Technology for Real Estate Professionals

C.A.R. November 2008 Forms Update

frank@tech4repros.com (Frank Jewett) — Sat, 15 Nov 2008 10:46:10 PST

The California Association of REALTORS issued four new forms this week.

DBD - Data Base Disclosure (Megan's Law)

DLT - Declaration Regarding Real Estate License and Tax Reporting

BIE - Buyer’s Inspection Elections

SWPI - Septic Insp., Well Insp., Prop. Monument and Allocation of Cost Add

Click here for more information on these forms.

Click here for the current list of forms in the C.A.R. library.

WINForms Desktop users will need to connect to the internet to download the latest forms update to add these forms to their library. Click here for a video demonstration.

WINForms Online users do not need to download forms updates because they are always using the latest forms directly from the internet.

Thanks for reading!

Frank Jewett

News: Frank Jewett wins election!

frank@tech4repros.com (Frank Jewett) — Wed, 05 Nov 2008 16:06:35 PST

Frank Jewett won re-election to the West Valley-Mission Community College District governing board, beating out the third place finisher by a scant 80 votes. Over the past few days I have received several calls from friends and associates to let me know that they had voted for me. Actually they voted for another fellow named Frank Jewett, who, like me, is a business consultant here in Santa Clara County. I'm relieved that I wasn't a drag on the ticket.

Congratulations, Frank!

For the people frantically emailing "red state/blue state" nonsense in the wake of the election, here are two quotes that everyone should take to heart, particularly right now.

"There are no red states. There are no blue states. There is only the United States." - Barack Obama

"A house divided against itself cannot stand." - Abraham Lincoln

Thanks for reading!

Frank H. Jewett, IV

Industry: The 4% Solution

frank@tech4repros.com (Frank Jewett) — Thu, 09 Oct 2008 01:00:23 PDT

There is no simple solution to the current economic crisis. There is no dollar amount, even $700 BILLION, that can fix the problems we face. Our economy has been bleeding skilled and unskilled jobs for decades, but we haven't adjusted. In fact, we've actually spent more while making less.

The dot-com bubble temporarily masked the decline by creating an economic rush at the expense of the accumulated wealth in baby boomer retirement accounts. When that bubble burst, Alan Greenspan was there with cheap money methadone to relieve our pain, but he left us on the low interest rate drip so long that a housing bubble formed. That bubble resulted in speculation and fraud, but it also masked the weakness in the economy by providing TRILLIONS of dollars in extra income through the home equity ATM. Stopping the foreclosures won't replace that spending power. In the absence of another bubble, we'll be left to suddenly adjust to the reality of a service economy without the cushion of baby boomers spending their pensions on those services. It's going to be a struggle, regardless of what happens to banks.

There are reasonable things we can do to try to minimize the damage. One aspect of the current "crisis" is that banks don't want to loan money. Another aspect of the crisis is that mortgage defaults drive down home values which triggers more defaults. Setting aside the crocodile tears in Washington over families losing their homes (politicians stuff self serving verbiage into each bill which they can use as a campaign talking point, yet no one gets rescued), this is a very real problem because it is driving the acceleration of this implosion. If prices fall far enough, people with strong incomes and good credit will default on principle. It doesn't make sense to pay a premium on an upside down mortgage, especially when Wall Street executives are walking away from their obligations with hundreds of millions of dollars in their offshore accounts.

If we could stop home values from plummeting, we could slow the rate of defaults. It's likely that collateral damage to the economy due to layoffs or business losses will trigger additional defaults for some time to come, but we could offer hope to those people who could still afford to make some sort of mortgage payment and create a bottom to stem the velocity of the implosion. One way to do that would be to have the Fed take over all residential home loans.

Currently the government loans money to banks cheaply so that the banks can make a profit by turning around and loaning the money to us at a higher rate. The problem is that banks don't want to lend money any more, though given the poor choices they made in the past, the problem could have a silver lining. We could solve the home ownership lending crunch and make real progress toward keeping families in their homes (instead of just talking about it) by having the fed offer to refinance any residential loan at 4%. At that rate, the Fed would get a higher return than they are getting now, but homeowners would get a lower monthly payment or they could afford a higher total price. This would partially reinflate the bubble while giving people a legitimate shot at saving their home. If you can't make payments at 4%, you don't deserve to stay in that home. Buy something you can afford at 4%.

Any plan has to account for human nature. I know many couples who only used one name on their deed so that they could abuse first time homebuyer incentives to pick up a second property. We might as well plan for this practice up front by creating a simple rule: One loan per social security number. Couples can apply for two mortgages, one on their own home and one on another home. No questions asked. This increases the risk of speculative bubbles slightly, but it pales in comparison to common stories about investors taking out "owner occupied" mortgages on a half dozen different properties during the recent boom. What about responsible people who own their homes free and clear? Well, they're welcome to use their 4% loan to buy a second property or they can take out a home equity line of credit at 4%. This solution is pretty fair to everyone who has income.

Demand for housing would increase immediately. Who doesn't want to borrow money for housing at 4%? Prices probably wouldn't increase to bubble levels because those levels were supported by unconscionable "teaser" rates that should be eliminated forever. Prices would stop falling however, and the bubble would probably refill enough to discourage people from abandoning their mortgages as long as they can still afford to make the payments on a 4% loan.

Socialism? We've crossed that bridge. We're already a socialist country, so before we start taking equity positions in all of our financial institutions, we should sit down and think about how to implement socialism properly. We could go beyond the 4% rule and simply garnish 25% of gross income to be placed into a personal mortgage fund. The only way to spend the money would be to take out a 4% loan from the Fed on real property. If you can't afford a home today, the Fed will start saving your down payment for you, though given the Fed's unique ability to collect, a Fed loan wouldn't require a large down payment anyway.

Find something you can afford and buy it at 4%. Does that sound like a bad plan?

Thanks for reading!

Frank Jewett

Industry: Walking the Wall Street Midway

frank@tech4repros.com (Frank Jewett) — Tue, 07 Oct 2008 14:38:54 PDT

The Dow Jones dropped another 500 points today, disappointing those who thought the 10,000 range would be the mythical "bottom" of Wall Street's plunge. A few days ago, President Bush argued for the $700 Billion bailout by pointing out that stocks had lost a trillion dollars the day before. It might have been the stupidest thing Bush ever said, and that claim covers a lot of territory.

You recognize losses when you sell something for less than you paid for it, or when something you paid for becomes worthless. Take a lottery ticket, for example. You buy it for $1, but it has no actual value unless you win. If I tell you a ticket is worth $1000, does that make it worth $1000? Of course not. Shares of stock can be similarly oversold. Their price is not a measure of actual worth.

The stock market is self-correcting. If shares fall too low, either a competitor will purchase the shares to purchase the company or the company will buy back it's own shares to retain more profit for the remaining shareholders. The fact that neither process has halted this slide indicates that companies believe their shares were and still are overvalued. They are voting with their capital.

What is the true value of the stock market, given the economic outlook? It could be 9,000 or 7,000 or even 5,000. We'll know we're nearing the bottom when corporate executives, who have access to better information than most investors, start agressively buying back shares because they feel those shares are a good investment. Everything else is just carnies, shills, and gamblers making noise.

Thanks for reading!

Frank Jewett

Industry: Wachovia Commits Corporate Bigamy

frank@tech4repros.com (Frank Jewett) — Fri, 03 Oct 2008 08:31:14 PDT

Earlier this week, Wachovia sold itself to Citigroup to avoid being seized by the FDIC. In a pre-bailout market, Wachovia was so unattractive that Citigroup agreed to absorb up to $42 BILLION in losses on the condition that the FDIC would cover any additional losses. Essentially the FDIC cut a deal with Citigroup so that they could avoid declaring that Wachovia had failed.

What a difference a bailout makes.

Today, Wachovia announced that it was selling itself to Wells Fargo Bank in an all-stock deal with no participation by the FDIC. Apparently the likelihood of a bailout makes Wachovia attractive enough that taxpayers are no longer required to offer a dowry.

Citigroup executives are understandably upset and being adults, they have signed contracts which prohibit Wachovia from seeking another suitor. Whether Wachovia executives are adults remains to be seen. They've certainly embarrassed themselves here. Taxpayers might be tempted to root for the Wells Fargo deal because it gets them "off the hook" for losses over $42 billion, but that offer is only being made with the expectation that taxpayers will be on the hook for a larger bailout.

Either way, Wachovia will be sold to someone, but this raises bigger questions. Why we are handing $700 billion to the people involved in this fiasco? I believe there is a crisis, but I don't believe giving money to these bozos will solve that crisis. Unfortunately the bailout bill has now been filled with pork provisions designed to make it more desirable to candidates (they never lead, they simply keep on running), so it will probably pass.

Thanks for reading!

Frank Jewett

Strategy: Shop Around

frank@tech4repros.com (Frank Jewett) — Thu, 02 Oct 2008 10:16:52 PDT

The other day, an agent complained to me that the business has changed. Years ago, people would hire him because they were referred to him by friend. Now instead of simply hiring him, referrals were inviting him to be one of several agents they interviewed before deciding who to hire.

Real estate coaches are split on the best strategy for winning the listing when you are invited to be one of several candidates. Some suggest going first so that you can get the prospect to sign before they see your competition, while others suggest going last to eliminate that objection.

If a prospect called and invited you to interview, what would you say? I'd tell the prospect that he or she had made a wise decision to interview several candidates. I would also warn the prospect that some of my competitors might try to convince the prospect to sign before hearing everyone.

Of course you can't warn propects that other agents might try to hustle them if you are planning to try to hustle them yourself, so you really need to decide where you stand. Do you want to be one of the hustlers or do you want to sell against that approach? You can't have it both ways.

There is no point in bemoaning competition. There are over 10,000 REALTORS in Santa Clara County, so consider yourself lucky if you're invited to interview. I wouldn't care if I interviewed first, last, or middle, provided I got a chance, so I would sell against high pressure hustlers.

Thanks for reading!

Frank Jewett

Industry: Dow Plunges 770 Points As Bailout Rejected

frank@tech4repros.com (Frank Jewett) — Mon, 29 Sep 2008 14:33:42 PDT

Congress finally acted in bipartisan fashion, with 40% of Democrats and over 60% of Republicans teaming up to kill the $700 Billion Bush/Paulson/Frank Bailout of Doom. The stock market, which has been in denial for years, dropped 770 points when the punters discovered the administration wasn't going to cover Wall Street's bad bets.

The good news is that we still have $700 Billion to spend on a solution, rather than handing it to Paulson so that he can buy time for the Bush Administration to slink out of Washington. Paulson's record has been one of total dishonesty and utter failure, though I suspect he tells himself that the public can't handle the truth.

It's past time to shop for Paulson's replacement. The public respects Warren Buffet because he's ultra rich, but Buffet, like the rest of the punters, just lost big by betting on corporate welfare. Buffet is a creature of the markets and therefore is disqualified from fixing them because he would try to restore the status quo.

We need new ideas and we need to demand specifics. Take for example the notion floated by Congressional Democrats that the bailout should allow the government to buy loans and then renegotiate terms to allow families to avoid foreclosure. How would that work, exactly? Did they have a plan, beyond campaign talking points?

Lets look at two hypothetical families. The Smith family bought a modest home for $500,000 using a fixed interest loan at 6.5%. The Jones family bought an opulent home for $800,000 using a loan with negative amortization. Without drowning in the numbers, let's stipulate that both families can afford exactly the same payment.

Based on the talking points of the Democrats, the government would rescue the Jones family from their untenable mortgage and refinance them at a payment they could afford, which might mean an effective interest rate of 4%. Can the Smith family also refinance at 4%, or do they get punished for buying a home they could afford?

That deafening silence you hear is Barney Frank, Christopher Dodd, and the rest of the Democrats ignoring one of the most obvious questions raised by their proposals.

It's time to hold Washington accountable for more than soundbytes. Maybe refinancing the Jones family at 4% is the best possible solution, but if that's true, the government (not banks) should offer to refinance every homeowner at 4%. If you can't cover your mortgage at 4%, you probably deserve to lose your home.

Let's go back to the drawing board and develop a solution that's fair to everyone rather than looking for ways to bail out Wall Street, irresponsible lenders, and irresponsible borrowers. If we're going to become socialists, let's do it right!

Thanks for reading!

Frank Jewett

Industry: Wachovia Sold To Citigroup

frank@tech4repros.com (Frank Jewett) — Mon, 29 Sep 2008 08:56:22 PDT

Wachovia Bank avoided government seizure by selling their banking assets to Citigroup. Citigroup agreed to absorb up to $40 billion in losses on Wachovia, with additional potential losses covered by the government. Not surprisingly, Citigroup shares fell 5% while Wachovia shares plunged over 90% to become penny stocks.

Have you noticed how quickly we went from Fannie and Freddie through AIG to WaMu and Wachovia? One could argue that the government is being more proactive, but one could also argue that the jig is up. Ben Bernanke, Henry Paulson, and others lied for months about the health of these firms. Now we're dealing with reality.

That sounds like an improvement, but Team Bush and the investment crowd still don't grasp the situation. Their focus is on bailing out Wall Street, not fixing the economy. William Larkin of Cabot Money Management said "These announcements couldn't have worse timing because they're taking the shine off the potential bailout."

Shine?

SHINE?!?!

The bailout proposal won't create good paying jobs, nor will it refill the home equity ATM machine, so at best it will maintain the current recession which began because people no longer had free access to tens of thousands of extra dollars in cashed out home equity to inflate their buying power. It's the economy, stupid!

Thanks for reading!

Frank Jewett

Industry: Washington Mutual Seized and Sold

frank@tech4repros.com (Frank Jewett) — Fri, 26 Sep 2008 07:58:29 PDT

Washington Mutual, one of the (sub)prime movers of the housing bubble, was seized by Federal regulators on Thursday and then sold to JP Morgan. The move appeared to be timed to coincide with the passage of Treasury Secretary Henry Paulson's MegaBillions bailout in the latest attempt by the government to get ahead of the wave collapsing the financial system, but the expected bailout stalled after a meeting where John McCain either said little of note or made such a stink that he singlehandedly derailed the bipartisan agreement. Who you believe and how you feel about the outcome probably depends on your political allegiance, but two items stand out.

First, Democratic Senator Dianne Feinstein claimed her office had received almost 40,000 calls, emails, and letters, most of them opposed Paulson's bailout plan. Second, the people describing today's breakdown as a "shouting match" are mostly McCain staffers. Yes, several leading Democrats attempted to lay the blame for the breakdown solely on McCain, but it seems that's what his team wants you to believe, too. Put those two items together and I think the answer is clear: McCain figured out that Paulson's proposal was almost universally reviled so he decided to put a stop to it in "Maverick" fashion. Whether he did so or not, I don't know, but he's now got leading Democrats saying it's all his fault... as if that was a bad thing.

It also bears noting that bailout measures have been coming faster and costing more, which signals that this process is an implosion that is gaining speed. Paulson believes that too, which is why he had the audacity to ask for a $700 Billion blank check. Paulson believes he can still get in front of the wave, but I think it makes more sense to get out of the way. If banks are unable or unwilling to loan capital to homeowners and businesses, the government should create an agency to fill that void rather than trying to make broken banks whole again.

We tried to solve the illegal immigration problem by granting amnesty, but that amnesty only encouraged more illegal immigration. Giving banks and other companies amnesty on toxic derivatives, specifically so that they can kickstart the economy by turning around and loaning money, will only encourage another wave of reckless lending. We need to let the market remove business models and people from the game. Already the big five independent Wall Street brokers have been sold, bankrupted, or turned into banks. We need to let that process play out naturally among the rest of the participants, with the government acting as a surrogate rather than as an enabler.

Thanks for reading!

Frank Jewett

Software: Using AVERAGE and MEDIAN functions in Excel

frank@tech4repros.com (Frank Jewett) — Tue, 23 Sep 2008 18:26:34 PDT

If you use Excel to produce CMAs and market updates, you can easily calculate average and median values using Excel's built-in average and median functions. Let's take a look at an example of how to apply those functions in your Excel spreadsheet to calculate and display median and average values.

First, import or enter the data you are going to present. In my example, I entered sale prices and DOM (days on market) values for five properties as shown below. If you would like to practice as you follow my instructions, open an Excel spreadsheet and enter the data shown below.

Click the cell where you would like the median value to be displayed. In my example, I selected cell B8, which is indicated in Excel 2007 by the goldenrod highlights on the column and row headings.

Enter the following text in cell B8: =MEDIAN()

The standard format for an Excel function is an equal sign followed by the name of the function in all capital letters followed by parenthesis. The values inside the parenthesis will be used to calculate the value of the function. Notice that when you start to manually enter a function, the syntax or pattern for that function will appear as a guide to indicate how many values are needed.

For MEDIAN and AVERAGE, we can either type each value between the parenthesis or we can reference a range of cells containing the values we want to use, as shown in the example.

Insert your cursor between the parenthesis, then click and drag to select all the cells containing the values you wish to use to determine the value of the function. In my example, the sale prices I wanted to use to calculate the median sale price were in cells B3 through B7, which Excel understands as (B3:B7). Note the blue color code used to show the selection rectangle and the resulting range of cells, also known as an argument, in the median function.

Press ENTER to calculate and display the value of the function.

To calculate and display the median days on market, simply copy the function in cell B8 and paste it into cell C8. Notice that the median function will determine the middle value in numerical order even if the values are not sorted in numerical order in your data table.

To calculate and display the average sale price, enter the following text in cell B9: =AVERAGE(B3:B7).

Press ENTER to calculate and display the average sale price.

Copy and paste B9 into C9 to display the average days on market.

There are many other useful functions in Excel, including functions used to perform financial calculations for use in amortization tables. All functions will follow the =FUNCTION() syntax, but the number and type of arguments inside the parenthesis will change, especially with more advanced functions. You can also "nest" one function inside another function, but an example of that is beyond the scope of this post. You can get more information about Excel functions from the Microsoft Office website by clicking here.

For more information on Excel, click here to read the tech4REpros Microsoft Excel Digest. If you have any questions about Excel that have not been discussed in the Excel Digest, please contact me.

Thanks for reading!

Frank Jewett

Social Networking: Register at LinkedIn.com

frank@tech4repros.com (Frank Jewett) — Wed, 17 Sep 2008 00:35:38 PDT

Social networks are websites that allow you to create a profile and link to the profiles of family, friends, coworkers, and clients. You could think of a social network as an online version of your sphere of influence. The top social network is Facebook, but I also recommend signing up for LinkedIn because the Facebook public profile is very limited. LinkedIn provides plenty of space to describe your services and detail your experience and search engines like Google scan that data.

Here are simple instructions for joining LinkedIn and editing your profile.

Join LinkedIn

Click here to open www.linkedin.com in a new window.

Enter your first name, last name, and e-mail address.

Click Continue. The registration page will load.

Create and enter a password. Passwords must be six characters long.

Enter your ZIP code.

Enter your company name.

Enter your title. Appropriate titles are Broker Associate or Agent.

Select Real Estate as your Industry.

Click Join LinkedIn to complete your registration.

Edit Your LinkedIn Profile

Click Profile on the left side of the screen to edit your profile.

Click Add Photo to upload your photo.

Click Browse to locate your photo on your computer.

Click Upload to upload your photo.

Drag the yellow box to select the area of your photo you wish to display. LinkedIn only displays a square area of a photo.

Click Save Photo to save your photo.

Select the area of your photo to display.

Click Save Settings to save your entries and return to the profile editing screen.

Click Add Websites to add links to your website, your company website, and your blog.

Click Save Changes to save your entries and return to the profile editing screen.

Click Add Summary to add a description of your services with testimonials. List your professional designations under Specialties.

Click Save Changes to save your entries and return to the profile editing screen.

You can also list your experience add detail to your education.

If you do nothing more than what I've described here, at least your professional information will be available on the internet so that you can be found when someone refers you to a friend using only your name.

If you want to use social networking to generate more referrals, start reaching out and making connections to family, friends, and clients. Join groups, including the groups in your own sphere of influence such as the Rotary Club or the PTA. If your group isn't on LinkedIn, create the group, then invite other group members to join.

Thanks for reading!

Frank Jewett

Software: Excel Notes From SCCAOR Trade Show

frank@tech4repros.com (Frank Jewett) — Mon, 15 Sep 2008 23:39:02 PDT

I had the honor of presenting a lightning fast seminar at the SCCAOR Trade Show on how to produce a CMA from MLS data using Microsoft Excel 2003. If you were one of the attendees, thank you for your interest. Several attendees requested electronic copies of my presentation and my step-by-step instructions. Click the links below for PDF copies.

Powerpoint Presentation on Exporting Data from MLS

Step-by-step Instructions for Excel 2003

While you're here, why not subscribe to the FREE tech4REpros blog by clicking the envelope to the right?

Thanks for reading!

Frank Jewett

Industry: Financial Sector Avalanche

frank@tech4repros.com (Frank Jewett) — Mon, 15 Sep 2008 00:32:24 PDT

Real estate may soon be seen as one of the safest havens for investors given all of the trouble in the financial sector. Last year, Charles Hugh Smith predicted a major institutional failure due to the devaluation of mortgage related derivatives. At the time, his dire prediction seemed alarmist. Now they are starting to seem downright optomistic. Several major developments took place this weekend, but first let's recap how we got to this point.

In March, the Fed engineered the buyout of Bear Stearns at taxpayer expense, guaranteeing $29billion worth of likely worthless paper to marry off Bear to rival JP Morgan to avoid an embarrassing bankruptcy. The Fed offered loans to the rest of the financial companies to try to shore them up, but that approach hasn't helped.

In June, Countrywide was spared the axe courtesy of Bank of America in a buyout that still doesn't make any sense. Indymac Bank wasn't so lucky. Despite a book value of $32 billion, Indymac was pushed into insolvency in July. Then came the seizure of Fannie Mae and Freddie Mac, legislated in late July, but not executed until the first Sunday in September, allowing for several weeks of sucker's rallies as gamblers bet on yet another equity bailout.

The Fed was busy again today, calling in banks and investment companies to try to broker a deal to save Lehman Brothers from the humiliation of bankruptcy. Cooler heads prevailed all around. Rivals refused to invest without government backing and the government refused to throw good money after bad for another financial sector fig leaf. Reports tonight are that Lehman will file for bankruptcy protection.

A deal did come together today as Bank of America purchased Merrill Lynch for $50 billion, which is about half of Merrill's 2007 book value. Recently Merrill sold mortgage related securities at 22 cents on the dollar and took $40 billion in losses. With Bear and Merrill bought out and Lehman down for the count, Morgan Stanley and Goldman Sachs are the last of the major independent Wall Street brokerages and their futures will become a matter for speculation. Among banks, Washington Mutual and Wachovia are now the front runners in the race no one wants to win.

Meanwhile insurance giant AIG represents a new fracture in the financial sector. In Feburary, AIG came forward and admitted that they were exposed to losses on mortgage related derivates. AIG stock has plunged about 80% since then, but tomorrow it will probably drop even further. AIG is a perfect example of how overleveraged modern financial giants have become. At the end of the second quarter they had over $1 trillion in assets, yet shareholder equity was a mere $78 billion.

All of these companies have been in trouble for months, yet the stock market has continued to stage a series of suckers rallies to keep the Dow in the mid-11,000 range. Looking at all the weakness in the economy, the Dow should be several thousand points lower. Will the latest round of failures and fire sales trigger an avalanche on Wall Street or will investors stage another rally based on false hope that the worst is behind us? Monday may be one of days we remember for years. Follow the story at The Big Picture blog by clicking here.

Thanks for reading!

Frank Jewett

Industry: Glenn Beck Laughs At NAR Economists

frank@tech4repros.com (Frank Jewett) — Sun, 14 Sep 2008 00:37:55 PDT

The bubble blogs have been making fun of NAR economists David Lereah and Lawrence Yun for years, but organized real estate has dismissed those bloggers as cranks. Now it appears the message has leaked into the mainstream media via one of the biggest cranks of all, Glenn Beck.

Some in the industry feel that NAR is simply doing their job by touting the health of the housing market, but NAR is doing long term damage to their credibility and to the public perception of the REALTOR® brand in a misguided attempt to achieve the short term objective of boosting sales. In fact if NAR has had any impact at all, it has been to prolong the low sales volume by sewing false hope among sellers.

Thanks for reading!

Frank Jewett

Industry: More on Fannie and Freddie

frank@tech4repros.com (Frank Jewett) — Sun, 07 Sep 2008 18:53:38 PDT

If you are interested, "The Big Picture" blog has excellent coverage of the government seizure of Fannie and Freddie, with links to government press releases and articles from all the mainstream media outlets. Click here for "The Big Picture."

If you look back through recent months, you'll see "The Big Picture" blog was ahead of the MSM on this story and on the collapse of Bear Stearns and Indymac. As Barry Ritholtz pointed out, when the government gives themselves authority to do something, it is because they intend to do it. The seizure of Fannie and Freddie was essentially a done deal five weeks ago when Bush signed the housing rescue bill.

Thanks for reading!

Frank Jewett

"In practice, the act of authorizing a fill in the blank (war, bailout, whatever) is the same as declaring (war, bailout). The two are identical." - Barry Ritholtz

Industry: Feds Seize Fannie and Freddie

frank@tech4repros.com (Frank Jewett) — Sun, 07 Sep 2008 18:54:17 PDT

The Federal Housing Finance Agency is taking charge of Fannie Mae and Freddie Mac. The two mortgage giants have lost almost $14 billion in the past year and have $1.6 trillion in outstanding debt. The Treasury Department will purchase billions of dollars worth senior preferred stock leaving current stockholders to absorb ongoing losses.

The big question is whether the latest Plan 9 from Washington, seemingly a day late and a dollar short, will be able to salvage the mortgage giants who underpin our economy. One gets the feeling that Paulson, Lockhart, and Bernanke, like the band on the Titanic, are simply trying to calm the crowd as they wait for the inevitable.

Thanks for reading!

Frank Jewett

Government seizes control of GSEs

Industry: September Real Estate Calendar

frank@tech4repros.com (Frank Jewett) — Mon, 01 Sep 2008 20:56:43 PDT

Happy Labor Day!

The real estate market usually starts to cool off as kids head back to school. This year sales numbers in Santa Clara County held firm throughout the summer due to increased interest in REO properties from both first time homebuyers and investors, though the percentage of transactions that fell through was much higher than normal so the overall number of closed (successful) sales was similar to 2007. It will be interesting to see if the number of closed sales remains at summer levels due to longer escrow cycles on short sales and bank owned properties.

Here are the dates of upcoming industry events you may want to add to your calendar.

Wednesday, September 10th - Richard Calhoun's monthly market update

Thursday, September 11th - 22nd Annual SCCAOR Convention & Trade Show at South Hall from 9:30 AM to 4:00 PM

Wednesday, September 24th - IREBN monthly meeting

Richard Calhoun's monthly market update and the IREBN meeting are usually held at Old Republic Title Company's main office at the corner of Hedding and The Alameda, but they have been moved due to renovations. I will update this post with locations and times.

Thanks for reading!

Frank Jewett

Strategy: Are You Losing Referrals?

frank@tech4repros.com (Frank Jewett) — Wed, 27 Aug 2008 13:43:24 PDT

Do you enjoy getting referrals? I understand the importance of referrals, because that's how I've been getting most of my business. A typical referral starts by "word of mouth" when one person recommends you by name to another person.

Twenty years ago, my mother sold her house in Cupertino. I still remember the names of the agents, Jack and Jane Rosenthal. I don't remember the name of their brokerage, it might have been Cornish & Carey, but I remember where their office was located. It was replaced by a FedEx office about fifteen years ago. The only referral Jack and Jane could get from me would be based on their name. What happens next will determine whether or not they get any business from that word of mouth.

In the old days, we might have looked up a service provider in the yellow pages or, if we had their name, in the white pages because there were fewer distractions there. Do you know where your phone books are? Mine are in a cabinet above the refrigerator. They are probably five years out of date because I don't use them now. Like most people, I use Google.

The acid test for any real estate professional is whether prospects can find your contact information by going to Google and searching for your name and the words "real estate." If they find your website with a description of the services you provide, great, but if they can't at least find your current contact information, you are going to lose that word of mouth referral to someone else.

There are plenty of FREE services you can use to publish your contact information and a description of your services on the internet. If you need help establishing a web presence, you've come to the right place. Click here to subscribe to this blog via email. I'll be devoting several days to providing simple, easy to follow instructions on how you can get "found" on the internet.

Thanks for reading!

Frank Jewett

Industry: Is the REO brand sexy?

frank@tech4repros.com (Frank Jewett) — Tue, 23 Sep 2008 18:30:21 PDT

Every day as I drive down Meridian Avenue, I pass a series of A-frames proclaiming "We have REO properties" with the phone number of the brokerage. Today, as I was driving through Cambrian, I noticed a "Bank Owned" rider sign in front of a house with an even more obvious indicator of its status: six inches of grass in the front yard. It took two years, but the REO phenomenon has clearly reached Santa Clara County.

Those REO signs may be exceptions now, but we'll be seeing a lot more of the REO brand in the future. For one thing, foreclosure rates and notice of default rates have increased dramatically this year, so there will be more REO inventory next year. But more importantly, we'll be seeing more REO signs because the REO brand is sexy.

How can you tell the REO brand is sexy? Well, if you want to understand the REO phenomenon (as opposed to fighting the uphill battle of ignoring or minimizing it), you need to start reading the "bubble" blogs. Many real estate professionals find it difficult to read "bubble" blogs because those blogs deride people in the real estate industry, but it's worth holding your nose because you can learn a lot about how the REO process is playing out in markets that were hit earlier and harder than Santa Clara County.

Last week, I recognized Jim "the Realtor" Klinge for his excellent coverage of the North San Diego County market. If you subscribed to Jim's blog, you probably saw a post titled "Flippin' Banks." For those who didn't see it, Jim discovered that some banks have been selectively raising their asking price on REO listings compared to their starting bid at auction. From this we can conclude that banks have determined that the REO brand is sexy enough to allow them to charge a premium on foreclosures.

Will this new REO premium strategy be successful? The best way to find out would be to monitor bubble blogs in Sacramento, Stockton, Inland Empire, and San Diego to see if the idea catches on. One thing is certain. We'll be seeing more REO and "Bank Owned" signs in Santa Clara County because bank owned inventory is increasing and the REO brand is drawing the attention of first time homebuyers and investors.

Thanks for reading!

Frank Jewett

Strategy: Time To Motivate Your Sellers

frank@tech4repros.com (Frank Jewett) — Sat, 23 Aug 2008 23:27:31 PDT

As the kids head back to school, the real estate market here in Santa Clara County begins to slow down. Of course it's been slow all year. Despite the increased number of accepted offers, we've actually had fewer closed transactions than last year. Now it's going to get even tougher, but before you fire your clients and look for seasonal work, here are two considerations you can use to motivate your sellers, assuming they actually wanted to sell in the first place.

Interest Rates

The reason home prices appreciated so quickly was because low rates meant lower monthly mortgage payments. Most buyers ultimately purchase homes based on the cost of those monthly payments. Earlier this year, the Fed slashed rates in an attempt to bail out their friends on Wall Street. It didn't work, and now the chief fear among regulators is rapid inflation. The only way the Fed can fight inflation is to raise interest rates. Higher rates increase the cost of monthly mortgage payments, meaning the price of the house has to be reduced to attract the same buyers. If your clients are thinking "wait until next year when prices go up", talk to them about interest rates because it's likely home prices will be forced down if interest rates increase and at this point the only place for interest rates to go is up.

REO Inventory

It seems like every month the Mercury News reports record year-over-year increases in the number of foreclosures and notices of default, even here in the bay area. It can take several months before foreclosed properties hit the market. Given those high numbers, it's likely sellers will face even more competition from bank owned properties next year. Banks have been slashing prices to try to generate interest so that they can clear inventory. If your clients are thinking "wait until next year when there are fewer REOs on the market", remind them that more notices of default today probably mean more bank owned properties next spring, and that's without considering the mortgages that are scheduled to reset next year.

The Solution

It's a simple fact that most sellers in Santa Clara County will make more money by selling now than they will by waiting until next year. Unless they are willing to wait 3-5 years, they need to lower their price to generate offers, just like the banks have been doing. In many cases, banks have received multiple offers on REO listings, some more than 20% over asking, so lowering the asking price doesn't necessarily mean settling for a lowball offer. The buyers are out there and many of them are motivated by concerns over rising interest rates due to inflation. For sellers who are motivated, now is the time to set a realistic asking price that generates offers. Otherwise, they might as well post their fantasy asking price using Zillow's "Make Me Move" feature and stop wasting your time.

Have a heart to heart with your clients about the actual state of the market and how concern over interest rates and rising foreclosures and notices of default mean that it isn't realistic to "wait until next year" in hopes of getting more for their house. Motivated sellers need to reduce their prices to start generating offers now, because the selling season is starting to wind down and they aren't likely to do better by waiting until 2009.

Thanks for reading!

Frank Jewett

Strategy: Are Bus Tours Good For More Than Just REOs?

frank@tech4repros.com (Frank Jewett) — Sat, 23 Aug 2008 18:01:37 PDT

You can get great ideas by studying what brokers and agents are doing to promote and sell real estate in other markets. REO bus tours have been widely discussed in the media and we've already had some here in the bay area. Today, I read an article about Keller Williams agents in Philadelphia who have put together a bus tour for first time homebuyers. Click here to read that article.

We have many large brokerages here in Santa Clara County. Brokers could promote a first time homebuyer bus tour for their entire office. This would show the agents that the broker was investing to help them become more successful. It would also give agents an opportunity to attract more buyer clients by promoting the bus tour in their neighborhoods. It sure beats passing out more brag sheets.

One of the best parts of an operation like this is that it gives brokers and agents a reason to prequalify buyers. The first time homebuyer bus tour is free, provided the buyer prospect gets qualified in advance. This increases the likelihood of closed sales and also provides a useful sample of prospective buyers so that future bus tours can be designed around properties that are within their price range.

Thanks for reading!

Frank Jewett

Strategy: Are You Telling Leads To Punt?

frank@tech4repros.com (Frank Jewett) — Fri, 22 Aug 2008 12:29:03 PDT

Jonathan Washburn of ActiveRain posts a monthly list of top real estate blogs based on data from Compete.com and Alexa.com. Click here to view the list for August, 2008.

Yesterday, as I was scanning through some of the agent blogs on the list, I discovered a broken link. I decided to send a note to the agent, but when I clicked on the Contact link, I received the 404 (no such page) message below.

What's going to happen when prospects get that message? Will they use Google to locate the agent's contact information or will they contact another agent instead?

Checking links on your website and blog can be very time consuming. It's common for links to news stories to break as publishers reorganize and archive material. The one link you should check every month is the link to your own contact information, assuming that information isn't included on every screen or on the front page of your website and your blog.

Don't let your technology tell your leads to "punt."

Thanks for reading!

Frank Jewett

Web: Meet the new Localism, same as the old Localism?

frank@tech4repros.com (Frank Jewett) — Wed, 20 Aug 2008 18:04:01 PDT

Six weeks ago, I used George Santanaya's famous quote "Those who cannot remember the past are condemned to repeat it" when I suggested that lessons from the failure of Localism 1.0 should be remembered when designing the relaunch of Localism. Today, I'll use a quote from Albert Einstein: "The definition of insanity is doing the same thing over and over and expecting different results."

Earlier today, Rich Jacobson of ActiveRain quoted Robert Burns, "The best-laid plans of mice and men go oft awry", when announcing that ActiveRain had backtracked from their plan to moderate submissions to Localism in favor of the old, failed approach of trusting members to read the guidelines and police themselves individually. As The Who sang, "Meet the new boss... same as the old boss."

Some might argue with the suggestion that ActiveRain's actions are "best-laid", or even "plans." Sponsorship pricing and banner configuration changed almost immediately in response to feedback from members. Now members who signed up to sponsor communities based on the belief that moderation would ensure quality content are being told this change is also being made in response to them.

If member feedback is critical enough to scrap your "best-laid plans" within the first month or two, shouldn't member feedback have been solicited before plans were unveiled and sponsorship money was collected? ActiveRain's frequent changes in direction, and the negative feedback they generate, give the appearance that AR management makes decisions in an ivory tower, or on the fly.

One could understand the lack of moderation at the original Localism. Other options had not been tested and there was no revenue to support hiring moderators. Now we have the benefit of learning from the failure of the old Localism, plus ActiveRain has a revenue stream after selling over 3,600 neighborhood sponsorships at something like $9 per month, so this decision to repeat an old mistake is perplexing.

Here's the obvious question that should be driving the design process at ActiveRain: What do consumers think? Let's not forget that the ultimate purpose of Localism was to attract consumers, not to pander to members. If Localism doesn't attract those consumers, sponsorships won't be worth a dime. That's what ActiveRain's management should be thinking about while they are redesigning Localism on the fly.

Thanks for reading!

Frank Jewett

Software: FREE WINForms Webinars!

frank@tech4repros.com (Frank Jewett) — Wed, 20 Aug 2008 10:45:08 PDT

C.A.R. members can now attend FREE WINForms® webinars online. These 30 minute webinars will focus on a different topic each month. Here is the schedule for the rest of 2008.

Tuesday, August 26th - Import and export transactions

Wednesday, September 24th - Create and apply templates on WINForms Desktop

Tuesday, October 21st - Clause Editor on WINForms Online

Wednesday, November 19th - E-mail Integration on WINForms Desktop

Tuesday, December 16th - Create and Apply Templates on WINForms Online

All webinars will be from 10:00 AM to 10:30 AM. Space is limited, so register early. Click here to register.

If you can't wait for the webinars, click here to read the tech4REpros WINForms® Digest.

If you have any questions about WINForms® that have not been discussed in the WINForms® Digest, please contact me.

Thanks for reading!

Frank Jewett

REBHOF - Jim Klinge

frank@tech4repros.com (Frank Jewett) — Mon, 18 Aug 2008 23:53:47 PDT

Jim Klinge - bubbleinfo.com

Jim Klinge understands that credibility is one of his most valuable assets.

It takes chutzpah to name your blog "bubbleinfo.com" when your brokerage is located in Carlsbad, California, the epicenter of North San Diego county's real estate meltdown, but Jim Klinge understands that the best way to sell your real estate services in any kind of market is to be knowledgeable and honest about market conditions.

Jim doesn't shy away from discussing high inventory, increases in the number of NODs and REOs, or even the dreaded Neg-Am Recasts that threaten to drag out the current lending crisis for years. In Jim's own words, "What you read here is based on what's really happening in the marketplace, not theory or speculation. I have no investment in the bubble, and I'll hopefully be selling homes whether the market is going up or down, so I'm not looking to influence one way or another. My goal is to provide an accurate description of what's happening, and present all the facts to help people make clear decisions about their real estate!"

As you read through Jim's blog, you won't find much local interest content, but that is because Jim targets serious real estate investors. Sophisticated buyers understand that all real estate is local and good deals can be found in any market. They turn to Jim because he has a lot of credibility, even outside the industry on the dreaded "bubble" blogs.

The leaders of organized real estate seem to think that it is acceptable to oversell market conditions at the expense of credibility. NAR already had to replace David Lereah with Lawrence Yun following a series of embarrassingly wrong books and bogus bottom calls by Lereah. Jim doesn't try to dress up the market by cherry picking facts and figures. Sophisticated buyers respect that, which is why Jim's blog is generating plenty of business, even in a tough market like Carlsbad.

Click here to visit Jim's "bubble" blog, subscribe, learn, and "go and do likewise!"

Thanks for reading!

Frank Jewett