Fading American Dream
For many Americans the long-cherished dream of home ownership was dashed by the financial crisis, but upcoming government reforms may make it even more difficult to secure that picket-fenced home.
After overhauling Wall Street and the US health care system President Barack Obama’s administration will, by January 2011, tackle rules that have underpinned the housing industry for decades.
Obama’s main tool for change is a shift in the policies of huge government-backed lenders that have provided mortgages for millions of middle-class Americans since the 1930s, but which recently needed bailouts worth hundreds of billions of dollars to stay afloat.
How the Treasury Department intends to reform the housing market is unclear. But one thing is certain: the state will no longer sustain home ownership rates at levels seen before the crisis.
With the creation of lenders Fannie Mae and later Freddie Mac, as they are commonly known, successive governments have fostered home ownership.
Ownership rates saw almost constant growth between 1940 and 2004, with a blip in the 1980s when interest rates rose prohibitively.
According to the historian and sociologist Thomas Sugrue, “every generation has offered its own version of the claim that owner-occupied homes are the nation’s saving grace.
“During the Cold War, home ownership was moral armor, protecting America from dangerous outside influences.”
As William Levitt, the father of suburbia, once claimed: “no man who owns his own house and lot can be a Communist.”
Later, in the Bill Clinton era, home ownership was seen as an important element in achieving personal fulfillment, neighborhood stability and crime prevention.
But as millions of Americans struggle to pay monthly bills, the crisis has kicked up a painful realization that not every American might be qualified to own their own home.
That realization has forged Obama’s approach, which is likely to break with the notion of a “home ownership society” supported by successive presidents across party lines.
In 1994 Democratic president Bill Clinton set a target of having 67.5 percent of occupants own their homes by 2000.
The goal was reached and taken further by his Republican successor George W. Bush who vowed to expand “home ownership for all Americans.”
The ownership rate rose to a peak of 69.2 percent in late 2004, according to figures from the Census Bureau.
But that figure has retreated dramatically with the crisis.
According to a recent study by the Federal Reserve, the 67.2-percent-rate of home ownership seen at the end of 2009 may actually inflated by around 5.6 percent, as some homes are in reality owned by banks rather than their occupants.
That would make current home ownership levels the lowest since the 1960s.
And the writing may be on the wall for further declines.
A move to overhaul Fannie and Freddie could further reduce access to capital for the less well-off, dampening a dream which has been embossed on the American political and social landscape for decades.
“To be clear, the government’s footprint in the housing market needs to be smaller than it is today,” Shaun Donovan, Obama’s head of housing policy, recently remarked.
-by Marc Jourdier, WASHINGTON (AFP)
Urge Governor to Sign SB 1178!
California’s legislature has recently passed SB 1178 (Corbett), C.A.R.’s sponsored bill to extend anti-deficiency protection to homeowners who have refinanced. C.A.R. is asking all California REALTORS® to contact Governor Schwarzenegger to urge him to sign SB 1178.
Please Contact Governor Schwarzenegger TODAY to urge him to sign SB 1178! To send an automated message provided by C.A.R. Take Action, click here.
What’s At Stake:
C.A.R. is sponsoring SB 1178 (Corbett) to better protect homeowners going through foreclosure. SB 1178 will ensure that homeowners keep the same “anti-deficiency” protections they have in the original loan after the loan has been refinanced.
California’s anti-deficiency protection for “purchase money” mortgages says essentially that if a homeowner defaults on a mortgage used to purchase his or her home, the homeowner’s liability on the mortgage is limited to the property itself. The law has worked well since the 1930s to protect borrowers, ensure the quality of loan underwriting and allow borrowers brought down by financial crisis to get back on their feet.
Unfortunately, the 1930s law hasn’t kept up with current times. Current law doesn’t apply to loans used to refinance the original purchase debt, even if the refinance was only to gain a lower interest rate. Recent years of low interest rates have induced tens of thousands of homeowners to refinance their mortgages. During those years, almost no one realized that refinancing their mortgage to obtain a lower rate, they were forfeiting their protections and were becoming personally liable on the new note.
SB 1178 will correct this injustice by extending anti-deficiency protections to those who have refinanced their loans.
Campaign Expiration Date: October 1, 2010
Below is the sample letter:
Subject: SB 1178 (Corbett) — SUPPORT
Dear Governor Schwarzenegger,
As a California REALTOR®, I respectfully request that you sign SB 1178 (Corbett) to better protect homeowners going through foreclosure or short sales.
SB 1178 will extend existing anti-deficiency protections to those homeowners who have refinanced their home mortgage. When owners refinanced their home to get a better interest rate, lenders never told them that the protection is lost if they eventually lose their home to foreclosure — the lender can not only take their home, but also pursue them personally for the difference between the current value of the property and the new mortgage balance.
It is unfair to allow lenders to use this technicality, since most owners are unaware that they’ve lost their anti-deficiency protection when they refinanced.
I urge you to sign SB 1178.
Sincerely,
Your Name
To send an automated message provided by C.A.R. Take Action, click here.
GreenFEST 2010
Contra Costa Association of REALTORS® and Sustainable Contra Costa invite you to GreenFEST 2010!
Saturday, August 14th
1870 Olympic Blvd.
Walnut Creek
CCAR and Sustainable Contra Costa have partnered on this annual event that brings together GREEN businesses offering resources and tools for “going green.” The free and fun event will feature food, music, and educational demos on recycling and composting, water conservation tips, as well as money-saving products for utilizing a healthier, green lifestyle. GreenFEST will accept food bank donations, provide cell phone recycling, e-waste recycling, paper shredding, TRADE a bag (receive a recycle bag for a plastic bag) and Green Travel tips. In addition there will be TEST rides on electric scooters, alternative fuel vehicles, demos, a kids’ zone, and GIVEAWAYS from the many sponsors like Renassaince Club Sport, Green Essence Cleaning Company, Whole Foods, and scrumptious food from Nature’s Bounty Café.
For the RAFFLE, the Walnut Creek Green Business, Green Wheelin’ Scooters, will provide a TEST ride on bikes and scooters like the RAFFLE PRIZE Sorrento electric transportation Scooter, and IZIP Electric Urban Cruiser Enlightened bike, each valued at $1899. Tickets are available for $10 each, three for $25, or 7 for $50.
Proceeds from GreenFEST 2010 will go to the Contra Costa Association of REALTORS® non-profit “Helping Hands Foundation” which funds educational scholarships and philanthropic endeavors that give back to the communities in which CCAR serves as well as benefitting Sustainable Contra Costa. For sponsorship opportunities and posters to display at your location, go to www.GreenFESTContraCosta.com.
We’ll see you at GreenFEST on August 14th!
Contact Terrylynn Fisher for more information at, info@GreenFESTContraCosta.com or 925.876.0966.
The Mortgage Challenge
Meeting the Mortgage Challenge
by Jeremy Conaway
Last month I had an opportunity to work with Brian Buffini and the Wells Fargo Home Mortgage team in a program called Meeting the Mortgage Challenge in 2010. I thought the program had great merit and I hope you will all forgive me for sharing both the experience and the message of that interaction.
The format of the program was a first for me. It is called a “CineMeeting,” the name being drawn from the company that broadcasts live via satellite to theaters across the country. While the main production was staged at the Public Television studios in Chicago, it was broadcast live via satellite to 60 theaters across the country, and reached a combined audience of over 28,000 REALTOR® guests.
I was struck by how incredibly professional the team was how detailed the production process was. The day was like visiting another world. It started at 6:30, when I was whisked away to the studios and taken through the process of preparing for a live satellite broadcast, a big departure from most days around my office.
Putting the whirlwind of production aside, I also want to share the serious side of the experience. First of all, I was taken by the professionalism, knowledge and caring of the Wells Fargo team. More specifically, I was impressed with Executive Vice President for Loan Servicing Mary Coffin and Executive Vice President and National Sales Manager Brad Blackwell. These are two very impressive young executives who are very much into the current mortgage situation. They were really focused on getting a specific message across regarding the seriousness that surrounds the current mortgage environment. They noted that the mortgage conversation has three, not two, participants, pointing out the fact that the vast majority of mortgages are sold to an investor shortly after execution.
Literally hundreds of regulatory changes that have occurred in the mortgage process over the past year, they reported, and warned of more to come. They talked about the fact that just their organization alone has hired over 7,000 new employees who will be tasked with helping to clean up the mess. They shared the communication nightmares caused when the Administration announces mortgage benefits and solutions as if they were going to materialize in minutes. In fact, the underlying regulations would take 6 to 8 weeks to draft, distribute and take effect, while, in the interim the very families they were supposed to protect are losing their homes.
Then they spoke, in grave terms, about the almost epidemic level of mortgage fraud that still exists, even in the short sale process. Finally, they talked about all the work that would have to be completed to get the mortgage system back to being able to support the REALTOR® and the American families that want to shelter their children in a secure environment.
During one of the breaks, the conversation turned to the importance of teaching partnerships between mortgage professionals and REALTORS®. The challenge of teaching both agents and consumers about the new world of mortgages, may be one of the most important elements standing in the way of a full market recovery.
It is sufficient to say that the dysfunctions, oddities and indeed vulgarities of the mortgage world of 2005 and 2006 are hopefully only distant history. In their place is a industry where young executives like Mary and Brad are doing everything they can to make sure that funding is available to monetize the hard work of agents and fulfill the dreams of American families. Yet, despite Mary and Brad’s best efforts, the mortgage process that survives this process, and the rules that will govern mortgages in the future, will bare few similarities to that which gave birth to the sub prime crisis of 2006. In fact for the next several years it may more closely resemble the mortgage process of the late 1970’s.
So what is the message here? Let’s start with the fact that funding real estate transactions must be on the top of everyone’s priority list. Interestingly enough, the first step of that challenge will be to ensure that REALTORS® themselves understand the new mortgage rules at a level that allows them to explain to their clients how the new systems work. The second step is to ensure that consumers are prepared for what they may have to go through in order to qualify, so that they don’t end up angry and dissatisfied with their agent, and a system, which is still pretty reasonable considering all that it has gone through.
Brokers should immediately undertake to meet these challenges by working with responsible and educated members of the mortgage community. It is essential that agents not only understand the changes that have already been made but, of equal importance, that they understand the changes that might yet occur, as they occur, rather than months later.
We share our real estate marketplace with a number of other professionals. This is a time to put aside past unhappiness and work together to give the American consumer the sense of confidence they deserve and, given the reality of today’s market, will probably demand before those closing documents have been signed.
We can do this.
Home Sales Rise
Existing-Home Sales Rise on Home Buyer Tax Credit and Favorable Market Conditions
Washington, April 22, 2010
Buyers responding to the homebuyer tax credit and favorable affordability conditions boosted existing-home sales in March, marking the beginning of an expected spring surge, according to the National Association of Realtors®. Click for the full story!
Consumer Listening
Consumer Listening in 2010: A Challenge to Be Embraced or a Pain to be Avoided?
by Jeremy Conaway, Reconis
Virtually every marketing writer and demographic expert in American print, broadcast, and online media has declared this to be the decade of the consumer. The absolute power of the consumer, and their unrelenting use of that power, to change everything consumer-related makes it clear that real estate brokerages must quickly complete their transition from agent centricity to consumer focus.
So…how are we doing with this objective? How many brokerages have adopted consumer centricity policies or guidelines? How many firms are using internal or external resources to track consumer behaviors in their marketplace? How many brokerages are downloading their agents relative to the demands, preferences, and expectations being articulated by their customers every day, in every way?
A recent poll of 72 brokerages conducted by RECON Intelligence Services suggests that, while the industry is saying that it understands the need to be consumer centric, its behavior suggests a slightly less aggressive posture. Only fifteen of the firms surveyed indicated that they were collecting data from their agents. Only 22 indicated that they were monitoring external sources and/or sharing/reporting information regarding changing consumer behaviors to their agent panels. This result carries dire consequences for an industry that is currently vulnerable to the whims and perspectives of a consumer who continues to have a less than positive sense regarding real estate professionals.
A number of firms and organizations within the industry, which lay claim to an active consumer interactive program, use surveys to generate their numbers. Oops. A consumer survey makes a very negative statement regarding the firm’s knowledge regarding how to listen to consumers in 2010. It’s a major part of the challenge. Consumers are changing everything in the business equation. If you aren’t following your consumers, you might not know that “listening” has replaced surveying as the number one exchange media.
Consumers have grown wise to the fact that the real skill set in surveying isn’t communications, but rather in crafting a surveying instrument that will generate the result sought by the surveyor. In other words, today’s consumer is not interested in having someone put words into their mouth. They feel totally competent in expressing their opinions, preferences, and demands without the assistance of some sharp-witted researcher who can design a survey question that sounds remotely like; “when did you stop beating your spouse?”
Marketing professionals across the industry continue to complain that consumers and insiders refuse to participate in their survey processes. All too frequently, this failure to respond is interpreted as proof that the consumer or insider simply has nothing to say. Obviously, it is quite the opposite. They do have something to say, and they want to say it in their own words.
There is a new solution for brokers, brokerage executives, and managers who wish to transition into the “new wisdom” relative to the finding out of what their customers are thinking, preferring, and demanding.
The Advertising Research Foundation (ARF) recently published a book entitled “Foundations of Listening.” A quick read for those responsible for understanding consumers, the book sets forth the current art of listening, complete with excellent case studies. Traditional marketers need not panic, however. After seeming to commit itself to a new way of interacting with consumers, the book concludes by pointing out that the old time survey still has its place when it is clearly and perceptibly unbiased.
The fact is that millions of real estate consumers are freely giving their opinions and senses about a massive range of real estate experience issues. This speaks volumes about both their need to be heard and the brokerage’s need to hear them.
The world of social media has gifted the real estate industry with an avalanche of consumer opinion and preference. The only question is whether the industry wants to tap into this wealth. The first step to asking the question is recognizing that this stream of consciousness is a blessing, not a curse. It is a gift, not a burden. It is our customers caring enough to share with us how they feel about the current brokerage value proposition and experience.
If this message catches your attention, set about the process of establishing a consumer listening program in your brokerage. Carefully monitor social media for comments regarding your agents and services. Use your blogs to comment on your value proposition, and then carefully listen to consumer response. Take advantage of Linkedin, Twitter, Facebook, MySpace, Ming, Bebo, BigTent, and Geni.com.
Set up a system to capture and categorize what you are hearing from your consumers. Convert that information into improved services and value. Use the same social media channels to report back to consumers relative to your response and solutions. Use the whole system to create powerful consumer-brokerage relationships. Encourage your customers to rate your services, remembering that rating is the new advertising.
This is exciting stuff. It moves brokerage management from a reliance on anecdotal stories, guess work, and incomplete conclusions to an exacting science of listening, analysis, and action based upon the known. This is our destiny, and we can do it.
Broker’s Commission
Hud Letter Allows Percentage Plus Flat Fee Commission
A real estate broker’s commission may be determined using a percentage of the sales price, a flat fee, or a combination of both, according to a recent letter from HUD’s General Counsel Helen Kanovsky. The January 22 letter clarifies the distinction between using a formula to calculate a legitimate commission, as opposed to an unearned fee that violates RESPA. Under RESPA, a real estate broker cannot charge a fee if no, nominal, or duplicative work is done.
According to the letter from Ms. Kanovsky, the new HUD-1 simplifies the reporting of the broker’s commission because it is now reported in the 700-series as dollar amounts, rather than percentages. If, however, the amount in the 700-series is more than the commission in the listing agreement or buyer’s broker agreement, then HUD may review whether additional services were provided for the excess amount charged. As an example, a listing broker charging the buyer an administrative fee absent any contractual relationship between the listing broker and buyer may be evidence of a RESPA violation.
A copy of the HUD letter is available here.
It provides REALTORS ® with some guidance after a federal district court in Alabama invalidated a $149 administrative brokerage commission last year in the case of Busby v. JRHBW Realty, Inc. (2009) 642 F.Supp.2d 1283.
For more information on that case, see C.A.R.’s Realegal dated April 27, 2009, available here.
Post-Recession
Post-Recession Marketing Message for Brokers
by Jeremy Conaway
The government announced it was over last fall. Conservative financial experts are suggesting it will be over next June. Whoever one listens to, there is a high level of disagreement regarding when the recession was, or will be, over. Regardless of when your brokerage’s management team officially decides it has tired of the recession and is ready to move into recovery, it is clear that there is much to be done inside your firm’s marketing program.
The confusion in declaring the recession’s death is, to some extent, brought about by the fact that making these types of market calls is, for real estate professions, a very emotional decision. It works both ways. Many real estate professionals refused to admit that the market had tanked in 2006. For this group such declarations were considered bad luck and the kiss of death. Accordingly, well into 2007 they were still telling everyone who would listen that “their” market was grand and that the key was to work harder. Oh, the power of positive thinking!
Now, in the spring of 2010, we are at the other end of the spectrum. Now this same group is dragging their feet at the idea that a normal market has returned. Yet industry experts, such as Steve Murray of the Real Trends organization, are telling us that their research indicates that over the past thirty years the average market performance has been 4.93 units per one hundred households. Adjusting that for real time (adjusting is the sign of an expert you know) one would come up with a figure of 4.84 residential transactions per 100 household units, a number that is dangerously close to the 2009-year end production numbers.
So, regardless of how your firm will go about declaring the recovery process has arrived, the first test of success will be universal acceptance of the decision within your firm. If half of your management team and agents are still in doubt, your efforts to adopt a recovery mind set and marketing program will fail.
The next step to adopting a successful recovery mindset is to understand and accept the consequences of the recession. Its impact will affect millions of American families for years to come. That same group that wanted to deny the down market in the first place will now work to convince everyone in the office that “their” clients were, somehow, untouched by the recession. This is simply not the case. Real estate consumers in every socio economic category have lost wealth through the devaluation of their property and financial holdings. Pretending otherwise will only further damage existing and new customer relationships that will already be strained by the financial events of the past few years.
Firms that have traditionally dealt with wealthy clients and luxury homes will find the new economic order especially challenging. On one hand, a whole new generation of Americans may now be able to afford homes that, at their 2005 prices, were out of reach. In the same vein, clients, whose 2005 level of wealth and affluence would have allowed them to live anywhere, may now find themselves downsizing into much more restricted circumstances.
Consumers in all ranges will be looking to enter into a whole different kind of relationship with their real estate broker. That broker’s, or their agent’s, insensitivity to their new status or plight may not be consistent with such a relationship.
Another key element of the post recession brokerage strategy will be continuing to emphasize both value propositions and consumer experiences. A recession, like heart surgery, is over years before its effects upon the patient wear off. Over the next several years a significant percentage of real estate consumers will be focused upon value in everything they approach.
In the same vein, many consumers, especially those who were hurt in the recession, will be focused on getting back into a local community environment. Many Americans will associate the recession with the global economy. For this group being a global citizen may not be as attractive as it was ten years ago. This attitude will embrace buying into familiar neighborhoods and re-engaging lost social contacts. Expect to see a rise in “made in America” marketing messages.
Now, more than ever before, consumers will be seeking out and attempting to capture the “essence” of their local communities and even neighborhoods as they create new lifestyles. Brokerages with long histories in the community will want to emphasize this quality in their marketing. A word of warning here would be appropriate. Don’t market traditional roles and values unless the entire company team is prepared to deliver them. Be sure to train managers and agents on the fine points of delivery this unique kind of value proposition.
Smart brokers will be focusing on marketing strategies that communicate effective messages in good markets and bad. The concept of “what matters most” captures this idea. Again, recognize the fact that consumers whose priorities previously included impressing friends and social contacts and enjoying 20% annual appreciation may now just be focusing on owning a nice home with friendly and non-judgmental neighbors as a place to raise their families.
This is also a time in which innovation will be both recognized and appreciated. In this context, innovation is not so much about bringing in new things as much as it is about improving existing things like procedures, processes and outcomes. Successful post recession brokerages will review their marketing and transactional services with an eye towards making the home buying process more dependable, more stable, with less surprises and unforeseen consequences. While the consumer of 2000 may have been willing to tolerate significant levels of hassle on their way to fame and fortune, that same customer in 2010 will recognize these shortcomings for what they always were – a failure to respect customers and an unwillingness to provide a quality and accountable experience.
This is not to suggest that innovation will not include new products, programs and services, for it certainly will. Over the next two years, lifestyle services will become critically important as consumers work hard to adjust to their new social, economic and living environments. The provision of lifestyle services will also represent a key opportunity to expand brokerage profitability.
In summation, whether brokerages engineer their post recession success through transitional messages, product mix or innovation, the single most important element of this new energy will involve updating and refining the brokerage’s relationships with its new and old customers. Think of it as “dating” your customers. They are looking for new experiences, and you are looking for a new space and increased profitability in the marketplace.
We can do this. Now is the time to start.
MLS DRE # REQUIRED
Effective April 5, you will n
eed to enter the Selling/Buyer Agent’s DRE number when changing a listing’s status to “Pending.” You will still need to enter the agent’s name in addition to this new field before saving the page. If you have any question regarding the new requirement or other MLS Rules, please contact Jared White at 925 295 9209 or jared@ccartoday.com. Click here to see a full set of the MLS Rules and Regulations.
ILLEGAL SHORT SALES
UNDISCLOSED SHORT SALE PAYMENTS MAY BE ILLEGAL
Undisclosed payments in short sale transactions, especially those paid outside of escrow, may violate the law, including RESPA, laws against loan fraud, and licensing laws. Short sale agents have increasingly reported to C.A.R. about requests for agents and their clients to pay junior lienholders and others, oftentimes outside of escrow.
One common scenario is when a short sale seller’s senior lender authorizes a payment of $3,000, for example, to extinguish a junior lien, but the junior lender demands that the buyer pays an additional $9,000 outside of escrow. Not only would it be risky for a buyer to pay outside of escrow, but concealing this additional payment from a federally-insured senior lender may constitute loan fraud, which is a crime punishable by 30 years imprisonment plus a $1 million fine (18 U.S.C. section 1014). Furthermore, omitting from the HUD-1 Statement any charges paid at settlement by either a buyer or seller may violate the Real Estate Settlement Procedures Act (RESPA) (Appendix A to 24 C.F.R. Part 3500). Depending on the specific circumstances, carrying out these payment requests may also violate other laws and regulations, and an agent’s participation in the scheme may be subject to license revocation by the Department of Real Estate or other disciplinary action.
Agents and their clients are encouraged to file any complaints regarding fraudulent activities to the proper authorities, including the following agencies:
Attorney General’s Office
California Department of Justice
800-952-5225 Phone
http://ag.ca.gov/consumers/mailform.htm
Department of Housing and Urban Development (HUD)
HUD Office of Inspector General Hotline (GFI)
800-347-3735 Phone
http://www.hud.gov/offices/oig/hotline
Federal Bureau of Investigation (FBI)
202-324-3000 Phone
https://tips.fbi.gov
Nationwide Open House
REALTOR® Nationwide Open House Weekend: April 10-11
The NATIONAL ASSOCIATION OF REALTORS® (NAR) has designated the weekend of April 10-11 as REALTOR® Nationwide Open House Weekend. REALTORS® and brokers across the nation are encouraged to participate in this campaign focused on increasing consumer awareness of the benefits of homeownership.
Nationwide Open House Weekend will enable sellers to showcase their homes for sale and potential home buyers to shop for a home while interest rates are low; home prices are affordable; there is a wide variety of homes available; and the federal tax credit is in place.
Managing Risk
2010 is so much more than just a new year. It is the beginning of a whole new decade, a new national economy, a new American demographic, a new consumer culture and, for the American real estate industry, a whole new way of doing business. It will be a year in which: information will reign supreme, REALTORS® will be rated, consumers will control, and real estate services will be redefined. It will be a year in which absolute attention to detail will represent the minimum standard, conversational knowledge of the global condition will earn a position in the race, and a total lack of assumption and legacy thinking will merit a winning finish.
Over the past few months this column has discussed the role of profitability, accountability, and consumer centricity moving forward onto this new brokerage landscape. This column will focus on a factor that will be universal to all of the above. We are focusing on risk, risk acceptance, risk avoidance, and risk management.
This column will have one thing in common with each of the others. Moving forward, it is critical for brokers to appreciate and understand that the period of change that they have survived over the past several years has now produced a new wisdom. This is not to suggest that the industry’s institutional wisdom during the 2002 – 2009 period wasn’t appropriate. It does, however, call our attention to the fact that the net deliverable of this now eight-year period of change, including pain and progress, is a whole new set of circumstances and precedence and, accordingly, a whole new set of rules regarding business policies and procedures.
Our inspiration for this column comes from the good folks at the Harvard University Business School. Harvard has recently produced a number of knowledge products, lectures, and publications addressing a new approach to risk in business. The stars of this show are Professors Kaplan, Mikes, and Tufano. Each offer in-depth examinations of specific elements within the new study of risk.
This article will cut through to the big picture and offer six management tools that can get the real estate broker on the road to meeting the “new risk” challenge.
The Risk Management Officer (RMO)
In the traditional brokerage business model (TBBM) the only official and effective risk monitors were likely to be legal counsel and/or the financial auditor. This is not to suggest that the broker was not involved in looking for risk, but it does suggest that “management by wandering around” didn’t turn out to be an effective risk management tool. In most cases, risk was a condition that was discovered when a critical incident occurred, a suit was filed or a negative comment appeared on a periodic audit. In essence the discovery was made when it was too late for the broker to manage out of its consequences.
The contemporary approach to risk management includes the designation of a Risk Management Officer (RMO). In the majority of firms whose size will not allow for a dedicated individual, the RMO will be “another duty as required.” The benefit of designating a full-time or part-time function isn’t the designation as much as the tools that go with the assignment. Most important, risk management now becomes an automated function with periodic reporting and testing, rather than something that happens when business is slow and other duties don’t beckon.
Risk Mapping
In the new world of risk, monitoring takes the place of early detection. Where the previous system was deemed successful when it discovered risk at an early stage, the new approach looks for circumstances or benchmarks that are likely to lead to risk. Jim Collin’s recent book “How the Mighty Fall” also provides a useful review of this concept. This new tool is called “risk mapping.” In its simplest format, the broker identifies each unique area of business and establishes a “risk profile” that, first,identifies probable risks and causes and, second, uses operational benchmarks to monitor business activity levels in order to determine when and where the risk situation might arise.
While a number of very sophisticated risk mapping models exist, perhaps the simplest one can be found in how a NASCAR race team monitors drivers, cars. and track conditions during the race to project when the probable risk factor moves beyond the risk acceptance performance mark.
Benchmark Trending (instead of extreme events)
As indicated above, the RMO will be searching operational data in order to determine the probability of risk, rather than trying to predict extreme events. In some cases this management technique will result in adjusting company behaviors to avoid the risk. In others, the risk will be allowed to occur, but the firm will be prepared to take actions to sharply avoid the full consequences of the risk.
Statistical Analysis (over a reliance on history)
Traditional risk management practices relied heavily on spotting similar historic situations and then predicting that the same result would occur. The reality of today’s rapidly changing business environment is that there is, generally, a whole new set of circumstances in play and that the chance of the same risk outcome occurring is quite rare. Perhaps, unfortunately – perhaps not – this is yet another example of the new reality in which past experiences are not necessarily beneficial to current operations because not enough of the circumstances of the two events are similar or even related. While industry experience will remain valuable in the management mix, it will not be as important as ‘out of the box’ thinking and benchmark analysis – a bad omen for the boomer generation executive but great news for the up and coming X and Y generation “Technofused benchmark junkie.”
Focus on ‘What to Do’ (rather than on ‘what not to do’)
The historic evidence suggests that too many risk managers focused their attention on what shouldn’t be done, rather than what could be done to reach the firm’s objectives. Success in risk management, moving forward, will not be measured by a lack of critical events, but, rather, on how close the firm comes to reaching its goals and objectives without having a critical event. This is the alternative opportunity theory that will place a bull’s eye on the foreheads of the classic corporate legal counsel whose advice sought to keep clients far away from risk, even if that meant far away from success.
Incorporate redundancy that wins out over economy.
The new real estate brokerage business model will run at a significantly higher “RMM” (Risk Measurement and Management) level than its predecessor. It will incorporate many more “risk generation” points. The success of risk management will not be measured on the basis of critical events, but rather on how prepared one is to face the possibility of negative social media comments. Overall, this will result in a much faster flow of events. In the traditional system, risk management involved keeping the firm’s operations away from risk. The new system will focus on accepting the risk that supports the firm’s goals and objectives, but providing many more instant solution resources when a risk event occurs or draws close. Redundancy will be a critical design factor within this environment.
These, then, are some of the issues, features, and performance characteristics of risk management in 2010. The prescription is simple. Read the current literature, identify who is going to play what role, align the firm’s risk management program with the upside rather than the downside, and, finally, use redundancy in tandem with a more aggressive “win-win” approach.
We can do this. Why wouldn’t we?
BROKERS: HIGHER GROUND
It is Time to Shift Our Focus From Commission Engineering to Lifestyle Design
By Jeremy Conaway
A friend and client of mine, Elaine Hangis, from Lexington, Kentucky is one of the brighter practitioners of association management. She consistently approaches the profession at a higher intellectual level than most and is almost always ahead of the crowd when it comes to spotting new concepts.
Hangis recently participated in a regional economic conference that featured, among other notables, former Federal Reserve Chairman Paul Volcker. Volcker, who is now 82, served the Fed under presidents Carter and Reagan. He is currently spending his days advising President Obama.
As a lead-in to his presentation, Volcker was asked to share his assessment of what caused this economic crisis and what is needed to fix it. His response was blunt and to the point.
Volcker said the nation must see the economic crisis as a “wake-up call” and make some fundamental changes. He emphasized the need for more rigorous math and science education and more technology research that can be commercialized to create jobs.
He criticized the recent emphasis on the service economy saying: “We can’t create wealth by serving hamburgers to each other.”
In what has to be one of the most poignant comments of our time, Volcker said that Americans need to shift away from “financial engineering” and focus once again on civil, mechanical and electrical engineering.
“We need to regain our leadership in technology development and manufacturing”, he said, “rather than churning out thousands of business school graduates who are focused solely on making big, quick and easy profits by manipulating money.”
Volcker concluded his comments by pointing out that economic recovery will require us to figure out how to prosper in a new and different global economy, rather than simply trying to get back what we have lost.
“Hear! Hear! That’s all well and good”, you might say, “but what does this message say to our industry?”
For much of the past twenty-five years the American real estate industry has focused its agent recruiting efforts on numbers versus quality. The industry’s culture is rife with references to this practice, none of which are more to the point than the famous “mirror test.” This practice reached its pinnacle in the mid point of this decade when almost half a million new agents were recruited, just in time to either cause or witness the end of history’s longest real estate boom.
Today the negative effects of this flawed process are more than obvious. Significant numbers of these new recruits have abandoned this new career, chagrined by the failure to make good on the implied promise of instant riches. The remaining survivors appear to be languishing in the remaining offices of their now exhausted brokers awaiting a return of the 2002 market, a reality almost as distant as the legitimacy of those failed agents’ claim to riches.
We know, as a matter of certainty, that the American real estate market will return, perhaps not to its 2005 glory, but certainly to levels that are sustainable and profitable. We also know, or should know, that we will not be returning to the legacy market of 2002. Those days are gone forever and in their place will be a whole new, and hopefully much more rational, marketplace and predictable transaction.
We know that this new market will be powerfully influenced by a whole new generation of consumers who will communicate, influence, reward and punish their real estate experience through social media technologies. We know that information will play a more important role than professional opinion in this new environment and that with its onset a whole new scenario of regulatory and financial tools will be in place.
We also sense that once it becomes clear that the market is returning, a lemming-like wave of humanity will return to the industry, once again seeking instant riches to be harvested with wit and personality rather than intellect, research and respect.
In this light, we return now to the wisdom of Chairman Volcker’s comments. Just as we, as a nation, cannot build wealth by serving hamburgers to each other, neither can we, as an industry, build sustainable profitability by employing individuals who are just in it to get rich quick.
The validity of this position has been more than established by recent surveys reflecting consumer distrust and disdain of agents based upon their lack of knowledge about the residential marketing process, the local market itself, and their inability or unwillingness to negotiate on behalf of the participating consumer. Whether these specifics are, in fact, true is not as important as the knowledge that today’s consumer is going to judge, rate and rank agents on a much different scale than the old “where they satisfied” test.
There is one other factor that we also know. Moving forward, well over sixty percent of the new market will be driven by consumers from the X and Y generations. Experts, authors and researchers reflecting on this demographic have been telling us, for a number of years, about their enhanced sensitivity regarding integrity, ethics and scrutiny.
While these generation-based factors may, in and of themselves, have been sufficient to change the ethical landscape in our industry, the recent recession and its aftermath have created an even more intense focus on the role of both ethics and integrity.
In other words, the stage is set. We know more about this new market than perhaps at any other time in the industry’s history. Fresh from our last recruiting boom in 2003 and 2004, we also know exactly what we can expect with respect to individuals who will seek entry as the next generation of agents. Many of them will not contribute to profitability, or agree to be accountable, and they will not be consumer centric.
As an industry seeking to maximize its credibility before this new consumer, as brokers seeking to return to profitability, as agents seeking to return to a satisfying and stable career path and as investors seeking to generate a market level return on investment, the real estate world must have this conversation. It must make a decision regarding who will be its ‘face’ moving forward, and it must decide whether the recruiting practices of the past are one of the lessons the industry has learned over the past 7 tumultuous years.
This is the moment in time to take the high ground. This is the time to create an agent demographic made up of individuals who are looking for a careers “worth living,” individuals of integrity, individuals who are willing to invest the time and resources into relevant knowledge, and individuals who understand the values necessary to create long term sustainable relationships with consumers.
We can do this. We must do this.
Broker Marketing
Adaptive Brand Marketing Will Change the Whole Approach to Brokerage Marketing
by Jeremy Conaway
All of us in the real estate industry have warily watched it approach. Quarter by quarter, over the past few years, the exploding world of the Internet and social media has been aggressively impacting and eroding the doctrines and concepts of traditional business marketing, including that which we have used to promote brokerages. We have heard and rejected the idea that the newspaper is on its way out, yet each month we hear of another newspaper leaving the newsstand. We hear how traditional “in your face” marketing is being rejected by today’s consumer and find that, indeed, expenditures for traditional mass media based marketing were down almost 18% during the first half of 2009.
Then in August of this year comes Bob Garfield, a really bright guy who is a twenty-one year veteran columnist from Advertising Age magazine and one of the most respected journalists in the business world with his new book The Chaos Scenario. The book chronicles the demise of traditional marketing and, of course, those who practice it. The book sets out, in great detail, why traditional marketing is neither effective in the digital age nor responsive to the demands of the social media empowered consumer. Even Garfield’s most vehement critics, like Jeff Goodby, acknowledge that the book is well researched and extremely well written, even if they don’t share its most dire predictions. They delight in pointing out that the Internet and social media are still relatively immature in many ways, including their financial model. They note, with tongue in cheek and fingers crossed, that these shortcomings may hold off the dogs for several more years.
Switch now to the first week in October and engage the Forrester Research organization’s latest white paper Adaptive Brand Marketing (2009, Lisa Bradner). If Bob Garfield is the marketing world’s early warning system, then Forrester is its Stanford University. Readers might recall that it was Charlene’s Li’s blockbuster book Groundswell that finally forced the business community to take the entire social media technology world seriously. Li, and her co-author Josh Bernoff, were, at the time the book was published, senior associates with the Forrester organization.
For the princely sum of $499 paid for the Forrester white paper, real estate brokers can find validation for their beliefs that today’s brand centric marketing shops are focused on periodic “dynamite” marketing campaigns that create new market spaces, leaving them with the perception of being in control of the marketplace.
But these firms are simply not equipped to deal with the 24/7 world of social media in which new trends and media events can happen virtually every day, all day. Brokers will further learn that in order for marketing campaigns to be relevant to today’s consumer, they must listen to the consumer needs expressed through social media and rapidly respond by aligning consumer demands with brand deliverables. This type of marketing program involves respecting and appreciating the power of consumer intellect, the necessity of incorporating consumer input, creating strategic brand platforms and empowering a “federated” organization across its width and breadth. (Marketing speak for “more than agents have contact with consumers”) Forrester suggests that the power of this “adaptive” approach to marketing will be so powerful that it will single handedly change the classic 4 Ps of marketing (Product, price, place and promotion) to a whole new set (Permission, proximity, perception and participation).
So what does all of this have to do with being a real estate broker in the last half of 2009? The answer can be found in the concept of preparation.
Whether in six months or twelve or even eighteen, a new real estate marketplace is coming to your community. It will not look like any real estate market you have ever dealt with. Most certainly of all it will not look, act, respond or perform in any manner like the market of 2002, which was the last market brokers could say that they were comfortable with. There will be a new inventory, new price points, a new consumer with new priorities and demands, new financing mechanisms, and yes, a whole new way to market your services.
The last four years have been tough times. Most, if not all, brokerages are struggling to break even and make payroll and other obligations. But unfortunately survival may not be enough. Surviving the down times is only the first challenge. Preparing for the new era is the second. It is critical that all real estate brokers, who hope to persevere until recovery in the new market, continue the steps that they have been taking to survive. But in the same vein, it is essential that they study the changing market environment and prepare to succeed in a totally new marketplace.
Create a “new era” action plan. If the new market arrived tomorrow what new strategies and tactics would you want to have in place? Don’t waste the first ten months of new opportunity getting ready to perform. That is the sole purpose of the last ten months of the down market.
Here is something really cool you can do with your “new era” plan. Bob Garfield is in the process of writing a new book entitled Listenomics. He is writing it on line for all to follow. Here is your change to learn about something that is critical to the success of your business. http://adage.com/garfield/index?sid=Listenomics Register to follow Bob on this new adventure. By the time he has finished the book you will be an expert on this new approach.
This is not about money brokers don’t have. It is about time they do have and a rekindling of the passion that makes this the best industry to be in, ever. Get started, we can do this.
Tax Credit Update!
According to John DiBiase, NAR Government Affairs Communications Director, the U.S. Senate just voted 98-0 to pass the Tax Credit [within the Unemployment Bill]. It now goes to the House of Representatives. It is expected that Democratic leadership will place the bill on a fast track for passage on Thursday. It could get to the President on Friday. - November 4, 2009
HOT – HomesOpenToday.com now offers an export!
Good morning, Michael Seguin, Director of Technology for the Contra Costa Association of REALTORS®. Today is Monday, October 19th. We hope you had a great weekend.
This past weekend we made some updates to the HOT – HomesOpenToday.com platform. These updates allow us to provide member brokers and the vendors that serve them with an export of Open Homes information. Specifically, we export MLS #, date and time held open to a file that participating members are allowed to download to merge with their existing consumer facing property search.
We will be working with authorized vendors to ensure that they are aware of their ability to pull this information into their search enabling database for use immediately.
The practical upshot of this is that HOT now offers yet more FREE exposure for your open homes. HomesOpenToday.com was of course built as a member benefit by the Contra Costa Association to facilitate its members showcasing of their MLS open homes. It is the only MLS driven open homes search in the East Bay. Adding your open house to HOT is free and easy for members – simply navigate to HomesOpenToday.com, login as you would to the MLS, and click ‘add open house’ next to the property that you want to publish as an open house. Enter the date and time held open, and click save. That is all!
You will now note a new checkbox on that property publication page – this check box allows you to OPT OUT of the free advertising that exporting your open house MLS #/date & time allows. If you choose not to allow us to syndicate this information to broker members and their sites, we will still publish your open house on HOT for the consumer to find… you simply won’t get all the extra free exposure that comes with having that open house be searchable from other bay area member search sites.
Thanks for your continued use of the HOT – HomesOpenToday.com platform. We look forward to providing you with more HOT updates soon.
Introducing ELF – Event Logic Framework
Good morning, Michael Seguin here, Director of Technology for the Contra Costa Association of REALTORS®. It is Monday, October the 12th. We hope that you had a great weekend.
We wanted to take a moment to introduce you to ELF. ELF stands for Event Logic Framework.
At its core, ELF is a message broker system built using the AMQP protocol. What that really means for you is that it is a very sophisticated business intelligence tool that we are able to use to send you communications based on pre-programmed channels of information.
So, for example… lets say that you just entered a new listing into the MLS. ELF constantly ‘listens’ for this sort of change, and reacts accordingly when it ‘hears’ an updated piece of information. In this case, it notices that you have a new listing, and sends you a convenient one stop ‘post listing input shop’ with information and tools for your new listing.
Want a snapshot of how your new listing compares to other listings in your area? Want a handy link to the rules and regulations governing that listing, direct access to add the listing as an open house to HOT, and other useful new listing tidbits? ELF will start sending these to you on every new listing.
Each message ‘channel’ that we program into the ELF system will be yet another way for you to get information that you need, when and where you need it. We look forward to putting this system online in October 2009. So please, white list the address ‘elf@ccartoday.com’ and stay tuned for more from ELF!
SHORT SALE REQUIREMENT
NO NEW 21-DAY TURNAROUND REQUIREMENT FOR SHORT SALE APPROVALS
Recently enacted Senate Bill 306 does not require lenders to review short sale requests from sellers and their agents within 21 days. The new California law, which addresses certain escrow procedures, has been mischaracterized by some practitioners as landmark legislation calling for a 21-day turnaround for short sale approvals.
The new law inserts a short payoff amount request into the existing payoff demand law which generally requires a lender to respond to a request for a payoff demand statement within 21 days from when it is requested, typically by escrow. The new law essentially requires, after a short sale has already been approved, for the lender to respond to a request for a short-pay demand statement within 21 days. The lender’s response to escrow can be a short-pay demand statement or even, depending on the circumstances, a written statement electing not to proceed with the proposed transaction.
Another provision of SB 306 may also cause confusion. In practice, a lender may approve a short sale subject to its review of a closing statement prepared by escrow, but the lender does not review that closing statement promptly. Under the new law, if a lender fails to approve the closing statement within four days, the closing statement shall be deemed approved, but only if it is “not clearly contrary to the terms of the short-pay agreement or the short-pay demand statement provided to the escrowholder.” The new law does not bind a lender to a short payoff amount in an offer that the lender has not approved.
Senate Bill 306 contains other technical changes in real estate related laws, such as, but not limited to, the following:
Expanding the existing requirement for a lender to contact certain borrowers to explore options for avoiding foreclosure at least 30 days before filing a notice of default, to include not only owner-occupied residences, but also owner-occupied residential property with two-to-four dwelling units.
Extending the existing requirement for a lender to record a notice of sale from 14 to 20 days before a trustee’s sale. This provision does not change existing law requiring a lender to wait at least 20 days after mailing a notice of sale before conducting a trustee’s sale.
This new law comes into effect on January 1, 2010. Click here for the full text of Senate Bill.
Written inquiries regarding Realegal® should be directed to Stella Ling, stellal@car.org.
Copyright © 2009 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)
Agent Ranking
Reconsidering Agent Ranking: The Last Moments of a Golden Opportunity
by Jeremy Conaway, RECONIS
RECON Intelligence Services prides itself in the quality of our research, the creativity of our thoughts, and the innovative nature of the concepts that we advocate. Accordingly we have, over the past several years, attempted to make this column as original and thought provoking as possible. However, this month we are going to divert from that track for what we would consider the common good.
Over the past two years a relatively small group of thinkers has been trying to convince the industry to engage consumer-generated agent review, rating and comment systems. We have been part of that group. Although we have raised a wide range of cogent and rational arguments in favor of this practice, our success to date has been limited to a small group of associations, one national brokerage and a few forward-thinking regional brokerages.
The vast majority of the industry remains steadfast in its belief that not only is real estate agent rating and ranking not necessary, but that it will simply not catch on in the real estate industry because our consumers are somehow different.
Our support of agent ranking, rating, and commenting has never been based upon the fact that we want it, although we should. It has not been based upon a sense that it would raise the agent bar, although it probably would. Our support of this concept has been based upon our belief that if the industry doesn’t set up its own program, a third party will do so. In all likelihood, such a third party will base its program on getting between the agent and the consumer and capturing a share of the commission. That we, as an industry, would take such a risk clearly outweighs any potential downsides.
We, as an industry, are running out of time to get on board with this cause. As we move closer to the new market environment that will be created by the rehabilitation of the housing market, the end of the recession, and the final deployment of the new consumer, the pace of change within the real estate space is quickening. We are in the warm-up lap of a whole new transactional and business environment. Within the next several months the pace car will leave the track and the green flag will be lowered. That moment in time will be for performance, not development.
The trendwatching.com organization has had a long and distinguished history conducting research into the trends that are impacting the American marketplace and business community. Each month they provide their subscribers with a trend briefing that is without peer, especially as it relates to the real estate industry.
For September, trendwatching.com’s trends brief is entitled “Transparency Triumph: Reviewing is the New Advertising.” This exceptional article covers, in great detail, just how far rating, ranking and review have come across the entire American economy.
The point of this article is simple. Whether you are a real estate industry leader or decision maker, or simply a practitioner trying to set your course in the new market, it is incumbent upon you to take a few moments and review the trendwatching.com article at http://trendwatching.com/briefing/.
What will you learn from reading Transparency Triumph?
• The traumatic economic events of the past five years have traumatized the American consumer into a state of complete distrust of both institutions and advertisers
• Today’s consumer is focusing on trusted relationships and trusted sources of information, and accordingly is obsessed about rating, ranking, and commenting on their own experiences as well as reading the rating and ranking of other consumers whom they consider trustworthy
• Everyone and everything being offered to this consumer is going to be rated, ranked, and commented upon
• Within the next 18 months accessing ranking, rating, and commenting sites will have become a mandatory part of the responsible consumer experience
• The good news is that third party real estate agent and brokerage rating sites have yet to gain critical mass and acceptance
• There is still time for the industry to facilitate the reviewing, ranking, and commenting activity within parameters that are fair to both consumers and real estate service providers
• The industry’s failure to realize this opportunity will create a permanent disability that will forever plague the agent and the industry
If after reading Transparency Triumph you remain opposed to the real estate industry undertaking an “agent sensitive” rating and ranking system, then at least you can say that you did your homework. If, on the other hand, you learn from the article that agent and broker ranking and rating is clearly going to happen, just like it is happening to doctors, lawyers, CPAs, dentists, architects, teachers, restaurants, and professors, and that the industry had best get about creating its own program, then use your power and influence to make it happen.
If the industry doesn’t respond to this trend on its way to becoming a rule, it will forever be unhappy as it suffers the fate of agent and broker rating and ranking systems designed and implemented by third parties that seek to exploit. Why ever would we do this to ourselves? We can make this happen, we can do this.
Brokerage Innovation
by Jeremy Conaway
Here is what we know about the next twelve months in the real estate marketplace:
• That a new and vibrant real estate market will emerge
• That consumers will be the most powerful force in this new market
• That information will be the currency of the new market
• That consumer expectations, the release of distressed properties and the availability of information will combine to create a new market dynamic
This level of knowledge may not be enough to satisfy a detail obsessed business planner, but it is certainly enough to recognize that whatever else must come out of the next twelve months a record level of innovation will be necessary and essential.
Given this certainty, the top priority for each and every brokerage must be to ensure that their business model and operational environment are positioned to encourage, seek out and recognize innovative behaviors and solutions. The following information is provided to get that process started.
The first response for some reader’s will be to sigh in exasperation and suggest that in today’s capital poor and stressful business environment survival is the objective and innovation is a luxury.
There is only one response to this position. It is impractical and unacceptable for brokerage firms to delay their innovation initiatives until the economy repairs itself. To do so is to risk: being well behind the industry curve when the economy does recover, and giving up precious opportunities to be a relevant and productive part of the new real estate industry. Now is the time to plant the seeds of innovation.
The first step to innovation is to understand it and create an atmosphere within the brokerage that will foster it.
What is innovation? The term innovation refers to creating a new way of doing something the brokerage is already doing or, in the alternative, doing something new that the brokerage is not currently doing. It may refer to incremental, radical, and revolutionary changes in thinking, products, processes, or organizations. Something new must be substantially different to be innovative, not an insignificant change. The change must increase customer value. The goal of brokerage innovation is to bring about positive change, to make someone or something better for its customers.
An innovative atmosphere exists when individuals engaged in this environment feel encouraged to think, create, interact and collaborate in an innovative manner. An innovative atmosphere also includes effective recognition and reward programs.
Prime you firm’s innovative pump by holding a one-day innovation retreat or innovation camp. Spend that day working with your management staff and top agents to:
• Review current consumer, consumption and real estate market trends. Create a matrix of these trends.
• Review your firm’s current consumer experience and value proposition. Create a matrix of their characteristics and promises.
• Identify reoccurring problems that your teams are encountering in today’s marketplace. Everyone is having issues today so they make a great place to start.
• Select a number of key operational or consumer services areas of activities or innovation zones.
• Motivate the participants to begin the process of thinking about how your management and sales teams can begin to meet today’s unique market circumstances with new approaches to the experience you offer consumers and your value proposition.
• Remember, during this process everything is up for consideration. There are no black out dates in the innovative process.
Carefully review your current initiatives to determine what should be postponed or curtailed. One of the biggest blocks to innovation is a sense that “there is already too much to do, why would we make our day-to-day activities even harder.” Innovation needs just a bit of space. But be sure that any space you create is being filled with innovation, not daydreaming.
Look for innovative ideas you can undertake quickly and cheaply. Financial distress should be a guideline, not a deterrent to innovation. Great innovation will not only improve the experience and value proposition, but it can also lead to cost savings.
Embrace “open sourcing” with respect to innovation. Expand your innovation search to include everyone in your firm, as well as customers, vendors and family members. Make your search for innovation transparent.
All too frequently, the greatest block to innovation is the person or persons at the top. Test your own innovative senses and response mechanisms. How innovative are you right now and how much have you really been encouraging innovation in this difficult time. Remember, a declaration that there is no money for innovation shuts down the entire process because it really says, “I am so busy keeping this thing afloat I have no time for silly ideas and innovation.”
Look for innovative ways to expand your current service package especially in ways that make it more valuable and feeds the twelve expectations of the current consumer.
Be sure that your innovation process includes a relevant threat analysis. Many things have changed in the real estate market environment over the past four years. There are a number of new threats out there. Be sure your search for innovation includes ideas and solutions that address these threats.
Finally be sure that your search for innovation goes beyond your current range of operations. Leading firms will be innovating new and better ways to serve the real estate consumer.
These ideas will get you started, and now is the time. Declare your desire to be an innovative company, create a specific event or opportunity to start the process, carefully review what you are doing and what you would like to be doing, articulate a vision of what you would like to be, consider possible threats and get out of the way.
Innovation is there. Just let it happen. We can do this.
Your Listing: Meth Lab?
By Melissa Dittmann Tracey
The New York Times ran an article recently (”Illnesses Afflict Homes With a Criminal Past” by Shaila Dewan and Robbie Brown) that details a story about a family who moved into a spacious home in Winchester, Tenn., only to soon start battling years of illness — from breathing problems to seizures and migraines to kidney problems. Their home was making them sick.
Five years after moving into the home, the family discovered the home had once been used as a meth lab. And apparently these contaminated residences are not all that uncommon. What’s more, some may even be hitting your local market.
“Federal statistics show that the number of clandestine meth labs discovered in the United States rose by 14 percent last year, to 6,783, and has continued to increase,” the New York Times reports.
View a U.S. Drug Enforcement Administration map of meth lab incidents by state to see how prevalent it is in your area: http://www.usdoj.gov/dea/concern/map_lab_seizures.html
Chemist Lynn Riemer Of The North Metro Drug Task Force provides the following list of signs a meth lab may have been present in a home:
1. Yellow discoloration on walls, drains, sinks and showers.
2. Blue discoloration on valves of propane tanks and fire extinguishers.
3. Fire detectors that are removed–or taped off.
4. Burning in your eyes, itchy throat, a metallic taste in your mouth, or breathing problems when in the home.
5. Strong odors that smell similar to materials often found in a garage, such as solvent and paint thinner, or odors of cat urine or ammonia.
About 20 states have passed laws that require meth contamination cleanup. Cleanup can be costly, though. The family described in The New York Times article would need $30,000 or more to get the necessary cleanup, and that amount doesn’t even take into account their medical bills from living in a contaminated house for so long.
News from C.A.R.
New rules protecting home loans effective July 30. New rules that revise the disclosure requirements for mortgage loans under Regulation Z (Truth in Lending) went into effect on July 30. The revisions implement the Mortgage Disclosure Improvement Act (MDIA), which was enacted in July 2008 as an
amendment to the Truth in Lending Act (TILA). It is possible that these new requirements may cause delays in getting loans, and agents should be careful to plan for this when their clients are deciding close of escrow dates.
The MDIA requires creditors to give good faith estimates of mortgage loan costs (“early disclosures”) within three business days after receiving a consumer’s application for a mortgage loan and before any fees are collected from the consumer, other than a reasonable fee for obtaining the consumer’s credit history, according to information from the Federal Reserve. The MDIA also requires early disclosures for loans secured by dwellings other than the consumer’s principal dwelling, such as
a second home.
In addition, the rules implement the MDIA’s requirements that creditors wait seven business days after they provide the early disclosures before closing the loan; and that creditors provide new disclosures with a revised annual percentage rate (APR), and wait an additional three business days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate beyond a specified tolerance, according to the Federal Reserve. The rules also permit a consumer
to expedite the closing to address a personal financial emergency, such as a foreclosure.
More info: http://takeaction.
Share your input: HVCC and your real estate business online survey C.A.R. is working to mitigate as quickly as possible the unintended consequences of the HVCC (Home Valuation Code of Conduct). Effective May 1, 2009, the HVCC is now required for all loans sold to Fannie Mae and Freddie Mac and since then has had a significant impact on many California real estate transactions. In an effort to gather input from REALTORS®, we need specific information on your experience with the HVCC and encourage you to participate in this short survey. Please click on the link below to share how the HVCC has affected your real estate business. Thank you for your cooperation.
http://takeaction.realtoractioncenter.com/ct/xdL0IvE1A4Zm/
C.A.R.H.A.F. Mortgage Protection Program webinars July 30, Aug. 4 and 18 To help provide first-time home buyers with peace of mind when purchasing a home, the CALIFORNIA ASSOCIATION OF REALTORS® Housing Affordability Fund (C.A.R.H.A.F.) is offering a new mortgage protection program to first-time home buyers.
Through the C.A.R. Housing Affordability Fund’s Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month, for six months, to help make their mortgage payments. A qualified co-buyer also can participate in the program, and receive a monthly benefit of $750 per month for up to six months.
C.A.R. also is offering a series of free webinars for members about the C.A.R.H.A.F. Mortgage Protection Program (MPP). Beginning Aug. 1, changes to the C.A.R.H.A.F. Mortgage Protection Program were implemented. To learn more about these changes and how to get your clients pre-approved for the C.A.R.H.A.F. Mortgage Protection Program, plan to attend one of these free webinars. The webinars will be offered on the following dates and times:
Tuesday, Aug. 18, 3 p.m. ? 3:30 p.m.
Visit http://takeaction.realtoractioncenter.com/ct/3dL0IvE1A4Zh/ to register.
For questions about MPP, call (213) 739-8380.
More info:
http://takeaction.realtoractioncenter.com/ct/w7L0IvE1A4Z6/
Customizable Green Living Tips available
If you’re looking for an affordable way to share both your green sensibilities and REALTOR® brand with your clients and farm, then “Green Living Tips” is the solution. This professionally designed four-page brochure is chock-full of tips that will save your clients money and improve their home’s energy efficiency. “Green Living Tips” is customizable, allowing you to add your contact info and logo. Available in quantities of 50 to 1,000 at a cost of $50 to $750, depending on number ordered, “Green Living Tips” is printed on 100-percent post-consumer recycled fibers, using soy-based inks, by a Sustainable Green Printing Partnership and Forest Stewardship Council-certified printer. “Green Living Tips” can be ordered online at http://takeaction.realtoractioncenter.com/ct/2pL0IvE1A4Zt/.
Quantities greater than 1,000 are available upon request. For more green real-estate-related tips and discussion, visit C.A.R.’s green blog(http://takeaction.realtoractioncenter.com/ct/M7L0IvE1A4Zd/)
and C.A.R.?s Green Web site
(http://takeaction.realtoractioncenter.com/ct/2dL0IvE1A4Zv/).
More info:
http://takeaction.realtoractioncenter.com/ct/2pL0IvE1A4Zt/
You Be the Reporter
C.A.R. Market Matters is developing You Be the Reporter, a new feature that will appear monthly in Market Matters. REALTORS®, as trusted sources of information, are best positioned to provide an overview of what is happening in their market at the local level. You Be the Reporter enables members to share local market information and advice with peers and clients, while also sharing their expertise on doing business in California’s dynamic market.
You Be the Reporter also will serve as a platform for REALTORS® to discuss how their local markets differ from statewide or national trends. It also will be an opportunity to share tips on working with clients in today’s market.
This month’s question: How have you convinced an on-the-fence, first-time buyer that now is an opportune time to purchase a home?
To submit a response, please send via e-mail to marketmatters@car.org with “You Be the Reporter” in the subject line. Submissions should include a headshot, name, company name, city, and complete contact information. Each month C.A.R. will pose a new question and ask REALTORS® to respond via e-mail. A selection of responses will be featured in upcoming issues of Market Matters.
Realtors® Fight West Nile Virus
Realtors And Mosquito Control Unite: Fighting West Nile Virus One Swimming Pool At A Time
– Partnership aims to fight disease by locating and treating mosquitoes in neglected swimming pools –
Realtors® find them, and mosquito control treats the mosquitoes in them. In a unique partnership, two Contra Costa County entities, Mosquito & Vector Control and the Contra Costa Association of Realtors®, have partnered to wage a war on neglected swimming pools that readily produce mosquitoes that can carry West Nile virus, a potentially debilitating and deadly disease spread by mosquitoes.
“Realtors® are the first line of defense, since they are usually the first to find neglected swimming pools that are virtually hidden in neighborhoods,” said Deborah Bass, spokeswoman for the Contra Costa Mosquito & Vector Control District. “Once we control the mosquitoes, residents are at decreased risk from contracting West Nile virus.”
Contra Costa County is one of the top California counties for home foreclosures, many of which have swimming pools. Neglected swimming pools account for most of the mosquito production in residential yards. One neglected swimming pool can produce more than 1 million mosquitoes and affect people as far away as five miles. Often, the swimming pools are hidden from public access and can be difficult to find.
“Reporting neglected swimming pools to Mosquito & Vector Control is the best solution for everyone,” said Steve Reiser, President of Contra Costa Association of Realtors®. “We want the properties under our care to be mosquito free, and they are the agency to ensure that. And it helps potential buyers to know that the swimming pool is free of mosquitoes as well.”
In addition to working together on neglected swimming pools, Mosquito and Vector Control provides the Realtors® with tailored presentations that educate them about the virus and the mosquitoes that carry the disease.
To understand possible mosquito water sources in yards, visit the District’s Web site http://intranet.ccmvcd.net:8089/pdf/mosquito_proof_yard.pdf
To learn more about Contra Costa Mosquito & Vector Control District, visit www.ccmvcd.dst.ca.us
Contra Costa Mosquito & Vector Control District, a public health agency, is located at 155 Mason Circle in Concord. Call the District to report mosquito problems at (925) 771-6195 or visit their office between 8:00 a.m. and 4:30 p.m. to get FREE mosquitofish for ornamental ponds or horse troughs.
