I have been seeing on the news quite a bit lately how the economic recovery is underway (I read something about Green Shoots months ago now, so logic dictates we are on our way to recovery, right?) but I am still being asked the question of “So what exactly is keeping me current on my mortgage?” more than just a few times a week from people living in many different states, not just here in Arizona.

http://www.flickr.com/photos/dr_j0nes/354386695/

Consider a local business leader here in Arizona who posed this question earlier this week as he thought about this problem. Derek is a local community leader, small business owner and has an abnormally large dose of common sense loaded into his neocortex:

The above person might qualify for the Obama 125% refinance plan, but at best that might only make their payment $1300/mo.  Not to mention that the banks are not just making the refinances happen.  They refuse to live up to their side of the bailout.  If instead a plan was in place to force lenders to readjust principle balances (not interest rates) to a point where the home owner was not completely underwater then perhaps the home owner might full well consider staying in their home.  At this point, I think someone in the above situation has NO SENSIBLE reason to stay in the home.  They have far more to gain crushing their credit and walking away.

Regardless of your loan amount, if you are having trouble making your mortgage payments and contact your lender about what your options are, these are generally the options you have in front of you:

• Continue paying as agreed
• Apply for a loan modification
• Start the process of doing a short sale
• Negotiate for a deed-in-lieu of foreclosure
• Foreclosure

If your loan balance is below 417,000, the Making Home Affordable plan has pretty well outlined what can and cannot be done. You can read through it (or hire help if needed) and know what to reasonably expect as an outcome. But keep in mind, each situation will be different – and each outcome will be different.

And if your loan balance is above $417,000 – this means that there is not currently a standard set of guidelines as to what to expect – which means anything can happen.

Regardless of what your loan amount is – or what your overall personal financial situation is…

I haven’t seen a plan that can help you if you find yourself in a situation where your house is worth 50% of what you bought it for and you now owe 150% or more of what it is worth.

But I will keep you posted if I hear of anything.

About the Author: Justin McHood is a mortgage broker with VanDyk Mortgage Corporation. You can find him at Arizona Mortgage Team, on the Zillow’s Mortgages Unzipped Blog, and at most East Valley Friday Nights gatherings. He’s the one in the blue shirt.

Here I am, sitting in a San Diego hotel room at 4:00 in the m0rning, weeping like a baby…

Just a few hours ago, the Highland High School Marching Band won first place in the Arizona State Marching Band Championship!

My daughter Lauren is a member of that band.

I just don’t have the vocabulary or the writing skills to  express how proud of her I am, and how sad I am that I wasn’t there to witness it.

She and her band mates worked so hard for this championship.

Two hours from now, give or take a few minutes, will mark the one year anniversary of the tragic and senseless death of my daughter’s band mate, Kelly Tracy.

Those that have read here for a year on Phoenix Real Estate Guy may remember that around 6:00am on November 15, 2008, Kelly Tracy – just 16 years of age – was killed by a drunk driver when she was minutes away from joining her band to march in the Gilbert Days parade.

That day was, without doubt, the most emotional day of my life.

My wife Francy and I were volunteer “band parents” the day Kelly was killed and words can not come remotely close to describing what we felt that morning, as we stood in the band room surrounded by 150 kids when they were informed their friend had been killed.

As painful as that day was for us, and trust me it was agonizing, it pales in comparison to what the kids went through and was nothing remotely close to the pain the Tracy family has endured.

And yet, here we are – just one short year later, almost to the day Kelly died – and the band wins an Arizona state championship. On the same field where they marched last year on the day of Kelly’s funeral.

I am not an overly spiritual person, but it’s hard to imagine that Kelly wasn’t looking down from heaven last night, urging her friends on.

And they won. They are state champions!

I know for a fact that Kelly’s friends have not forgotten her.  They overcame the sadness from the loss of their friend, and amongst very strong competition, they won a championship. I wouldn’t be surprised if Kelly was doing back-flips in Heaven when the results were announced that her band were the state champions.

Lauren, I am so proud of you and your friends. I know how hard you all worked for this, and I’m sorry I wasn’t there with you when you won. Of course nothing will ever remove the pain of losing Kelly, but I assure you that she marched with you last night, and she is thrilled beyond belief. Congratulations sweetie!

For more on Kelly and the legacy she leaves behind, read this article from yesterday’s East Valley Tribune – and bring a box of Kleenex..

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Real estate bar camps are an held in an “unconference” format where some of the best and brightest come to share, laugh and learn.

On November 12, prior to the National Association of Realtors annual Conference and Expo in San Diego, approximately 400 real estate professionals from across the country gathered for just such an event…

Many more photos available on Flickr.

Please consider donating to Mothers Fighting for Others.

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For my Dad, Chaplain (COL) Jim Thompson, USA,  Ret. and all who have ever served.
Thank you, from the bottom of my heart.

It is easy to take liberty for granted, when you have never had it taken from you. 
– Author unknown

In war, there are no unwounded soldiers.  – José Narosky

I think there is one higher office than president and I would call that patriot.  – Gary Hart

Courage is almost a contradiction in terms.  It means a strong desire to live taking the form of readiness to die.  – G.K. Chesterton

America’s veterans have served their country with the belief that democracy and freedom are ideals to be upheld around the world.  – John Doolittle

This nation will remain the land of the free only so long as it is the home of the brave. –Elmer Davis

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Spend much time on real estate blogs, internet message boards and the like and it won’t take long to hear Realtor Bashers making wild claims about over-paid real estate agents.

And while it’s true that one can make very good money in real estate sales, the simple fact is the vast majority of real estate agents actually earn very little.

Here is some data that was shared by the Arizona Regional Multiple Listing Service (ARMLS) in a “Broker’s Breakfast” this morning. Apply a little simple math, and it highlights what real estate agents typically earn, at least here in central Arizona (though I suspect the numbers are similar across the country).

Some facts:

• At the end of 2008, there were 33,500 agent subscribers to ARMLS.
• 20,466 of those agents (61%) had at least one sales transaction.
• Conversely, that means 39% of agents in the Phoenix area sold nothing in 2008.
• 7,156 agents (21%) had $1 million or more in sales volume.
• Those 7,156 agents had $23.6B of the areas $29.4B in sales transactions (80.1%)

In short, it’s the age-old “80/20 rule” – 20% of the agents do 80% of the business.

What does this mean?

Let’s start with defining “$1 million in sales volume”. This does not mean an agent earned $1 million dollars. Not even close. You may often hear an agent puffing out their chest with pride, proclaiming, “I’M A MILLION DOLLAR PRODUCER!”

Big deal.

“Sales volume” means the value of the homes sold. So if an agent sells one home priced at $1 million, they are one of the coveted MILLION DOLLAR PRODUCERS! Ditto if they sell ten $100,000 homes or four $250,000 homes. You get the idea.

What does this equate to in dollars of actual income for the agent?

Let’s say, for example purposes only, the commission on the sale of a home is 3% of the purchase price. (Before someone jumps all over me, yes, commissions are negotiable. And they vary wildly. But 3% is pretty typical around here. You’ll find some less, and some more.) Simple mathematics will tell you that on $1 million in sales volume at 3% commission, the agent has just earned $30,000.

Let’s not even go down the commission split road. For the uninitiated, real estate agents typically split their commissions with their real estate broker. I’ve seen splits of 50/50 to 90/10 (90% of the commission to the agent, 10% to the broker). There are offices that claim to be “100%” offices. That’s really a fallacy as trust me, brokers don’t work for free. They get money in one form or another from agents.

Then there are of course taxes. And expenses. But for the sake of argument, let’s just say the agent clears $30,000 on every $1 million in sales volume.

Then by ARMLS’s numbers, 79% of the real estate agents in the Phoenix area made less than $30,000 in 2008.

That’s hardly a boatload of money.

I’m sure someone has already whipped out their calculator and determined that the 7,156 agents that did $23.6B in volume averaged over $98K in gross earnings. That’s a pretty nice annual income. But averaged of course, means exactly that. There’s going to be a distribution of incomes in that 20% of top producing agents, and this data doesn’t tell us what that distribution might be. The entry wage to get into that “top producer” group is just $30,001 in annual income. No question though that some of that 20% are doing very well financially.

But still, four out of every ten agents in the Phoenix area made NOTHING in 2008. and eight out of ten made less than $30,000 in annual income (significantly less if one factors in commission splits).

What does this mean for home buyers and sellers?

Finally, Jay gets to the point!

What this all means is that you, oh home buyer or seller, is that you need to be very careful in who you chose to represent you in the sale or purchase of your home. Obviously the majority of agents out there aren’t making a living selling homes. Don’t you want an experienced agent representing you?

This is not to say that a part-time agent, or an agent that has a “real job” supplementing their income is incompetent. I know *many* wonderful agents that are in this situation. (I also know some lousy agents that are in the 20% group). An agent can also receive (or not) a lot of help from their broker, and/or other agents on their team.

Whether the agent you chose to represent you actually makes a living doing this is one of several factors you should consider. But it’s definitely a consideration. No, don’t go asking your prospective agent for their last five tax returns. That’s just wrong, and honestly, it’s no one’s business knowing what someone else earns.

But questions like, “Is this your full time occupation?”, “How long have you been in real estate?” “Will there be times you can’t help me due to other commitments” and similar questions are perfectly acceptable to ask.

Should you rule out an agent that isn’t full time? Personally I don’t think so. I’d rather hear an agent say, “Real estate is my passion, and I’m darn good at it. Yes, I supplement my income but you’re getting me, a great broker and I have tons of support to help you” than something like, “Hire me, I’m in the Million Dollar Club!”. One agent is being honest and upfront, the other one is full of crap.

Whether an agent has a secondary income or not may or may not be a critical factor for you. That depends on you and the agent. If it is important, you should know the numbers and I suspect that much of the general public is quite unaware just how many agents aren’t making their primary living selling real estate.

Now you are more aware.

And that’s the point!

Going to Inman Connect NYC 2010?

Want to save $100?

Just enter the promo code PhoenixREGuy at registration checkout, and you’ll get an additional $100 off. (If you are an Inman Premium member, be sure to log in first, and you get an additional $100 off.)

Why should a real estate professional attend Inman Connect?

It’s the best collection of real estate minds assembled in one place that I’ve personally experienced. The program for this Connect looks fantastic. Some speakers have already been identified, and more are being added. I can’t count how many real estate visionaries, leaders of technology companies and ground-breaking thoughts, ideas and products I’ve encountered at previous Connects.

For what it’s worth, it’s the single best real estate conference I’ve attended.

And let’s be honest, New York City is a cool place to hang out. And the parties are epic.

Of note: If you are in the Phoenix area (or even remotely close) and want to attend, let me know because if we get a group of 5 or more, I can get us an additional discount. If we can get 25 or so, it’s possible we can get an even sweeter deal with some extra “benefits”.

Be SURE to enter the promo code PhoenixREGuy at registration checkout to get your $100 discount! But hurry, this discount code expires on November 21!

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Disclosure: This discount code is offered through an affiliate program. Yeah, I get a discount too if you use it.

I’ve been running this poll on Twitter for the last couple of days and would love to get more responses. No registration is required, and no one will see your answer.

Of course it’s not a scientific poll by any stretch of the imagination, but it’s interesting data none the less…

It’s easy… just select your choice and click “vote”. You’ll then be taken to the results page.

Here’s a clip from CBS5 News with a small portion of my thoughts on the home buyer tax credit. But don’t let that influence your selection…

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As we announced here back in October, Thompson’s Realty has expanded to serve the Tucson metro area. Everything is in place and the “doors” are open!

“Doors” in the metaphorical sense of course as we’re virtually based and have no “brick & mortar” office space. We don’t need a shiny and expensive office building to provide superior customer service.

There is now a Tucson home search installed here on Phoenix Real Estate Guy. You can access it via the button to your right (that’s a placeholder graphic – a better one will be in place shortly), or under “Phoenix Home Search” in the navigation menu up above.

It’s powered by Diverse Solutions, the same provider we use for the Phoenix home search here, and like that search, no registration is required. (If you want to save searches and get automatic updates, you’ll need to register with a valid email address).

We’ve also got our first Tucson listing. It’s a real beauty, so check it out! Just think, YOU can say, “I bought the very first Thompson’s Realty listing in Tucson!” How cool would that be?

Stay tuned. We’re not done…

UPDATE Nov 6: According to UPI, President Obama has signed this legislation. NOW it’s official.

The extension of the existing $8,000 tax credit for first time homebuyers is now all but a done deal.

Moments ago, the House of Representatives passed HR 3548 – The Unemployment Compensation Extension Act of 2009 with a vote of 403 -12.

“Whoa, hold on there Jay. You said the tax credit extension was passed. What’s up with linking to some unemployment legislation?”

That would be because the Senate attached an amendment (SA 2712, Section11) to HR 3548 that extends (and expands) the home buyer tax credit. The Senate passed the amended HR 3548 on Wednesday by a vote of 98 – 0.

The bill now moves to President Obama’s desk for his signature into law. Some mainstream media is reporting the President will sign this on Friday, November 6. THEN, and only then, will the tax credit truly be extended and expanded (regardless of whatever you may read on Twitter, on blogs, and in the press).

So what’s in the bill?

Amendments are difficult to read as they cross-reference multiple documents and contain gobbledygook that looks like this:

(1) by striking “and” at the end of subparagraph (M),

(2) by striking the period at the end of subparagraph (N) and inserting “, and”, and

(3) by inserting after subparagraph (N) the following new subparagraph:

“(O) an omission of any increase required under section 36(f) with respect to the recapture of a credit allowed under section 36.”.

Good luck deciphering that…

Here’s what I’ve gleaned from reading the amendment, cross-referencing it, and digesting various media reports:

The “New” Home Buyer Tax Credit Details

• The existing $8,000 tax credit is extended to May 1, 2010. (The credit is for 10% of the home purchase price, up to $8,000.)
• If a home buyer is “into a written binding contract before May 1, 2010”, and they close on that contract before July 1, 2010, the tax credit can be claimed.
• A new tax credit for “long-time residents of same principal residence” has been created. This has been reported in many places as a tax credit for “move up buyers”. Here is the actual verbiage of the new tax credit for existing home owners:

  EXCEPTION FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE.–In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.

• The tax credit for existing “long time resident” home owners purchasing a new home is 10% of the purchase price, up to $6,500.
• The old $8K credit had income limits of $75,000 for singles and $150,000 for married couples filing jointly. The income limits have been increased to $125,000 / $225,000.
• No credit shall be allowed for the purchase of any residence if the purchase price exceeds $800,000.
• All of this applies to primary residences only. No second home or investment properties are eligible for the tax credit.
• For members of the Armed Forces deployed on duty outside the United States, the tax credits are extended to May 1, 2011 (must close before July 1. 2011) Must be deployed outside the U.S. for at least 90 days between Dec 31, 2008 – May 1, 2010.
• “Fraud prevention” measures have been implemented. The tax credit can not be claimed by anyone under 18 years of age (some knucklehead tried to put it on the tax return of a four year old). Also, a “properly executed copy of the settlement statement used to complete such purchase” must be attached to the tax return claiming the credit (I take this to mean a copy of the signed HUD-1 Settlement Statement. But check that with your tax advisor!)

That’s it in a nutshell.

Of interest: According to economists at Goldman Sachs, around 70% of all current homeowners would be eligible for the expanded home buyer tax credit. The NAR and other Realtor Associations will no doubt be salivating over the extension and expansion of the tax credit. Some Senators have said that the chances of the tax credit being extended again come next April 30 are virtually zero.

Personally, I’m not a fan of the tax credit extension. I realize that flies in the face of a large majority of my fellow real estate agent / broker brethren, but that’s how I feel. It’s going to cost a TON of money (almost $11 billion by some estimates), and I am far from convinced it encourages people to buy homes (and if it does, that’s one BAD reason to buy a home).

Disclosure: I am clearly not an elected politician and my interpretation of the legislative text could be incorrect. Also, I am not a lawyer nor a tax professional, nor do I have any desire to be either. You should seek their counsel.

AND DON’T FORGET!! Until President Obama signs this bill, it’s not in effect!

Sources:

HR 3548
SA 2712 (Sec 11 is the applicable section)

Associated Press: Congress set to expand homebuyer tax credit
Wall St Journal: Tax Credit Extension Would Keep Home Prices Up
CNN Money: Senate throws a lifeline to the jobless

National Association of Realtors, Government Affairs: Here is a GREAT summary of the current and proposed home buyer tax credits (PDF file).

One of the facts of the mortgage business today is that it can sometimes be a hurry-up-and-wait game. When it comes to buying a house, I have seen it more than once lately where the seller’s lender who has to approve the purchase contract (because it is a short sale or a bank owned property) takes months to approve the sale and then request/demand that the deal must close in 21 days or less.

It can sometimes be a game of wait, wait, wait… hurry.

Wait, Wait, Wait... Hurry!

I don’t really spend too much time wondering why this is, I just make the observation that sometimes it is.

Which makes it all the more important for you to ask this one important question of your loan officer up front:

“How long will it take to close my loan once I have everything to you that you require?”

By asking this simple question, then if you somehow end up in this situation where you have had to wait, wait, wait… hurry you will know if your loan officer is up to the task or not.

So if you are planning on buying a home in Arizona and find yourself in this situation – who do you call?

Not me.

Call these guys.

They promise with their checkbook that they can get your loan closed in 10 days or less.

Which in my opinion is absolutely-eye-popping-remarkable for today’s lending environment. They have managed to put all of the pieces together under that are required to do this and if it were up to me, I would put them on the Today Show for being able to pull it off on a consistent basis.

But they haven’t asked me to write on their blog.

Yet.

About the Author: Justin McHood is a mortgage broker with VanDyk Mortgage Corporation. You can find him at Arizona Mortgage Team, on the Zillow’s Mortgages Unzipped Blog, and at most East Valley Friday Nights gatherings. He’s the one in the blue shirt.