculous. It seems to me that once I enter into a contract with the seller, continuing to accept offers to pass on to the lender is a blatant violation of California law.

The “fraud” here really is that the authors actually know something about the short sale process. The lenders choose their own method for determining the value of a property, whether it be through BPO’s or appraisals.

I have a message about the lenders:
Stop trying to make like they’re the underdogs here, so easily duped!!

THEY ARE READY TO TAKE YOUR HOME FROM YOU. In the end, their only concern is that a short sale will result in less of a loss than a foreclosure. IT’S A BUSINESS! They really don’t give a tinker’s damn about the people making their home there.

And don’t get me started about the references to the listing agent’s responsibility to the lender. Assuming the listing agent is in compliance with the B & P Code, that agent is there to affect the best outcome for the homeowner. The lender isn’t mentioned anywhere in the contract. In the case of a short sale, the homeowner has elected to sell their home rather than have it taken away from them. It is the lender’s choice to offer that option and it is done on their terms, not the agent’s, homeowner’s or buyer’s.

As an investor, I regularly negotiate with a lender for a short sale price and flip it for a profit. I don’t allow anyone else to negotiate for me, certainly not the seller or their agent. Before I engage, I make it quite clear that my intention is to sell it for a profit and that neither the seller nor the listing agent will be paying a fee. It’s my money, after all, that’s being spent. And while the DRE is busy looking for fraud being perpetrated by investors, they turn a blind eye to the common practice of lenders demanding promissory notes to approve short sales. When this is routinely done, even in the case of a non-recourse loan, knowing that they can “hold up” the homeowner whose only other choice is foreclosure, THIS is unethical. But I somehow doubt that the DRE is going to scrutinize this practice, perpetrated by their friends the lenders. And while nothing will justify fraudulent practices, the inference that the practice of short sale flipping is harmful to the community completely ignores the negative impact that the sea of foreclosures we see is far more damaging, to the homeowner and the community.

The federal government continues to implement ineffective programs to assist those who find themselves facing foreclosure. In the meantime, the lenders continue, unencumbered, with their predatory practices. It’s time we start insisting that our state representative do something about these practices.

I, for one, intend to speak with both my state senator and assembly representative to enact legislation that prevents these practices and makes the LENDERS accountable when they violate them. The practices of making a short sale contingent upon the signing of a promissory note for a portion of the balance, or what amounts to deed restrictions limiting the resale of the property have got to stop. Is anyone in Sacramento paying any attention to what the lenders are doing???

Come on, people!

Wheeew. I think that got my blood pressure up!!

Stay rebellious!!
-Larry

PS-I'll be taking a week off next week, but stay tuned for all kinds of cool changes, here at the Real Estate Rebel and at our investor websites!!

May Buyer's Tip-Everybody Marches Out of Step but Jimmy

2010-05-19T08:00:00.000-07:00

I don't remember which TV show it was, but there was a sit com back in the *harumph*ties where somebody read a letter from an elderly relative talking about how proud they were of a young man who was doing so well in the army. "I was at the parade when his unit came past," says the letter, "And everybody was marching out of step but Jimmy..."

I think about that scene whenever I start to think about market trends and forces, whether Doom & Gloom Analyst A or Perky & Optimistic Talking Head B is right about what's going to happen in real estate over the coming months. Should we all step out with our left foot, or lead with our right?

Then another memory pops up. I was at an investor conference and the speaker asked the room how many people thought the market would go up over the next 6 months, about half the audience raised their hands. He then asked what how many thought the market would fall, and the OTHER half of the room raised their hands. He smiled at us and then said, "Half of you are wrong. But nobody knows which half."

And so, since May is here and spring is definitely arrived in our City by the Bay, I thought it couldn't hurt to remind people of some basics of buying a home. Like last week's column, this is targeted at your Average Rebel, who is looking to buy a home for their family.

Just because everybody is doing something, doesn't mean you should do it, too. If all your friends are finally buying houses because they're afraid the market is going to to soar and they want the lowest price possible, fine. It doesn't mean YOU should do it. Plenty of people did NOT follow their friends' actions during the run up to the recession, and also DID NOT follow their friends into foreclosure. Buy only if the deal works for YOU.

Don't try to time the market. I'm a real estate investor and finance professional, and even I don't try to time the market when I'm looking at a property. I know what risk-levels work for my investment portfolio, and what represents a good deal today.

Don't wait for a perfect deal. I have said this so often I think it's become a meditation mantra. If you are looking at a home that you like, and it fits most of your criteria, and you know you can afford the payment over time, and that you wouldn't mind living there...what's stopping you??

Don't rush into things. This is the flip side of the "Don't wait" rule. If you're not sure you can keep up the payment (fer instance), or your real estate Agent is prodding you into making an offer just because "Well, the market's turning and you won't see these prices again," take a deep breath and re-run the numbers, or ask to see another property more within your budget.

Enough said!

And I'm pretty sure Jimmy was a Rebel...

Best,

Larry

May Resource Post-ARGH, I'M HIJACKING MY OWN BLOG!

2010-05-14T06:43:00.000-07:00

Ok, this week, I’m going to rebel against myself.

Normally, I’d be putting together a resource post for you Rebellious Readers out there, choc-full of useful links, sites, and tools to help you navigate the short sale real estate world and beyond.

But I’ve been going over and over in my head a recent issue that has come to my attention, and I thought I’d spend a little time talking about it…

You’ve all heard me rail against the craziness that seems to be inherent in the real estate industry when it comes to understanding short sales.

Now, there seems to be a whole ‘nother layer being created, this time coming from the Department of Real Estate in California (CA DRE). Now, they seem to say, only licensed real estate agents are allowed to talk to people about short sales on their properties, or to banks to negotiate a short sale price. I keep hearing this from both RE brokers and agents, so I started doing some digging myself. And, of course, I found that it ain’t necessarily so. IF YOU READ REBELLIOUSLY, and most people don’t, here’s what you find…

The core of the issue seems to come from the question of who is allowed to talk to a lender to negotiate a short sale on a property, as a recent article from the DRE muddies, er, I mean “attempts to clarify”, the issue. A short excerpt follows:

A real estate broker license (or a real estate salesperson license where that person is working under the supervision of his or her broker) is required under section 10131 (d) of the California Business and Professions Code (B&P Code) where a person, in a representative capacity on behalf of another, "negotiates loans…or performs services for borrowers or lenders …in connection with loans secured directly or collaterally by liens on real property…" for or in expectation of compensation, "regardless of the form or time of payment".

In addition, under section 10131 (a) of the B&P Code, a real estate broker license (or salesperson license with appropriate supervision by the broker of record) is required of any person who, as a representative of another, "Sells or offers to sell, buys or offers to buy, solicits prospective sellers or purchasers of, solicits or obtains listings of, or negotiates the purchase, sale or exchange of real property…" (http://www.dre.ca.gov/pdf_docs/Article_ShortSales03_2010.pdf accessed May 10, 2010)

I’d like to bring your rebellious attention in particular to this sentence from the above excerpt: “a person, in a representative capacity on behalf of another, "negotiates loans…or performs services for borrowers or lenders”

And that, my friends, is the rub. When I take a look at an investment property, I look at buying it FOR MYSELF, and, sometime later, SELLING IT. Nobody is “representing” me in the sense of the law, and while I may have employees engaged in some of the tasks involved in the process along with me, it’s my money and my company purchasing the property. YES, later on I will sell it, for more money than I bought it for. That’s kinda the point of being an investor.

So tell me, what is to stop me from talking to the banks to negotiate a short-sale on a property?

As I read it, as long as I’m the buyer, then nothing at all. Again, it comes down to that line that reads “…as a representative of another”. If I want to negotiate a price on something I’m spending my own money on, nothing in the code prohibits me from doing so.

I’ve got more to say about this letter in coming weeks, but I’m doing a bit more digging first. So stay tuned!

Rebelling everywhere,
Larry

May Seller's Tip-Distilled Wisdom for yer Average Joe

2010-05-05T03:05:00.000-07:00

Hola, Amigos, and Happy Cinqo de Mayo! I think I'll celebrate the victory of the Mexican Army over the better equipped French force at the Battle of Peubla in 1862 by taking a look at how an Average Joe looking to sell their home can come out ahead in these tough real estate times. I'm bringing you a few tips to navigate today's market as an average, non-short sale, non-foreclosure seller. Oh, and of course, I'll head out for some cervezas too...

What if, instead of fighting of French soldiers, that Average Joe (AJ) is stuck in the mire that is today's real estate market and is trying to sell his house? Supposing AJ is being moved out of town by his company and just needs to sell his Bay Area home and move to another state, but is worried about getting the best price when so many homes are on the block for below market rates? Or if AJ (Average Jane, in this case), just watched her last kid graduate from college and head for the big city to start a career and she is starting to think that it might be time to relocate herself?

Here are the top three things that I'm seeing recommended for a "normal" home seller in today's market. Now, remember, I spend most of my time focusing on the Bay Area short sale market, but I do keep my eyes and ears open to all aspects of Real Estate in San Francisco and beyond.

Get a REFERRAL to a good Real Estate agent. As much as I get frustrated with brokers and agents in the Short Sale environment, a good agent is your best bet for getting the top price for your home in a regular sale. If there's any good coming out of the housing crash, it's that a lot of half-baked agents are getting out the industry, leaving a smaller pool of dedicated professionals. BUT ASK AROUND, check with friends and colleagues who have USED the person's service. "Cousin Bob is a real estate agent" doesn't cut it. "The agent who helped me sell my house in a week at a great price six months ago" is closer to what you're looking for.
Make absolutely sure there's not much of work that will need to go into your home. The days when a seller could knock down the price a little during negotiations because the potential buyer spotted a ragged corner of carpet are gone. Fixer-uppers are everywhere, especially in areas where the previous owners walked away from a mortgage payment but took the faucets with them.
BE REALISTIC. As I've mentioned before in these pages, this is not the market in which to try and recoup all your stock market losses at one fell swoop. Although there seems to be some light in the tunnel, it's still a tunnel and we're not sure if that's a train or not, so if an offer comes in that looks good but isn't exactly what you want, think hard before you turn it down.

That's it, Rebels, if you read through all the blogs and articles, it still comes down to being smart, flexible, and realistic.

And drinking Cerveza. Which I'm heading off to do...

Rebelliously,
Larry

PS-Coming next week, The Government is dictating who can negotiate on your behalf with a bank?? What the..?

April Resource Post-Raw Rate Data Rocks!

2010-04-28T03:08:00.000-07:00

Greetings Rebels!!

I have been accused of being everything from an old fogey to a young whippersnapper, and never has my age and skill set been more questioned than when it relates to the Internet and the tools it represents.

Obviously, I love the Internet. I'm on LinkedIn and FaceBook, I Blog (duh), and every now and then, I even Tweet. But I don't Digg stuff, I don't have a playlist on MySpace, and my old college photos of that embarassing incident with the goat better not show up on Flickr any time soon. I consider the Internet a tool for business, staying in touch with clients, colleagues and some friends, and most of all, RESEARCH.

I find that the flattening of the playing field when it comes to available data is probably the best aspect of the dub-dub-dub, and while my years of digging deep into obscure financial info are behind me, I do keep an eye on what's happening that effects my business-particularly information on interest rates.

If anything, there's TOO much data out there, and more often then not you're asked to provide some kind of contact data before you can get the information you're looking for. So for this month's Resource Post, I thought I'd separate some metaphorical wheat from the virtual chaff and show you a few spots where I keep an eye on the financial indicators around lending/borrowing. As always, read rebelliously and make up your own mind.

For the official picture, if you can ignore the "Aint we cute, we got a website" nature of the government's online presence, the Dept of the Treasury has the 411 on interest rates. And if there's not enough there for you, head over the the Federal Reserve website. Also VERY handy if you find yourself needing some help getting to sleep. Just click the link to any of Chairman Bernanke's speeches and save a fortune on Sominex.

For something a little more consumer friendly, as well as comparison shopping for things like credit cards and mortgages, I'm a fan of Bankrate. Plus, they have a lot of helpful calculators that don't require you to give them your contact data before making the calculations.

While I think it's important for Rebels to think about their own situations before thinking in big, national terms, there is room for some counter opinions. So for data with a bit of a technical bent and analysis, more technical head to tradingeconomics.com

And lastly, for the die-hard big picture people, if you're looking for worldwide stats at your fingertips global-rates.com has a wealth of data, including historic and in-depth American inter-bank numbers.

So, my Rebellious Readers, go forth and get informed! No more excuses!

Yours in Rebellion,
LARRY

April Rant-It may be Lending...or it may be Predatory Lending

2010-04-21T10:35:00.000-07:00

I was having coffee the other day with one of my bird dogs (the people who hunt up properties at risk of foreclosure), and he said to me, “Ever notice how ‘Banker’ rhymes with ‘Wanker’?”

I nearly choked on my coffee! I’m proud of being The Real Estate Rebel, but we were at a crowded café in the middle of San Francisco’s financial district, and even Jack Sparrow (er…CAPTAIN Jack Sparrow) knew to keep his voice down when the Governor could hear him.

Although now I can admit that the thought had occurred to me. Especially after I spent some time catching up on some of the latest shenanigans in the banking world. And “shenanigans” are about the nicest things I can call them.

Seriously, I’m thinking that some of this latest stuff may fall in the predatory lending category. I urge you to do some more digging and, if you agree, it may be time to call your local lawmakers to action.

So here’s what I’m hearing in the Loan Mod world, through conversations and digging around…

A homeowner applies for a loan modification…then the lender says that they’ll “consider” the application and while they’re doing that, the homeowner will be put on a 3-month trial repayment plan with a lower interest rate.

So far, nothing abnormally abnormal here. I’ve talked before about how shaky that is, but for now, I’m more ticked off at the NEXT point…

BUT THE BANK ALREADY KNOWS THEY WILL BE DECLINING THE MODIFICATION.

Yes, that’s right. This stuff isn’t rocket science. It’s not like there is an army of analysts taking that application for modification and pouring over it with a fine tooth comb to see what the bank should do with it. A few key pieces of data are plugged into a spreadsheet and the answer is there.

SOOOOOoooo…why do the wankers…I mean Bankers…approve the “trial period”??

Because it does two things for them:

1) During the trial period, any outstanding interest piles up and is capitalized if the application is ultimately declined. If the bank already know the application will be declined, it’s a way to get the outstanding balance even higher than when the trial period started

2) It creates a larger asset that may be picked up eventually by you and me via the intervention of TARP, who won’t be looking at where the balance comes from.

And if TARP doesn’t buy it, and if the owner goes into foreclosure, well, that’s just a bigger, inflated number that can be written off as a loss against any profits that year.

Holy cow. I’m really really smart, I’m really really tricky, and even I couldn’t have come up with a scheme that does all this.

So, ya know what, for the next few weeks, even if I whisper it, “Wanker” it is…

Stay Rebellious!
-Larry

April Buyer's Tip-Tax Credit Expiring Soon!

2010-04-14T01:13:00.000-07:00

There's nothing certain but death and taxes. And when it comes to temporary tax credits, those aren't even all that certain.

I was chatting with one of my rebellious buddies the other day over a glass of wine and we were discussing the tax credit for first time buyers (defined, conveniently, as those who have not owned a principal residence for 3 years or more), and he said those words I HATE to hear.

"You know Larry, I'm telling people not to hurry their decision to buy a place in order to take advantage of the tax credit. It'll probably get extended again..."

Oh, my dear readers, you KNOW how much I hate that "let's wait and see" thing. So, in addition to making him pay for the wine as punishment, I told him to put on his rebel hat and "get, while the getting is good".

It also occurred to me that many folks out there aren't completely sure what's going on with the credit-how it's defined, how it's claimed, etc.

Now, it's against my rebel nature to tell people what to do and where to go (I hear you snickering, quit it!), but there are some great resources out there so people unsure of the credit can get the information first hand. As ALWAYS, read rebelliously and consult your tax advisor (Or your magic 8-Ball, if it can be trusted more) about what all this means for your situation in particular.

A good layman's discussion can found here, on a site provided by the National Association of Home Builders. It uses normal language and does a nice job of clarifying the different credits.

For those of you like pain and primary sources, the relevant IRS sections about the extensions of the credit can be found here, on the IRS site itself. I recommend taking an aspirin both before and after sorting through the legalese.

Lastly, there's some nice discussion of the extensions available via the CBS site MoneyWatch, which you can access here.

As always my Rebellious Readers, my advice is always on the Go For It side. If you are looking a home and a deal and a tax structure that works for you NOW but are hesitating to see if things get better, the odds are just as good that waiting will hurt you.

Coming Next Week...
More Shenanigans in the Banking World...

Best,
Larry

April Seller's Tip-You might HAFA do it, so do it right

2010-04-07T02:33:00.000-07:00

Ah, it's like those old Campbell's soup commercials, where the letters kept rearranging themselves to spell out new words...the government just keeps coming up with more and cleverer (clever-ier? cleverererer??) agencies and acronyms.

But this time, I think it's a pretty good thing. You've heard me rant about the problems that plague anybody working with the banks to work out their loan modification or to get a short-sale approval through the system. Now, with the Home Affordable Foreclosure Alternatives Program (HAFA) from the Obama administration, those of you are trying to avoid foreclosure via short sale have some real support.

In brief, HAFA is designed to help those homeowners who will just not be able to stay in their homes avoid foreclosure through increased incentives to banks to allow a short-sale, in addition to other assistance. One of the BEST of these additional benefits, and kudos to whoever thought it up, is that the program actually has a relocation benefit to help the homeowner make the transition to different housing arrangements.

This is a remarkable win-win, in my rebellious view (at least on paper-more on that later). Banks are increasingly encouraged to support the short sale process, the homeowner trying to make a graceful exit gets some assistance themselves, and all of this means that there are some real solutions out there.

BUT.

And in this case, it could be a BIG but...or a small one...depending on the lender...

As in many of the cases for these government sponsored programs, participation by the lender is optional, and, according to the official information page about the program ( http://makinghomeaffordable.gov/hafa.html ) the lenders write their own guidelines for eligibility.

So the success or failure of the program depends on the actual willingness, flexibility, and preparedness of the lender.

No, wait, don't laugh.

Yet.

The program has just been rolled out, and some early signs are very optimistic. According to DSNews, the on-line news site of the Default Servicing industry, real estate companies and banks are putting a lot of effort into getting on board with the program. http://www.dsnews.com/articles/government-agents-lenders-vendors-one-solitary-force-when-it-comes-to-hafa-2010-04-06

So, those of you that are looking at a short sale as a better solution than foreclosure for yourselves, and for investors like my team, this could be great news. It's well worth your time to check out the website to learn more about your options. http://makinghomeaffordable.gov/hafa.html

And if it joins the jumble of other progras and agencies and fades uselessly back into soupy mix, you can bet that I'll be Ranting about it!

Rebelliously,
-Larry

Happy Easter!!!

2010-04-02T10:32:00.000-07:00

Well gang, just a quick happy Easter greeting to all you rebels out there! We'll be back next week with more tips, tricks, rants, and raves!!

-Larry

I'm Not Making This Stuff Up! March's Resource Post

2010-03-24T02:35:00.000-07:00

Ok, my Rebellious Readers, it's time for another resource post for you folks out there who get tired of listening to my voice...no, really, it's ok to admit, for a few minutes every month you'd like to see a couple of other places to click...spend some time apart...give each other some space...

So I thought I'd point you in the direction of some of the information out there that I base my business model on, and more importantly, fuel my Rants from time to time. Honestly, I couldn't make this stuff up (I'm good, but not even I could imagine some of the shennanigans that banks think up to snarl the short sale process...)

Here are some directions to the original research that I use to fuel my inner fire...click away...I know you'll come back to me...you always do!

Just what exactly is a "Short Sale"? This article is a great summary. It's a little dated, but was updated last year and is still a good starting place to understand the who/what/why of the process http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/UseAShortSaleToEscapeForeclosure.aspx
Do the banks really deliver somewhat less-than-stellar customer service in the short sale environment? Don't believe me? Check out http://articles.sfgate.com/2007-08-12/business/17255730_1_short-sales-lender-approval-buyers
Lastly, several readers asked about my recent rant about the promissory notes that lenders are asking owners to sign to approve a short sale. Read more about them at http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2009/07/13/story15.html

So, whaddya think of me now? It's ok, I know you had to spread your wings and soar...and I know I'll see you next week, ya Rebel!!

Stay rebellious!!

-Larry

March Rant-Where There's a Will...There's a Won't...

2010-03-18T08:45:00.001-07:00

In the words of the immortal Sam Kinison, comic, commentator and Rebel, "OH...OH...OOOOOHHHHHHHH!!!"

That's what I said when I came across the latest tactic that some lenders are engaging in when it comes to messing up the short sale process. We've talked about the stalling, the poor customer service, the incorrect (to put it kindly) information, the ridiculous no-resale requirments, etc etc that are experienced by anybody trying to navigate the short sale environment. I'm not going to bore you with any of that again (but, I reserve the right, not to bore you, but to, um... GET YOU FIRED UP AGAIN about it a later date...), so let's move on to the latest bit of chicanery afoot in California and particularly in San Francsico Bay Area short sales.

Let's turn our attention to the folks in the #2 position...the SECOND mortgage holder...

For those of you who are NOT real estate investors but who bought homes in the past 5 years in the Bay Area, you know that having a second mortgage was practically de riguer in order to get into anything. So, of course, as a homeowner falls farther and farther behind on payments, it's not just the primary mortgage but the second that is growing more and more past due. Nothing new there...

So, a short sales expert comes along, and negotiates a deal-the homeowner gets out from under the house, the primary mortgage holder gets some cash (more than they would get at auction, and the place is off their books)...again, nothing new here. Now, the SECOND mortgage holder is often given a token sum depending on the primary lender; I generally see about $3k being approved and given to this #2 spot.

BUT NOW...

Many second mortgage holders are refusing to OK the short sale unless the soon-to-be former owner of the house signs a personal promissory note for the amount of the second mortgage, or for some huge lump-sum amount "today" in lieu of a larger amount spread out over time.

So what? Why shouldn't they hold out for more?

BECAUSE IF THE PLACE GOES TO AUCTION THEY GET NOTHING!!!!

That's why.

The whole point of a short sale (from a bank's perspective) is to avoid the low return and hassle of a repo. The banks work with investors like me and my team BECAUSE they will make more money that way (it ain't because they appreciate my or Sam's humour, I can tell you THAT fer nuthin!).

So, the lender in the #2 position refuses to OK a short sale and turns up their nose at the $1K-$3K that I commonly see going their way, unless the owner signs a new note for the $35k or $75K or whatever they owe...a note that is now UNSECURED, with interest that is now non-tax deductible, and rates that are often variable.

So the owner, who couldn't make the payments in the first place but at least has a roof over their heads that they are willing to give up if they can get out of debt, understandably says NO WAY! This means the property will probably go to auction and the lenders will make much, much less, the owner's credit is destroyed, nobody wins.

Get that?? It's worth repeating...

NOBODY WINS when a bank puts up roadblocks to a decent short sale offer.

Ok, I think that'll do for now. It's so simple, even a BANKER should be able to understand it!

Stay Rebellious!!
--Larry

March Buyer's Tip-Think Local, Think Credit Unions

2010-03-10T09:57:00.000-08:00

I've spent a lot of time critiquing the banks and mortgage brokers for their one-size-fits-all solutions, poor customer support, and general not-with-it-ness (hey, why be a rebel if you can't make up a word from time to time...?). And next week, I'll be getting back to that topic.

But today I thought I'd share a solution to the big-bank re-financing trap that a lot of people are in. Or, even if you're a new buyer looking for financing.

Take a look in your own backyard. If you're looking for innovative and still local decision making, try out your local credit union. Even if you don't already have an account, a small deposit ($50-$100 in most cases) will open one and give you access to their services.

According to the American Credit Union Mortgage Association, (www.acum.org) Credit Unions are well positioned to take advantage of the current lending crisis. Because they are generally local and association based (credit union membership is usually predicated on some kind trade, academic, or residency affiliation. See, I can use big words too...), reaching out to those members who are not being well served by the bigger banks represents a unique opportunity to grow a Credit Union's membership and asset base. This means that they are actively looking to restart their mortgage lending. Huzzah!

So what are you waiting for?? If you're having a tough time getting a response from your bank, check out http://www.creditunion.coop/ to find a Credit Union that fits you.

Good luck, and go gettem!!
-Larry

March Seller's Tip-for Real Estate Agents

2010-03-03T03:43:00.000-08:00

Recently we've spent some time talking about how we like to work with Brokers/Agents (B/As...and again...NO SNICKERING!) who really understand the short sale process. Especially San Francisco Bay Area foreclosures remaining high.

Sadly, as we mentioned, in many cases, we've found that many B/As are under some very false assumptions about the short sale process, even being confused about whether or not the process is legal. I'm not going to address THAT particular issue again (IT'S ABSOLUTELY LEGAL!), but recently my team and I thought that we'd be doing the world (and, frankly, ourselves) a favor if we worked hard at educating this group so they can work with the hundreds of sellers out there facing a short sale.

So I'm pleased to announce the launch of www.realtor.bea-corp.com, a sub-site of our investor focused site designed to help Real Agents work with us in the short sale market.

Using this site, B/As can get find a great resource to help them

Handle a short sale by bringing our team into the transaction
Spend more time on finding a buyer for a property at a competitive market rate
Spend less time talking to the lender negotiating all the short-sale issues (MUCH, MUCH less time-none at all, in fact)
Earn their full commission on a property
Do what they love-sell houses!

So if you are a B/A (or if you know one, pass this along) facing walking away from commission checks because short-sale properties are too much work and, frankly, outside of your expertise, www.realtor.bea-corp.com presents an excellent opportunity to become a Real Estate Rebel in your own Right (oooh, how awesome alliteration accelerates acceptance!) and start making money in a part of the market that you've previously stayed away from.

Keep Spreading the Rebellion!

-Larry

Numbers, Numbers, Numbers-February's Resource Post

2010-02-24T12:00:00.000-08:00

Numbers, Numbers, Numbers!!

In a previous incarnation, I was a numbers guy. That meant I crunched ‘em, munched ‘em, and spit out a whole slew of reports, analyses, and, yes, even the odd full-color chart from time to time. Sometimes, after combining wine-tasting with work, the graphics for those charts were VERY odd, indeed.

Now, I’m still a numbers guy, but as a Real Estate Rebel I tend to focus on the deal or the project at hand, and I’m less willing to spend a lot of time creating formulas and forecasting profitability curves (in fact, I get a little frisson just thinking about it…I’m not sure if that’s fear of wasted energy or some sweet nostalgia…). And investing, is after all, a numbers game.

BUT, I’m willing to let somebody else do the real digging and delving and Excel-sheeting, while I read the comic pages of the SF Chronicle and drink a cup of coffee and glance at their blogs. In the spirit of openness I mentioned a few postings ago, here’s a brief, non-comprehensive, list of blog resources to get your number-crunching fill.

ALWAYS REMEMBER: Read Rebelliously!! Form your own opinions, because in the words of Mark Twain, “There’s lies, damn lies, and then there’s statistics”. Often, sites are managed by Real Estate agents, and while they’re written in good faith, I tend to stick to sites that have reasonable explanations of the criteria/methodology/sources for their reports.

For some hard-core graphics of pricing trends, check out http://blog.redfin.com/sfbay/, and no, you’re not looking at roller-coaster schematics. Welcome to the wild ride that is real estate investing…

For a decent snap-shot of home prices in the SF Bay Area, http://www.lubasf.com/blog/, puts out a monthly report. The report is pulled from MLS sources, so keep in mind that not every development or property goes through that channel. And short sales are under-represented.

And for the broader, more national scope, I like folks over at http://blog.altosresearch.com/, although they’re a little thin on SF Real Estate data on the blog, having a wider focus.

Alright, my coffee’s getting cold and Garfield doesn’t read himself, so I’ll see you all next week.

STAY REBELLIOUS!!

-Larry

February Rant-It's Really a Compliment...REALLY!

2010-02-17T12:00:00.000-08:00

Ok, Rebels…this is NOT a rant…this is an observation…or maybe a compliment…directed toward Real Estate Brokers and Agents we work with as short sale investors in the California San Francisco Bay Area.

I’d like to give kudos to the many, many Brokers and Agents (B/As, for short, and NO SNICKERING) who really get and understand the short sale process. How do I know them? Remember, this is my business…

I can always tell when I’m working with a B/A who knows what they’re talking about. If they are listing a short-sale property, they understand that it’s not the normal transaction. Their role in the process isn’t to get the highest price possible for their clients, but rather to quickly and efficiently get their client out from under the housing payment and off the foreclosure list. B/As in this situation know that they need to look at the buyer in a very different light. The question then isn’t who came in with the highest offer, the question is, who came in with the most dependable offer, an offer that the B/A knows is funded, an offer that won’t fall through because the buyer’s financing disappears, or will be subject to snags and delays, leaving the B/A’s client twisting in the foreclosure winds for another month or more.

This type of B/A also knows that they are in a little bit of a weird spot, in terms of their relationship with the owner and the banks. If they’re working on a short sale offer, they don’t take it back to the homeowner for approval, they need to negotiate with the BANK to approve the deal. Things like this are why many B/A’s don’t work with short sales-there’s not a lot of money to be made BUT it’s a very complicated and confusing transaction best left to experts.

Sadly, I can always also tell when I’m working with a B/A who hasn’t got a clue about how different a short-sale deal is from a regular listing. I’m actually fine with somebody not understanding a complicated and unusual set of circumstances, but I really have a hard time with B/A’s who are full of misinformation, inaccurate understandings of the law, and are operating on the basis of hearsay and gossip. The most common error I hear when I talk to these B/A’s is “I can’t work with you on this property if you’re planning to resell it quickly. Flips are illegal.” This, oh my dear readers, is absolute rubbish. Hogwash. Hooey. Even, dare I say it, Phoney Baloney. I apologize for the strong language.

I’ve been so surprised by this response, and the certainty in the voice of the people who utter it, that I decided to do some digging. Was it actually possible that my entire business model, and the model of many real estate investors much smarter and cooler than me (hard to believe, I know) was actually illegal??

And I found NOTHING, anywhere to indicate that buying and then reselling a house is illegal!! What I did find, and what makes sense, is a lot of fine print from places like Fannie Mae encouraging lenders to take a closer look at buyers who are intending to flip a property bought at short sale to avoid what is called equity skimming or predatory flipping. I won’t go into detail, but these activities ARE illegal, and involve lying, cheating, and stealing.

Let me repeat: equity skimming and predatory flipping are illegal, but buying a house as an investor at a wholesale price and then reselling it at market value is not illegal. It's called investing. Many lenders, who tend to take the safe road when under the microscope (but NOT when doing the things that landed them under it), are adding restrictions into their lending documents about title seasoning, however, that’s not law, that’s the CYA (Cover Your Assets) system at it’s finest. There are lenders have no title seasoning requirements on their loans. Guess who I work with and make money for??

Now, there is a LOT of fine print out there about this stuff, and B/As are wonderful salespeople who really good at organizing all the myriad pieces of paper that have to be in place to buy and sell a home. Sadly, many of them are NOT great readers of fine print, and so go with the “NO” when approached by me or a member of my team.

Now I ask you, is that really in the sellers’ best interest?

BUT, again, this is more of a THANK YOU and GOOD JOB to those B/A’s out there who get and understand what it means to work with a short sale property and an investor like me. And we’ll be making money for years to come!

And keep in mind, reading the fine print is REBELLION at its finest!!

Best,
Larry

February Seller's Tip-Check out the Government's free tips...

2010-02-10T07:20:00.000-08:00

Ok, folks, last week we talked about someplace that people looking to buy a home that had gone through foreclosure could check out.

So, in the interest of balanced reporting, I'm pleased to let you know about another website that offers some great tips for people thinking about selling their homes. I'll be honest-I started thinking about when one of my colleagues, after months of trying to sell a home, switched listing agents and got two offers in two days. So I started doing some digging to see what advice was out there that was USEFUL, not just some Real Estate agent or broker's personal page designed to get you to use their services.

So often, if you hunt for help on selling a home, that's exactly where you end up-getting some canned and pre-packaged RE agent site. Now, I'm not knocking RE agents (at least not yet...but fair warning, look for a future rant on the topic), but how exactly can you entrust what may be the biggest financial transaction of your life to somebody based on their website, especially when so many of them look the same?

Similarly, how do you get a good understanding of settling costs and other seller's issues? I'm pleased to report that at least SOME of our tax dollars are helping homeowners answer questions like this (although don't forget to read Rebelliously and make up your own mind!). The US Department of Housing and Urban Development (HUD) has put together a fairly user-friendly and accessible site to help. You can find it at http://portal.hud.gov/portal/page/portal/HUD/topics/selling_a_home and look for tips on everything from interviewing a broker to understanding settlement issues.

So, if you're thinking of selling for any reason, I bet there's information there that will be helpful. Go Gettit!

Rebelliously,
Larry

February Buyer's Tip-Explore FannieMae's Homepath

2010-02-03T13:45:00.000-08:00

Ok Rebels, remember this rule about government agencies and those that are ESSENTIALLY government agencies: Not ONLY should we look a gift horse in the mouth, we should also double check that all four hooves are present and the animal is actually breathing. And I put FannieMae squarely into the "Essentially Government" category.

That being said, I have been happy to see that the organization is at least doing some interesting things to move houses off the market and into the hands of owners who will take care of them, thus re-filling many of the neighborhoods where FannieMae (FM) funded homes that are in foreclosure.

One of my readers recently tipped me off to Homepath.com, the website where properties that have been foreclosed on by FM can be found. The site also lists some interesting incentives that the FM is putting forward, such as a rebate of up to 3.5% of the cost of a home given back to the new buyer or credited toward the purchase of new appliances. Check the website for the fine print-more on that later.

Also, the site has a very user-friendly interface for finding prices/locations of properties for sale from their REO inventory.

Why am I recommending that people take a look at it? After all, it's possible that people may consider Homepath.com a competitor of us Real Estate Rebels. Nope. These homes have already been foreclosed on, and we work on Bay Area Short Sales, trying to work with homeowner BEFORE foreclosure happens. It's in everybody's best interests for neighborhoods to avoid empty houses, decaying lawns, and that odd ghost-town feeling that some blocks in areas get at times like this when too many properties have "REO" signs out front.

So I'm all for programs like this. JUST REMEMBER TO READ THE FINE PRINT! Also, specific lenders may have their own requirements when lending on these properties, so check out every option before you sign anything. Ever.

But it's nice to know that at least somebody's coming up with some clever ideas (besides us Rebels, of course) to get vacant homes filled and neighborhoods populated again.

So, if you're in the market for a home, you could do worse than check the site out and see if something there might work for you.

Have Fun!
-Larry

Bird-dog Program Invitation

2010-01-31T13:23:00.000-08:00

Hey Rebels!

Most of you have seen my stories about two of our "bird-dogs", people making money in California and Bay Area Real Estate without risking any of their own cash or having a real estate license. If you haven't, take a look at the recent interview with Francine, one of those people who is part of the program.

I'm happy to announce that we'll be rolling out a new training program for bird-dogs, and you're invited to apply. If you're interested in making money in real estate by sources properties that are good short-sale investment opportunities, we'd like to chat with you.

Please be aware that not everybody will be a good match for the program-here's our preferred criteria:

live/work in the San Francisco Bay Area or Los Angeles Area
be outgoing, friendly, and solution driven; somebody people like to talk to
currently working in an environment that brings you into contact with homeowners from all walks of life on a regular basis

Essentially, the program is about earning money by finding and referring acceptable properties for our team. If you'd like to be considered for the program, please click here and drop our team a note. One of my group will reach out to you and discuss details and to see if the program is a good fit...

...and get ready to join the Rebels!!!

Rebelliously,

Larry

January Rant-A Call to (examine) ARMS

2010-01-20T04:42:00.000-08:00

What’s in a name?? When is an interest rate not an interest rate? When it’s an ARM. I think it’s time we call these loans what they are-teasers, ticklers, or worse, traps.

I’ve been staying on top of what’s going on in Real Estate in the San Francisco Bay Area for awhile now, and I’ve got to be honest, I’m getting pretty nervous about what I’m seeing on the ARM horizon. I’ve mentioned it before, but in talking to people and banks in the area I’m afraid there’s a lot of head-in-the-sand attitudes out there about this topic.

Think about it. In the Bay Area, most people have to use an ARM to get into just about any home, in order to soften the blow of the payments they have to make in the beginning of their mortgages. Often, the thinking goes that by the time the ARM rate increases, the buyer will be in a position to refinance their mortgage for better terms, or they’ll be ready to sell in any case.

So what happens when their real estate has actually gone DOWN in value?? Or if the buyer can’t refinance? Well, then, the payment goes UP. And UP…, and if they were barely making ends meet already, then they’ve gotten themselves into a trap that leads directly into default and often foreclosure.

Why is this on my mind right now? One of my readers just sent me a CNN.Com piece from a couple of weeks back that really puts it into perspective:

“For many of the more than 350,000 option-ARM borrowers, it's time to pay the piper. Their loans will change into fully amortizing mortgages that will carry much higher monthly payments. A very large percentage of these homeowners will default, according to Shari Olefson, author of "Foreclosure Nation: Mortgaging the American Dream."
"We've still only seen the tip of the foreclosure iceberg," she said.” (CNN.com)

Yep, that’s 350,000 loans resetting that are at higher risk for foreclosure THIS YEAR than they were LAST year.

And what’s the government doing with our money to help ease these extra burdens on the economy? That’s a REALLY good question. The tax credit is set to expire this year, there are still no teeth to any of the modification programs, and the banks have been remarkably silent on the issue of how they’ll handle this next wave of foreclosures. Add to that the reminder that the government re-purchase of mortgage backed securities will taper off this year, and you’re looking at least one more tough year in the housing arena and a good case for thinking interest rates will rise. Besides, there’s not a heck of a lot left for the government TO do in this area.

So what’s a borrower to do if they’re looking at a mortgage payment that’s suddenly going to go up? Sadly, I don’t have a lot of advice there. If you’re looking at default/foreclosure, you know my best recommendation is to explore all your options, including short sale.

BUT, if you’re one of those lucky few who are actually buying a house in this environment, you should consider one question very carefully: can you, if the interest rate increases in a few years, still afford the payment? Are you already 110% stretched, or is there a little wiggle room in your budget?

Remember the Schwab posters… “My house is worth a million bucks is NOT a retirement plan”? If you’re looking at taking an option-ARM, make your motto “If the payment gets too high we can just refinance is NOT sound financial strategy.”

So, me Rebellious Readers, before you take up ARMS, take a sharper pencil to your worst-case scenario budget.

Stay Rebellious!
Larry

January Buyer Tip-5 Questions

2010-01-13T09:18:00.000-08:00

It’s a new year, and already the questions about what 2010 will bring are POURING in…as, unsurprisingly, are the pseudo-answers. Ira Glass, host of public radio program “This American Life”, had a great commentary on the uselessness of predictions, in particular his feelings about The Economist Magazine’s annual prediction issue, in his show a couple of weeks ago. You can listen to the program here…

You all know that I’m not in the business of predictions. Unless, fer instance, the question is “Will Larry open that last bottle of wine?” For things like that, I’m usually bang on. Instead of predictions, I’m going to give those of you considering BUYING a property this year some questions to help you make up your mind. For each question, I’ll ALSO talk about why it’s important to think about it. Remember, there are no right answers…

1) How stable is your job?
Even if you’re looking at a great deal on a property, if you look around you and see waves of layoffs at your company, and the guy next to you just got his pink slip it’s very possible you’re the next head on the block. If you lose the job, can you still afford the place you’re considering? This is especially important for single-income families to think about. If you’re in sales or marketing and heavily commission based, even if your job is secure, what income fluctuations may loom?

2) How are you “fixed” in your current housing payment?

If you rent, are you looking at doubling or tripling your monthly housing payment? If you are an owner right now, will you be able to get terms that are more favorable as you have currently?

3) How much do you love the property/neighborhood you’re looking at?

I have a colleague who was looking at buying a condo in the SF Bay Area. He and his wife liked it a lot. They didn’t LOVE it enough to believe that, if they ended up without any extra cash for a few years, they’d be perfectly happy re-arranging the furniture every Friday night instead of going out to dinner and a movie. They walked away and have never ever regretted the decision.

4) Where are you in the family planning stage?

If you’re just starting, do you really need that second bedroom already? If your kids are grown and out, do you want to have room for them to come visit or does the excuse “We just don’t have enough space for everybody for Christmas” sound like an EXCELLENT way to justify a trip to the Bahamas for the holidays next year?

5) Do you have the skills to take care of any issues that may pop up in a fixer-upper or bank-repo’d home you buy?

I know several people who made great deals and learned how to take care of some basics that the previous owners let slip while the place was undergoing the foreclosure process. They knew they could figure out a leaky pipe or a sagging porch and avoided spending money on contractors.

Remember, Rebels, there’s no right or wrong. There’s also no guaranteed good/bad time to buy. The Real Estate Rebel formula is simple: go in with your eyes open and consider your risks.

Of course, if all else fails, ask the Magic 8-Ball. The signs always point to “maybe”…

Rebelliously,
LARRY

Putting Christmas Lessons into action in 2010-check out some other RE sites!

2010-01-06T04:17:00.000-08:00

"I know on the face of it, this plan sounds idiotic and impossible, sending Macy's customers to Gimble's. But gentlemen, you cannot argue with success! -Miracle on 34th Street

One of my favorite things about the holidays (now that they’re over, at least) is the regular reminder about life lessons, captured in great stories like “A Christmas Carol” and movies like “It’s a Wonderful Life.” Both as a kid and as an…ahem…adult (well, kind of an adult) I feel that the little reminders about the way life should work are helpful, and gosh-darn it, I still like to think that every time a bell rings, an angel gets his wings!

One of the things that I think is missing from our world today (and maybe of yesterday too, since they put the idea into a movie made in 1947) is the idea that helping people find what they WANT, versus what you want to sell them, is a hallmark of fantastic service. You remember the scene from Miracle on 34th Street, right? When Santa tells kids where to go find the toys they really want, even if they don’t have it at Macy’s? At first, it seems incredible, but then, it works, and the people at Macy’s are heroes, even if they sent a customer to Gimbles.

I’ve been mulling over that idea for awhile, and thought I’d put it into action in a way here on the Real Estate Rebel by sharing with you some of the best, in my humble opinion, places other than here to get information on the Real Estate market. I don’t always agree with every conclusion they reach, and in some cases people may think they’re my “competition”, but the information is sound and, in true rebel fashion, I encourage you to use your own judgment about what you read.

Now, there are roughly a hundred zillion sites out there that a person can go to, from individual Real Estate Agent pages and the MLS all the way to high-end sites requiring a credit card for investment advice. I’ve narrowed it down to five places that 1) I use regularly to keep updated, 2) DON’T require payment for basic information and 3) present intelligent analysis as well as facts. I’ve listed them in no particular order, so click away and again, read REBELLIOUSLY!

1) Patrick.net has a forum called “Housing Crash” that has a lot of spirited discussion about what’s going on today, with a focus on the California Bay Area. It’s a good source of links to additional information, as users are constantly tossing up new sites and news items.

2) www.property-investing.org is a good source for broad spectrum news about Real Estate around the country. There’s a slight bias toward selling some services/books, but the round-up of trends and information is well worth the occasional pitch you’ll find buried in the links

3) www.bloomberg.com has good information from (mostly) market-leading business writers and the basic content is free. I keep my eye on this site for intel specifically from the Fed and other government-based entities that affect the market.

4) www.housingpredictor.com has excellent information about what’s going on in various states. Like Bloomberg (above), basic and useful content is free. If you want to pay for the deeper stuff, go for it!

5) Last but not least, I have to mention the Real Estate News and Commentary Blog at ShortSalesRiches.com, Chris McLaughlin’s website. Great intel there in easily digestible bites.

So there you have it, my Rebellious Readers, a veritable treasure chest of opinion, fact, and perspective on Real Estate around the Bay Area and the country. Go gettem!!

Oh, and one more time, HAPPY NEW YEAR!

Rebelliously,
Larry

BIrd-Dog Profile: Francine S. (w/guest Blogger Joshua Ramey-Renk)

2009-12-30T10:17:00.000-08:00

2009 is almost over, 2010 is just over the horizon, and it’s the time of year to take stock and figure out what we did well, what we’d like to change, and what we’re just glad is going to be “last year” instead of “this year.”

One of the things I’m happiest about is how the Bird-dog program is growing and bringing success to our team. From time to time, I like to highlight people who have successfully brought deals to us here at RE Rebel HQ, and once again I’ve asked Joshua Ramey-Renk of The Farwalker Chronicles to step in as a guest blogger to do the interview and write up the story…take it away, Joshua!

Thanks, Larry! And thanks for the opportunity to make a guest appearance again with the Real Estate Rebel!

Let me introduce you Rebellious Readers to Francine S. Francine holds an MBA from a prestigious university, but that’s not how she’s making money with Larry and his group. I spoke with Francine about how she got into real estate and how she identified the property that Larry’s team is currently moving through the contract process.

“I’ve been interested in real estate for what seems like forever,” Francine told me, “As a means of wealth creation and a way to flesh out my investments. I had done well on a personal level buying and selling my own personal homes over the years, and thought I could do a good job as an actual investor, not just a homeowner. So far, it’s worked out nicely.” She’s also quick to point out that she likes keeping a lot of balls in the air, and real estate is just one of her many interests.

I was very curious about how Francine found the current property she turned over to Larry. The house is in Northern California, while she herself is based in the Los Angeles area. She acknowledges that it’s definitely a bit far out off her beaten path, which is one of the reasons she turned the lead over to Larry. “I got a call,” she says, “From a loan modification expert I’ve gotten to know over the past few years. He was working with a distressed property up north, and the modification process wasn’t going well for the owner. He suggested that a short-sale investor might be a good way to go, and asked if I was interested. It was too far away from where I live and work to think about doing anything with it myself but I wanted to do what I could to help the owner out. I had met Larry at a Real Estate investment seminar and really liked what he was trying to do. Since I knew he focused on the San Francisco Bay Area market and is a good guy, I had no hesitation connecting him with the property owner. As you can see, it’s working out well for everybody.”

Francine told me that networking, getting to know people, and being considered a good problem solver are critical to success in finding properties and building contacts in the industry. Even if the problem you’re solving isn’t one that seems directly related to your own activities. “I once,” she laughs, “Helped a mortgage broker figure out how to get a notarized signature from a man in jail. I wasn’t involved in the deal, but the issue intrigued me.”

You also need to think outside the box to find properties nobody else has looked at. While talking with her, Francine told me about a friend of hers who is involved in commercial real estate. Driving anywhere with him is an adventure, because he makes a point of always going a different route, exploring side streets, and generally taking longer than expected to get from point A to point B.

“But it pays off,” she says, “Often in the least suspected way. Once when we were driving through a neighborhood we’d never been in, we noticed a small hand lettered ‘For Sale’ sign on a little multi-unit complex, something that 99.99% of the people driving by would have missed. My friend insisted on stopping the car and gathering the information from the sign. It turned out there was a messy mortgage structure combined with a messier divorce, and he was able to pick up an excellent property for a significant bargain because the owner wanted it gone as fast and as discretely as possible.”

What other tips does she have for identifying potential properties that would be good ideas to bring to Larry’s group?

“Just keep your eyes and ears open, and be somebody that people think of as a go-to person for Real Estate issues. Even if you’re just a shoulder to cry on, a soft shoulder can mean more to people than all the financial analyses in the world.”

There’s not much more that be said on that front!

Back to you, Larry…

Well, my Rebellious Readers, with success stories like Francine’s being created all the time by our Bird-Dog team, I’m sure 2010 will be an amazing year for all of us.

May 2010 be filled with prosperity, happiness, and good fortune for you and all your loved ones!!

-Larry

December RANT-but not really

2009-12-22T05:12:00.000-08:00

Those of you among my readership know that I like to take one day a month and go on a bit of a rampage. It's my reward for being such a good little rebel (well, if that's not a contradiction in terms) and playing nice the rest of the month.

You've read about my frustrations with policiticians, with bankers, with loan rehabilitation "Specialists", and with crazy people who wait too long to buy/sell/invest etc.

But not this month.

I spent a lot of last month visiting some of the most interesting, inspirational, and above all beautiful places in the world (visit me on Facebook to see pics). I was also reminded that time is fleeting, to all good (and bad) things there comes an end. So I'm in a bit of a reflective and forgiving mood.

And it's Christmas. No matter what your religion: Catholic, Jewish, Pagan, Wongawongan (ok, I made that one up) or even Atheist, it's a great thing once a year to just think good thoughts about people. Say Happy Holidays to your neighbor (even if he hasn't mown the lawn), your banker (even if she doesn't return your calls) and even the customer service people who can't answer your questions about loan modification (hey, they only know the script they're given, and they're tax payers too!)

So, in this world of stress and struggle and fear of foreclosure, I think I'll salute the ultimate rebellious spirit that lies within us all, finding cheer and happiness in the dark depths of winter.

Instead of ranting, I'd just like to wish everybody a wonderful holiday, especially the Wongawongans, and a joyous and bountiful New Year. Stay rebellious, stay alert, but stay positive!!

Rebelliously Cheerful,
Larry

Back on Dry Land-But I Miss My Vacation!

2009-12-16T04:09:00.000-08:00

Temple at Ggantija (older than the pyramids and Stonehenge)

CADIZ, SPAIN

I just wanted to share a couple of pics from my recent vacation. Thanks to all who followed along on Facebook! If you haven't joined me there yet, click on the badge to the left and add me as a friend!

More tips, tricks, and Real Estate Rebellion coming shortly! (I was just reliving my vacation...good times...good times...)

End of the (tax) year tip for Buyers AND Sellers

2009-12-02T03:08:00.001-08:00

OK, my rebellious crew...vacation is over, the boat is back in port, I've slept off my turkey-induced coma from last week, and it's time to get back to work. Especially as the end of the year approaches and we all start thinking of that dreaded season of spending too much money on too many things...no, I don't mean Christmas...I mean TAX SEASON.

So in a departure from my usual split between Buyer's Tip and Seller's Tip, I thought I'd toss out one for both sides.

The last day of the tax year for most of us is a mere 28 days away. If you're considering or in the middle of a sale of property, either as buyer or a seller, NOW (not later, NOW) is the time to talk to your accountant about what the tax implications are between closing before or after Dec. 31st.

The answer, in general, is "it depends." And that's why you need to talk to your accountant NOW. Because in a couple of weeks the Holiday insanity will be in full swing, and nobody wants to be a Scrooge and get their RE Agent out of bed on Dec. 26th in a panic because a deal needs to close in three days or credits will expire (fer instance) and nobody wants to duck a seller's calls through New Year's because they want a transaction booked in 2010 (fer another instance).

So get the question in now, talk to your tax guy/gal, and work with your opposite number (depending on if you're a buyer or a seller), and work out something that works for everybody. And go into the holidays knowing that all you have to worry about timing is the Turkey...the potatoes...the casserole..the green beans...the stocking stuffers...

Stay Rebellious!
-Larry

Location Location Location-Happy Thanksgiving

2009-11-26T22:56:00.001-08:00

Hey Rebels!

I'm taking it slow this week and enjoying the last bit of my vacation, but I did want to wish everybody a Happy Thanksgiving and extend my best wishes to everybody as the holiday season kicks off!

Take a look at this place-gorgeous! Unfortunately, it's on a volcanic island I recently visited, and all the water has to be collected from rain and stored in underground cisterns. Now THAT is Green Architectural design!

I'll be back next week with the kick of for December's tips, tricks, rants and raves!

-Larry

Where are the refinance operations?

2009-11-20T00:14:00.000-08:00

Well well well, the banks are making money again.
( http://www.cbsnews.com/stories/2009/07/17/business/main5167450.shtml )
OF COURSE THEY ARE, we bailed them out.

Remember that? The banks were failing, not just because of toxic assets, but because they made some bad decisions and then some more bad decisions, then they didn’t have the money to cover themselves, but we, with our tax dollars, propped them up and injected financing and kept many of them afloat.

But we did that for a reason.

That reason was mostly to help the American homeowner who, with the economic slump, was struggling with house payments, going into default on their mortgage, and getting evicted from their homes.

So those banks were supposed to do something with that cash infusion. They were SUPPOSED to start lending it again, and to work out refinance arrangements with the people struggling with mortgages.

Now, I’m in the San Francisco Bay Area, and while I’ve seen a lot of new bank signs going up to replace the ones that came down-basically the winners of the government give-aways replacing the losers, I’m not seeing that there are a lot of refinancing operations going full steam. I keep hearing and hearing and hearing stories like I’ve brought up here, poor customer service, refinance departments unavailable or not returning calls, etc.

So I just have one question-when do the banks take some of the money that they’re making again and do the job we-you and I and the other tax payers-have paid them to do?

Anyone?

Anyone?

Hmmm.

-Larry

November's Rebellious Buyer's Tip-Lower Rates, Higher Rates...Survey Says?

2009-11-11T07:31:00.000-08:00

Ok, I think you all know my mantra about not waiting around.

But I'm going to repeat it. And repeat it. And...well, you get the idea, I'm sure.

Rebellious Readers, both you ladies and you (relative) gentlemen, I keep getting the same question from those of you out there who are on the investment side of things. It's some version of this:

"Larry, what's going on in the Bay Area foreclosure market? I've found a place I'd like to buy, but if I wait, there might be a better rate in a couple of weeks. Should I buy now or hold off for a bit??"

First, a reminder. NOBODY has a crystal ball. After all, who could have predicted Britney Spears making a decent comeback?

But I gotta say, that while rates did dip a bit in October, they seemed to climb right back up again shortly. AND, if you know what kind of buyer you are (see my posting from last month about that), then a quarter-point here or there doesn't matter much in the long run. Because remember, we're talking about real estate and short sale investments in the San Francisco Bay Area, and we're thinking about it REBELLIOUSLY.

So, assuming you DO know what kind of buyer you are, then we're talking about having found a place that you either want to hold onto for awhile, or want to turn over quickly, or want to move into. In any case, what your rebellious line of thought should be is:

"Can I afford the payment and still get the kids through college?"

Or maybe, "Can I rent it out and afford the payment for as long as it takes for the economy to rebound, whether that's one, two. or ten years away?"

Because whatever the rate is, is what it is. And if you buy today and the rate drops in a few weeks, maybe you'll be kicking yourself. But YOU WILL ALSO KICK YOURSELF IF YOU DON'T BUY AND THE RATE GOES UP AND/OR THE PROPERTY YOU WANT IS GONE.

Please, my Rebel Alliance, remember that what might go down might also go up, and it's all about what you can afford today and for your foreseeable future. I have met many many many more people unhappy about not having done something in California Real Estate than I have met people who regretted having taken action. So if you're going to play the odds, play the ones that land you a property TODAY at a price that fits both your budget and your buyer type.

Yours Rebelliously,
Larry

BTW-for those who don't know, I'm actually on vacation for a bit, even though I'm still keeping my ears and eyes out in the SF RE scene from away. If you're Facebook users, look me up and add me to your Friend list for pictures and stories from the Mediterranean Cruise that I'm on. But remember...what you see on Facebook STAYS on Facebook...

November Seller's Tip-Don't Forget Curb Appeal!!!

2009-11-04T08:51:00.000-08:00

I know, I know. Why am I blogging while I'm out of town? Isn't a vacation for PLAY, not for work? Easy answer-this stuff is fun and I like what I do. Plus, while I'm waiting for the Bonine to kick in I'd rather have something to focus on...

Like the basics of home selling.

Look, it's not particularly novel or even very rebellious, but it seems that in this market people have moved away from even the basics of putting a home on the market. Even if you're in default and you're hoping for a quick sale to get out from under your mortgage but don't have a lot of cash, you can still do the basics and keep your house in tidy shape.

So do this-

Step outside and go to the other side of the street, and look at your house. Imagine that you DO NOT KNOW anything about the place other than what you see, right there and then. Forget that the lawn is a little shaggy because the kid who mows it is down with swine flu, or that the reason the plants are a little bedraggled is because budgets are tight and you understandably don't have the time to just blow time and money at Orchard Supply any more. Just look at what you see-and really really SEE it from a stranger's eye.

Now, if the first few things you see are negatives (lawn, plants, dirty windows, etc), then I guarantee you that the first thing a potential buyer will see is one of those exact same things, and there are good odds they will go from a potential buyer to a definite NOT-buyer. Even if they overlook a few small things and consider making an offer, you can bet that any deferred maintenance will be brought up as a reason for a lower-than-expected offer amount.

Understand that I'm NOT saying you have to put a lot of money into your place in order for it to sell. If you had a lot of money for a remodel, you wouldn't be looking at a possible foreclosure-it's a catch-22 that I understand well. What I AM saying is take a good hard look and make sure that what CAN be done HAS been done. Is the yard tidy? Is the fence in decent repair? Are the windows clean? Are the blinds open/closed/clean looking?

All of these things can make a huge difference in the initial impression a potential buyer will have of your property. And every one of them can be done without a huge investment in landscaping, painting, or remodelling.

Do what you can, my rebellious readers!!!
-LARRY

Alphabet Soup for the Forclosure Soul...

2009-10-28T08:20:00.000-07:00

Happy (almost) Hallowe’en, my Rebellious Readership!

It’s getting awfully alphabet-soupy out there in the banking world right now. So I thought I’d devote a few serious (relatively) lines to a brief overview of the various programs and what-not which are currently part of the home foreclosure universe.

Ready? Here we go...

TARP: How about we begin at the beginning with the Troubled Assets Relief Program. This was the originally big bail out fund, where banks were supposed to sell their “toxic” assets to you and me (er…the government, with our tax dollars) for a chunk of money, then use that additional money to start lending again. Whether this is working or not is debatable. Really, really debatable.

HASP: The Homeowner Stability and Stability Plan: The first formalized effort of the Obama Administration, aimed at getting homeowner’s payments reduced, with the government guaranteeing some of the risk to banks, ultimately leading to…

HARP: the Home Affordable Refinance Program, within fairly strict guidelines, Freddie/Fannie Mac mortgages can be recast based on the current market value of their home. But if your loan is NOT part of Freddie/Fanny, then you can avail yourself of…

HAMP: Home Affordable Modification Program. Designed for mortgage holders with loans from OTHER than Fannie/Freddie Mac and who are more than 31 days in default, this program was launched this past spring. This program requires banks to re-work mortgage payments based on homeowners current income, and does not require the banks to reduce the capital of the mortgage, but loans are amortized at lower interest rates and can extend for up to 40 years.

CLEAR AS MUD, Right? It boils down to one thing-there are lots of programs out there that banks are able and supposed to be using to modify the mortgages of homeowners who are in default. But, as I’ve mentioned elsewhere, the number of mortgages actually being re-worked is dismally low.

I’d like to hear from you, the Rebellious Reader, about any experiences you’ve had navigating the loan-modification jungle. Drop me a note, visit me on Facebook, or post your comment here.

Alphabetically Yours,
Larry

We were worried about this stuff YEARS ago!!

2009-10-21T09:59:00.001-07:00

I wonder if we ever really do learn from history??

I was taking a look BACK at my collection of articles about the real estate world, and I came across a BusinessWeek article dated Sept 11, 2006. In it, the writer is discussing ARMs and calling them “nightmare mortgages” where “the bill is coming due”. YEP, that was three years ago, and that was BEFORE the most recent crash. The article goes on to talk about the fancy bookkeeping banks were doing to show higher-than-normal profits on these loans and to mask the risk of default. Three years ago, alarm bells were sounding in many similar articles, but this one really puts the problem in a nutshell-you can check it out here.
( http://www.businessweek.com/magazine/content/06_37/b4000001.htm )

And you know what banks and mortgage brokers did? Kept on lending. Kept on issuing ARMs, kept on telling consumers that things would be ok. Pretty much hiding their heads in the sands and hoping that the tremors they were feeling in the financial markets were nothing but bumps in the night.

And what are they doing now, three years later? Well, what they AREN’T doing is much to avoid another round of foreclosures. The Newsweek article refers to loans in 2004 & 2005 that would be coming up for re-adjustment soon. Many of those loans have already gone into foreclosure, but what about the loans that were made in 2006 and 2007, when credit was still cheap and ARMS were still popular?

Yep, that’s right. They’re all due for re-adjustment. In many cases, those loans will re-adjust upward, due to the nature of the then-vs-now financial markets.

You heard me, the loans payments will actually go UP! And that means people who managed to keep on top of their payments will suddenly be looking at not being able to make them.

AND their properties aren’t worth what they bought them for. Of course, there’s nothing new there. BUT, these buyers will actually be in worse shape than the buyers mentioned in the BusinessWeek piece, because these newer borrowers are the ones who bought in at the very top of the market. People who bought in 2004 and 2005 are screwed; people who bought in 2006 and 2007 are ROYALLY screwed.

And how’s the job market looking? I’m not seeing any kind of huge recovery where I am here in the San Francisco Bay Area-how about you? Sure, there are dribs and drabs of profit and people who have jobs are keeping them for now. But here’s a chilling thought-when that BusinessWeek article was published (Sept 2006), the Unemployment Rate in California was 4.8%. That’s right…4.8%.

Three years later, the CA unemployment rate for September 2009 was 12.2%-nearly THREE TIMES what it was when concern was being expressed over the ability of borrowers to repay their loans. (For good, but scary, historical unemployment data see http://www.labormarketinfo.edd.ca.gov/ )

HOLY MORTGAGE-BACKED-SECURITY, BANK-MAN! What are you going to do now that a whole new set of ARMs is ready to blow up your face and there are even fewer people with jobs?

Well, it looks like…not much. As I mentioned before, the banks seem to be having a very hard time actually implementing all the loan modification programs they’ve been instructed to put in place by their newest share holder-the Taxpayers.

So, who the hell knows what’s going to happen when payments go even higher. All I can say is, check your loan carefully, and if your ARM is about to reset, make sure you know what the new rate, and the new payment, is going to be so you can start getting your budget modified now.

Because that’ll be a whole lot more likely than actually getting your bank to work out a LOAN modification for you.

Stay tuned-next week I’m taking a look at the various programs in place for loan-modification. AND I’m having alphabet soup for lunch (TARP…NAMA…HAMP…)

Rebelliously,
Larry

Buyer's Tip-Take a Look in the Mirror...

2009-10-14T05:33:00.000-07:00

If you're considering buying a home in today's crazy market, I would encourage you to think carefully about what kind of buyer you really are before jumping in. With the chaos that I'm seeing in the Bay Area and beyond, there are fantastic opportunities to make some great deals, but that ALSO means, and I don't want to be too crude (I have a reputation for subtlety and finesse to maintain, after all ;), that there are tremendous chances to really screw yourself up.

Here are the three types of buyers-where do you fit?

WHOLESALE Buyer (WB)-
This kind of buyer buys low and looks for a quick turnaround. A WB needs to obtain a property in good condition that can resell fast, at a profit, and in some cases has a buyer lined up before the title transfer goes through. In this kind of market, buying like this can be tricky because many properties available through foreclosure will need significant updating/fixing before they can be sold on. A Wholesale Buyer needs to offload properties quickly and needs a good network of potential buyers in order to turn around a property as soon as possible. There are good bargains available, but you have to have a good eye and really understand the pluses and minuses of a given house before moving forward, or you can be stuck with something that has no appeal to the next buyer.

Investment Buyer (IB)
An IB buys and plans to hold the property for awhile. Maybe he'll rent it out, maybe she'll spend a chunk of change to update and modernize an older home and recoup the money in a few years when prices rise. IBs will need to have good down payments (see my earlier post about cash becoming king again). If this is the kind of buyer you are, you must have firm financial footing to be able to support the initial cash outlay plus on-going charges. If you want to buy and hold, this is a good time for that if you're ready to play landlord or are able to pay for remodelling out of pocket with no need for additional loans in this credit-tight market.

Retail Buyer (RB)
Call him a family-guy, or call her a modern woman...but this buyer is looking for something for themselves. If you work smart, you can take real advantage of what's going on right now. First, have a very very good sense of your finances and what you can afford to pay, not just right now, but in 5, 10 or even 15 years from now. Don't count on a home's value skyrocketing and your mortgage becoming a giant ATM machine to pay for college for your kids or the automatic refinance option in a couple of years. And even though cash is becoming king again, if you don't have the $100K+ that might mean in the SF Bay Area housing market right now, there are some good options to explore, especially as more and more sellers are getting creative (in a good, REBELLIOUS way, not a scheming high-commission, pass-the-risk-on mortgage broker kind of way). I'm seeing lease-to-buy deals happening, I'm seeing co-signing becoming big again, and I'm even seeing some private sellers willing to work with mortgages that are amortized over a few more years than normal to keep payments rational. Lastly, stop thinking of your home as an investment that you'll cash in some day-start thinking of it as a place you want to be, where you want your family to be, and where you want to stay for awhile.

So, yeah, today's market is crazy. It seems like loans are tough to find, foreclosure properties carry high risk, and maybe you'll have to sit on what you buy for awhile. But, if you know what you're looking for, and you REALLY have a good idea of what kind of buyer you are, then you can surf the chaos like a pirate ship riding a wave.

Buy Rebelliously!
Larry

October Seller's Tip-Are You Counting on Loan Modification?

2009-10-08T10:36:00.000-07:00

I've been saying it, but I think it bears repeating-if you’re the owner of a distressed property, and you’re hoping loan mediation/moderation may be the way to go to get your loan down, you may need to think again.

Recent data from the National Consumer Law Center suggests that loan servicers are in no hurry to actually do much to help modify a loan. The report confirms something that I’ve been talking about for awhile-there isn’t really much incentive for banks to actually bother to work on modifying a loan with you. The reports was brought to my attention because I keep an eye on anything that cover the California real estate market, which was one of the areas examined by the NCLC. Basically, the loan modification guidelines mandated by the government have no teeth, and the way the programs are implemented make it very difficult to jump through all the hoops. And I don’t mean financial hoops-I’m in FAVOR of requirements that help insure the soundness of a buyer's financial background. In this case what we're seeing are procedural hoops (red tape, bureaucracy, whatever you want to call it). The report goes on to recommend MANDATORY loan modifications-meaning the government will require lenders and mortgage servicers to work with borrowers in a timely manner. To read the report for yourself, follow this link http://www.consumerlaw.org/issues/foreclosure/index.shtml

But believe me, if the day ever comes that the current loan modification "guidelines" become "rules" with some teeth, it will be too late for many homeowners facing their foreclosure crisis TODAY. If you're in that situation, it may be time to explore all your options.

Rebellious Regards,
Larry

A Rather Convenient Truth...

2009-09-30T07:52:00.000-07:00

It just gets weirder and weirder.

Each time I think that the mortgage companies and banks can’t get any more creative I find out something new. We all saw the rise of No-Doc loans, stated income loans, loans at 125% of value, etc; all of those were odd enough, but they were sort of, well, standard-weird.

Now it’s just gotten spooky.

One of my bird-dogs (see a previous post for a definition) recently talked to me about something that’s going on with the loan modification program. We’ve all been hearing about how well that program is NOT going, but here’s a new twist. It’s called re-capitalization.

Now remember, I’m not a big banking analyst, so I encourage you to take a look at this stuff on your own and make your own conclusions, but this stuff really making me think, so I figure I should get it off my chest and over to you, my rebellious entourage. In a nutshell, recapitalization is a way for banks and mortgage companies to hand-off their risk onto somebody else, this time via the Troubled Asset Relief Program (TARP) by taking all the fines and penalties and overdue $$ a homeowner owes and bundling it up into something that you and I (um…I mean the government, with our money) will buy up in order to bail them out.

Here’s how it works.

As it stands, TARP will only buy up the toxic asset at the value of the principal-the money the homeowner owes, net of penalties, late charges, fees, etc (which can run into the tens of thousands of dollars). Now, those items are important parts of a bank’s revenue stream. So how can a bank get TARP to reimburse them for all those fees that right now, they just have to eat?

By making a new loan to the homeowner, that’s how. And by making it a condition of the loan that all of those fees, late-payment penalties, etc, are now part of the CAPITAL, the amount of the mortgage. It then becomes one clean amount that TARP will happily spend your money on for you.

BUT wait-why the heck would a homeowner agree to that, you ask, with a rebellious look on your face and sharpening your cutlass, ready to cut away a bunch of financial BS.

After all, that new loan is a “modified” loan, offered to the homeowner at a lower interest rate designed to give them payments that are more affordable. It’s for a trial period, to see if the homeowner can make the new payment better than they were making the old payment. Exactly what the loan modification process is supposed to be doing.

So, at face value, the bank is doing everything it’s supposed to due to help out homeowners in trouble, via the loan modification programs. Right?

NOT!

Because the modified loan with the reduced interest rate is for a limited time (around 6 months is what I’m seeing). And part of the deal, is that at the end of 6 months, a new loan is created that encompasses all the outstanding interests, penalties, etc, and another NEW interest rate-usually HIGHER than what was being charged during the “trial period”.

So, the homeowner (who was struggling with the original amount due), now has a BIGGER mortgage than they started with, at an interest rate HIGHER than what they were offered as a trial, and which they will most likely go into default with AGAIN.

But the bank…ah, the BANK now has one nice and tidy mortgage that they can show to the government and have it bought up under TARP with our money. They win. The homeowner loses, you and I lose, the whole system loses.

Now, as I’ve mentioned, I do a lot of work with banks and mortgage companies and I don’t really believe that there are little banking trolls sitting around board room tables inventing ways to screw over their customers.

All this just seems awfully convenient.

That’s all I’m sayin’!

Sheesh! I feel better now.

Stay Rebellious!
-Larry

Jermaine Makes Money! (Guest Blogger)

2009-09-16T12:00:00.000-07:00

The Real Estate Rebel Sez:

This is a guest blog written by a colleague, Joshua Ramey-Renk. I asked him to talk to one of my “Bird-Dogs” to find out more about her success as part of my team. I know Real Estate…Joshua knows how to tell people’s stories…this “Bird-Dog” knows how to spot a property…read on…

Jermaine Jenkins knows how to recognize an opportunity. Jermaine is part of Larry’s extended network of “Bird-Dogs”: people keeping an eye out for property owners that may be able to use his services to work through a short-sale. Not too long ago, Jermaine, who isn’t a real estate agent but has a good eye for properties, earned a nice Finder’s Fee by identifying an opportunity for Larry and his team. She did this just by talking to a potential seller about their distressed property and making the referral. She knew that even though the property wasn’t something a Real Estate agent could do a lot with from a marketing perspective, she could help the sellers by connecting them with Larry.

“The occupants were in default,” says Jermaine, describing the problem. “The property needed a lot of work, so a standard real estate agent listing wasn’t going to be an option, especially with the owners facing foreclosure and clock ticking. But I know that Larry’s business is helping people who are stuck in the pre-foreclosure madness, and I gave him a call.” Jermaine knew that Larry would treat the owners with respect and courtesy, and that, as an investor, Larry and his team could help navigate the short-sale process with the seller’s dignity intact.

I asked Jermaine how she found the potential sellers. “I was looking through the list of pre-foreclosures in my county, and calling on them to see if they were interested in getting some help. To be honest, I got a lot of hang-ups and some fairly rude responses, but on this particular property, the owners’ son answered the phone and was very open in talking with me.”

Jermaine felt that the property would be a good match for Larry and his team. And of course, she got some cash in her pocket too. “It works on two levels,” she says. “On the one hand, I like the referral bonus that Larry pays when an owner decides to put his property on contract, but I’m also really happy to have been able to help out some people in a tough spot. They got out from under the property, I got a spiff, and Larry got a lot of leg work done for him identifying a potential property. I think we all win.”

What advice does Jermaine have for people interested in working with Larry like she does? “First, make sure you know what Larry’s looking for,” she says. “Second, just start digging!”

The Real Estate Rebel sez:
She’s absolutely right! For more information about how to make money in Real Estate like Jermaine did, drop me a note! For more from Joshua...check out http://www.thefarwalkerchronicles.blogspot.com/

BIRD DOG 101

2009-09-09T12:00:00.000-07:00

Ok, really this is Bird Dog 101A-"What is a Bird Dog". We'll get to the 101B-"How to Be a Bird Dog" later on...as needed.

Bird Dogs are the CORE of what it means to run a Real Estate Rebellion. These are people who want to make some money in real estate, who know their neighborhoods, know how to learn to do some basic research, and make cash by identifying homes that fit into my Rebellious activities. They are not Real Estate Agents, they don't lose out by refering a property to me, and they don't need to have any kind of special license. They just need sharp eyes and an understanding of what we're looking for.

A Bird Dog (BD, for simplicity), keeps an eye out for properties that are looking at foreclosure and could benefit from talking with a Short Sale person (like me and others on my team). They then refer the property to me and my team, and if the owner agrees to work with us for a short sale contract, the clever BD who spotted the deal and brought it to my attention gets paid.

Even better-

They might get paid TWICE! (more on that later...)

Simple enough? In the next couple of days, check back here for the story of Jermaine J. Her story of finding an East Bay property for us is a great example of how to make money in real estate without being a real estate agent, investing your own cash, or even having an office!

Oh, did I mention that I'll teach you most of what you need to know to identify properties for us? Silly me.

I'll teach you almost everything you need to know to identify properties for us.

The only thing I CAN'T teach you is how to have the drive and desire to put the energy in. If you KNOW you've got that, drop me a note and we can talk more about how to be a BDFR (Bird Dog for the REVOLUTION!).

Rebelliously,

Larry

September Buyer's Tip-Work with an expert to get the edge

2009-09-02T15:12:00.000-07:00

Last month I talked about the advantages, for a seller, of talking to a short-sale expert as soon as things get rough and they're in default. There's a flip-side to that idea that I thought I'd bring to your attention this week.

This is one of the best rebellious tips I can give a buyer in this market, especially somebody looking to buy a home for themselves versus an investor looking for a portfolio property (although the idea certainly applies):

If a property shows up on the MLS or with a "For Sale" sign, you may already be too late for the party! Sad but true.

Once the sign goes up, it's like blood in the water for buyers of all types. And a lot of times, if you are looking at the same property that an investor is looking at, you are going to have less cash, less credit, and a weaker bargaining position.

BUT...

What if you do what one of my clients is doing? Let's call him...Ronnie Rebel.
Ronnie is looking for a few of things for his family:

A good school for his kids
A safe neighborhood with good opportunities for outdoor recreation
Close proximity to his work because he likes to ride his bike
Getting all that within his budget

Ronnie is NOT so concerned with:

Finding his "dream house" with the spiral staircase and the built-in outdoor jacuzzi
Waiting until the "perfect" place comes along
Having a brand-new house
Paying a premium for the "right" address

Ronnie is my kind of Rebel.

Ronnie came to me and told me what he was looking for, and mentioned a couple of neighborhoods that he liked. I mentioned it to a couple of my Bird-dogs (don't know what a Bird-dog is? Stay tuned for an upcoming Topic on how to make money in Real Estate WITHOUT being a Real Estate Agent) and they did some digging and located a couple of places whose owners were looking at default and are talking about the short sale process with those owners...if one of them is interested in working with us for a short sale, Ronnie definitely has the inside track. Because he is looking at buying a property that will never go on the market and never have a "For Sale" sign attracting a bunch of potential competitors to the sale.

So, be like Ronnie: invite a short sale expert in early when you are considering buying a property and want to take advantage of the best bargains out there.

Yours (and Ronnie's) in Rebellion!

-LARRY

OOOOhhh that makes me mad...(aug rant)

2009-08-10T08:44:00.000-07:00

"Loss Mitigation Specialist" is what this guy's title was. He worked at the bank we were working with to get a short-sale approval before a property went to foreclosure. I'm not sure who designated him a "Specialist", but it was clear from the outset that he was just reading off a script, didn't actually specialize in anything. Our experience with him and his bank just re-affirmed for us our concern that there isn't a whole lot of committment to helping people who are in default and trying to work through the process diligently and honestly.

Granted, this was a tough situation-there was a tenant in the property who was making it difficult to show the property and get our inspectors on-site, plus rent was in arrears, and we had to go back to the bank to get an extension before they sent the property to auction. The "Specialist" we were supposed to be working with was almost impossible to reach, and when we did talk to him all we got was scripted answers with no regard for the fact that this was a situation nobody could have planned for. We got closer and closer to the deadline and the auction loomed.

We tried for weeks to get an extension. I can't tell you how many messages we left (you'll remember from previous posts-as an investor, I almost always get my call returned from banks who are serious about business deals). Finally, at 5:30pm on the Friday before the scheduled Monday auction, we got a-hold of somebody and got the extension. We had done all the right work on our end, including arranging to get the tenant off the property, and yet this house very nearly went into foreclosure when it didn't need to. And the price we had already negotiated with bank was significantly higher than they could reasonably expect to get at an auction.

The whole thing made no sense, in terms of the banks ability to recoup as much money as possible, in terms of the effort the seller was going through to make things work out, and our own up-front negotiation. But all this "Specialist" saw was that an auction had been set and that was it, period.

So...

Was this "Loss Mitigation Specialist" just a green recruit?

Was he following orders?

Was the bank overwhelmed and understaffed?

Frankly...I don't care. I've had a lot of really good experiences with banks, but frankly I've ALSO had a lot of experiences like this one. The banks have gotten a lot of support from us as taxpayers, and they need to step up their staffing and training. I wish I could say it was just this one guy, but there are a lot of jerks filling "Loss Mitigation Specialist" roles, and they are costing their employers clients, reputations, and worst of all (in banking terms), cash.

C'mon banks, get your people trained and empowered!

To my readers-Stay rebellious, demand better treatment!
LARRY

Sellers Tip for August-Find a short-sale expert early

2009-08-10T08:40:00.000-07:00

I would never tell anybody to miss a payment, go into default, or willingly stare foreclosure in the face. What I will tell you is this:

If it's happening to you, get real about it. And get real, REAL fast. This will be one of the hardest times of your life. Having somebody to shepherd you through it can help ease your stress levels and help keep your credit score as healthy as possible. You also need to understand all your options before you have them taken away from you.

And while I'm good at what I do, I know I don't have all the answers (there's that dang honest streak again), but I bet among our readers we've seen just about every situation possible. So, post your dilemma's and questions, and I bet somebody from our Rebellious Readership will have some advice.

Buyers Tip for Aug-if you want to DO the RE Boogie, prepare to Get (some) Down (payment, that is...)

2009-08-10T08:29:00.000-07:00

My Buyers Tip For This Month: Down Payments are back, so prepared!

And I hate to admit it (well, actually, I'm perfectly happy to admit it), but I'm glad.

If you're an investor, you should actually have some risk in your investment. That's what keeps old Mr. Smith's Invisible Hand working in the market place. As investors, we should take risks that are commensurate with returns. Without that, prices rise with no basis, people jump in and out of the market for no good reason but quick returns, bubbles get created, economies crash, and suddenly schools in Scandinavia are struggling because of mortgage defaults in small towns in the US. As Bill Murray says in Ghostbusters, "DOGS AND CATS, LIVING TOGETHER!!! MASS HYSTERIA!! " Unbelievable.

And you're looking for a home for your family versus a flip or a rental property, I think it's good news too. When down payments are required, you only buy the amount of house you can actually afford over time. And, there's less of a tendency to treat your house as a giant ATM machine. So people tend to keep expectations rational and prices tend to stay more realistic (I don't think a 2-bedroom condo would have hit $600K in most Bay Area cities if people had to have $120,000 in cash to get one...)

So get ready for it, Buyers, because having a decent credit score and unlimited optimism about the market is a thing of the past (for now). Investors should be thinking about 25%-35% down, and a retail buyer should be thinking around 20%. Believe me, we'll all be better off for it!

Rebelliously,

Larry

A GREAT show on the state of Bay Area Real Estate

2009-08-10T08:25:00.000-07:00

http://www.kqed.org/epArchive/R908070900

And as I've been saying...NOBODY has a crystal ball...

Seller Reality Check

2009-07-22T09:43:00.000-07:00

The Housing Market’s getting better

The Housing Market’s not going to recover

The Housing Recovery already happened

We’re nowhere near the Bottom

I’ve been hearing every possible outlook projected by the so-called experts when they talk about what’s going on in Real Estate here in the Bay Area (And the country, for that matter). So what’s a seller supposed to believe? What should a seller do? Wait? Sell? Pray? Have a drink? (well, I’m always up for that, but it may not be helpful in this case)

Honestly, I don’t have a good, general answer. But for people who need to sell, who are facing foreclosure or are looking at a short sale, I do have one piece of advice:

Have realistic expectations about selling your property.

We’ve all felt the sting of the steep decrease in housing values, but it feels especially sharp when you realize that you’re going to HAVE to sell and you have to sell soon. You are going to have a much easier time of things if you accept that no matter what the market MIGHT do later, TODAY you have to get out of your mortgage. And it might hurt. If you have an offer that is much lower than you’d hoped, but it will get you through this crisis with your credit largely intact, it may be time to put aside your sense of “if only” and accept “what is.”

Also, think about the difference between emotional value and dollar value. This is especially difficult if you’re selling a family home. A buyer is going to be looking at how well THEIR furniture will fit in a room, not how much fun you and your kids had picking out the paint colors. A buyer also may not care about the yard that has great shrubbery that your husband trims into the shape of a fish every year, or how much you love that funky old kitchen sink.

I know this sounds harsh, but I promised you all honesty. And the most honest thing I am telling sellers right now is to be straight with themselves about how much their property is worth, and maybe take some time to consider the tough news in addition to the rosy potential described by that listing Agent who promises you the moon but can’t seem to line up a buyer. If it isn’t moving, there’s a reason. And it’s probably the price.

Yours in HONEST rebellion,

Larry

Do you have stories about your expectations and your reality colliding? I’d love to hear about them! Drop me a line and maybe we’ll feature your story in a future Real Estate Rebel Case Study.

HEY BIG BANK-REMEMBER WHO YOUR CUSTOMERS ARE!

2009-07-15T10:09:00.000-07:00

How many times has this happened?

Ring ring
Ring ring
Ring ring

“Thank you for calling Big Bank, Inc. Your business is important to us! Press 1 for…”

For the third time.

OHHHHHH that ticks me off. Not that people or companies use voicemail-that’s just part of the modern world-what ticks me off is the banks and mortgage companies who have nothing BUT voicemail on the other end of the phone whenever you call. And who don’t call you back after you leave a message for the third time…or the fifth.

If you’re a customer trying to get your loan reworked or trying to do something to forestall foreclosure, working with the banks today is an absolute nightmare!

I’ve been lucky, being on the investor side of the short-sale and foreclosure transactions that I take part in, banks tend to return my calls. But many of my friends and colleagues here in the Bay Area have been sharing horror stories with me about their experiences with trying to reach their banks or mortgage companies to work on modifying their loans or trying to get something worked out BEFORE they go into foreclosure. And these banks have GOTTEN MONEY from all of us, in the form of government bailouts, to do exactly what they are avoiding doing by sending these callers into voicemail hell, and by not following up and returning calls.

What makes me mad is the total lack of respect this shows that many banks and mortgage companies have when it comes to their customer. I think it’s ridiculous that YOU, the person who bought their product (a mortgage, a line of credit, whatever), doesn’t even rate a return call when you are reaching out to them. Have they forgotten that you are a buyer who may be in difficulty today but down the line will have return business? It’s not like you don’t have a whole lifetime of profitable banking relationships to be had!

Even if your home goes into foreclosure, eventually you’ll rebuild your credit, buy another house or take out a student loan or open more credit card accounts-all business that Big Bank will spend billions in advertising to try to get from you. But they won’t return a phone call…or five phone calls…when you need some help today…and that could ensure your loyalty tomorrow.

THAT IS JUST RIDICULOUS!

I’ve even been hearing stories from the national stage about this, which means it’s not an isolated thing for a few people. I can’t even TURN ON THE RADIO with hearing an NPR story about people who have been trying for months to get their bank to work with them BEFORE they go into foreclosure but they just get voicemail and customer service “hold” muzak again and again. Even the Federal Government has noticed-a few days back Treasury Secretary Geithner sent a letter to batch of mortgage companies insisting that they step up their programs for re-working troubled loans.

I’ve been a businessman for more years than I care to share, and I’ve had to make tough decisions and handle all kinds of financial issues. I’ve had to cut off lines of credit and send customers into collection. But I can’t imagine running a business where one of my customers, even one who owed me a lot of money, wouldn’t get a return call to work out their account issues, ESPECIALLY when that customer was calling me to get ahead of any problems they saw on the horizon. And no matter what, my customers have always gotten the respect and consideration from me that any human being deserves.

Come on Big Bank! Remember who put all those profits into your pockets in the good times (heck, just remember who’s paying for your bailout TODAY, in the tough times) and step up to provide the customer service you always promised.

Sheesh.

To my fellow rebels-
If you’re looking at foreclosure, I’d love to hear your bank horror stories-drop me a line or post up in the comments section. Remember, even if you’re a customer of a bank looking at foreclosure, you’re STILL a customer and deserve respect and consideration.

Stay rebellious!!!

Larry

July Buyer's Tip-Just DO it!!

2009-07-07T22:44:00.000-07:00

I get asked a lot of questions from potential buyers of short-sale real estate in the SF Bay Area about timing and what's going on in the market: "Is it going up?", "Is it going down?", "I found a good deal, should I wait and see what happens? What if the price drops even further?".

So here's my Buyer's tip for this month-JUST DO IT!

If there's a property that you're interested in, and it's a good price and it meets your criteria (are you buying a place to raise your kids? Something to fix up and sell in 5 years?), go for it! Sure, the market might keep sliding and you can pick something up in 3 months for a little cheaper than today, but it's equally possible that the particular property could get snapped up, or the economy could get turned around.

You should make a buying decision based on what IS, not what MIGHT be. I saw a sign in an antique shop down in Pacific Grove the other day that said "The treasure you see today might not be here when you come back next week." I believe that principle wholeheartedly. I also believe that for every time one you Rebellious Readers of mine has said, "I'm glad I waited" at least two more of you have said "Dang it! I shoulda jumped on that deal when I had the chance!"

I'll add one caveat to this-I'm assuming that, no matter what your buying reasons are, you're making a CONSIDERED business decision. For instance, are you sure you have the cash or talent to fix the plumbing in that reposessed property? Are you certain you can live with that yard that's a little smaller than you'd like? Can you actually afford the payments on that place you're planning on flipping if you can't resell the house down the road?

If you're looking at your purchase with eyes wide open and a sound reasoning, and all that's holding you back is a case of the "what if the price goes down a little later?" blues, then make like a pair of Nikes and JUST DO IT!

Rebelliously Yours,
Larry

5 Questions for the Real Estate Rebel

2009-07-01T08:35:00.000-07:00

Since launching the Real Estate Rebel, I’ve gotten a lot of questions about exactly what I’m up to. I’ve taken the liberty of consolidating those questions and their answers below-enjoy!

Q: Why did you launch the RE Rebel project?

A: I saw a need in the market for buyers to get out from under properties and for banks to start being realistic about how to handle distressed properties. There aren’t really any realtors out there who understand both sides of the distressed property equation. Homeowners want to save their credit rating and be treated well as they go through a difficult time. Lenders want to receive a payoff based on the fair market value (FMV) of the property. Short sales seem to be the only way to get both the lender and the homeowner out from under a house with a negative equity position. These are complicated transactions, both from a business perspective and the emotional side.

Q: What can we expect from your commentary?

A: Honesty. I think that both buyers and sellers of distressed properties can use a reality check. The Market is tough, but that doesn’t mean that your credit score has to be destroyed and it doesn’t mean there aren’t good deals to be had. My job is to make sure everybody is on the same page. I think we get a lot of mixed signals about where the economy is headed. I don’t think we, as buyers or sellers, should believe much of anything out of Washington (or Wall Street, for that matter), when it comes to making a property decision. The world of politics and the realities of the economy don't mix as well as they pretend to, so I’m trying offer a solid reality check in the market and how it impacts selling your house or purchasing a property.

Q: What are you seeing in the market right now?

A: Interest rates are inching up, but prices are still sliding a bit. So much depends on your unique situation that there’s not much I can say on this front. It’s not about the Dow going down or the Stimulus package getting approved, it’s about your individual needs (as a seller) or specific financial objectives (as a buyer).

Q: What markets do you primarily keep an eye on?

A: My focus is the California Bay Area and other California markets, but I’m keeping an eye out all over the country. The issues we’re seeing here aren’t unique, and I think my rebellious approach can work in just about any market.

Q: Isn’t buying low and selling high just good business? What makes you a Rebel?

A: I have to go back to my answer to #2: “Honesty”. I’m not out to low-ball anybody or to squeeze every last nickel out of a property. It’s like that Dudley Moore movie about the ad executive who has a nervous break down and then rebuilds his career with help from his fellow patients at the mental hospital. My favorite quote from the movie comes from the campaign that the Dudley Moore character creates for Volvo, “Yes, they’re boxy, but they’re SAFE”. Just being straight forward seems to be awfully unique in today’s world.

Here’s an invitation to all my Rebellious Readers (RRs): I want to make sure that both buyers and sellers distressed properties get value from what I do. I’m inviting people to post questions to this blog any time, and I’ll get some straight forward answers out there for everybody’s benefit. Please feel free to send me anything you’d like me to comment on. Also, check out our current inventory at www.sterlingedwardsrealty.com

Stay Rebellious!
-Larry

HR 1728-Keep your hands off MY risk!

2009-06-18T09:55:00.000-07:00

House Bill 1728: Keep your hands off MY risk!

For those of you out there who invest in real estate on your own, LOOK OUT for HB 1728. While it’s titled “Mortgage Reform and Anti-Predatory Lending Act”, it also places a significant road block for the individual real estate investor. I’m not going to dissect the Bill (www. http://www.govtrack.us/congress/billtext.xpd?bill=h111-1728), nor do I disagree with the Bill’s stated goal of ending predatory lending, but the RE Rebel in me can’t accept a key provision: the Bill limits how often I personally can provide owner-based wrap-around financing (if you don’t know what that is, Google it) to a buyer of one of my own properties. According to the Bill’s provisions, I can only make a wrap-around mortgage once every 3 years. WHAT??

Don’t get me wrong-I’m as ticked off as anybody at the mortgage scams that brought us into this current crisis. But this Bill goes too far. The problems didn’t come from individual investors taking calculated risks, it came from companies creating enormous portfolios of high-risk loans, then other companies buying up those portfolios. At every step the risk got bigger and the originator of the loan passed that risk along to the new portfolio buyer. Much of the pressure to build these portfolios came from commissioned sales people who carried no personal risk, but collected high commissions and then headed for the hills (or the Club Med, or the Porsche dealership)

HB 1728 won’t stop this. But it does stop me, as a rebellious investor who takes risks with my own cash, from making calculated business decisions. If I help a buyer to get into a property using a wrap-around, and then that buyer defaults, it’s MY credit rating and MY money that suffer. That’s my call, not the US Congress’.

It’s bad for buyers too! It cuts off another source of financing for people who have less than perfect credit and/or who can’t find a 20% down payment. For those of you reading this in other parts of the country…in the California Bay Area a 20% down payment on a CONDO is about $100K. How many of us have that kind of money just stashed away? An owner-financed wrap around mortgage from a seller like me can help good people gain the American dream.

Sheesh! It’s like throwing the baby out with the bathwater! The Bill has already passed the House and now sits in the US Senate-let’s keep our fingers crossed that the Senate manages to keep the good stuff in and toss this provision out the window!

Yours in Rebellion,
Larry

What does the Real Estate Rebel do?

2009-05-28T18:53:00.000-07:00

“May you live in interesting times”-Ancient Blessing (or curse)

Lets face it-these ARE those “interesting times”; they’re here, and we’re living in them. That means there are both extraordinary opportunities and unexpected pitfalls. Today's real estate world abounds with phrases like "Loss Mitigation", "Short Sale" and, of course, FORECLOSURE.

When you are buying or selling a distressed property in these times, you’re making some of the most important decisions of your life. Our goal is to keep you informed of the trends in our local markets, and with property values fluctuating so much in recent months, our expertise can help you make sound decisions.

If you are a buyer, our goal is to provide you with the ideas for investing in distressed property, in the fastest and most modern way possible. With market conditions being what they are, you need the best information quickly to beat the other investors to the deal. We invite you to subscribe to our blog for the most rapid and complete updates on properties for purchase.

If you are a seller, we want to work with you to get the best deal for your home. We understand that tough economic times have forced many into situations they never expected to be in. Our experience in bank negotiation and stopping foreclosure means that you get treated with the respect you deserve in a time frame that works for you. Our team will work with you, negotiating with your lender(s) so you have somebody on your side during a difficult process. By subscribing to our blog, you can get updates on market conditions, ideas to assist you during this crisis, and more.

Thanks for visiting us-look for much more over the coming weeks.