New Housing Market

The days of fast money and anybody and their mama getting into the real estate business and hitting it big is over obi one kenobi...

And you know what I say?

Thank God!  The reason is we need a marketplace of professionals; leaders; trend setters; and customer service oriented champions who know what they are doing and can take their business to the next level.

Don't mean to be so harsh here (actually I do and I hope the wannabe's feelings are hurt) but this industry suffered greatly by people being able to get in so easily, and do to all the fast money, booming economic conditions, title companies, brokers, realtors, everybody was just jumping in for the quick buck, ran around and caused a muck.

See my post on building a brand or chasing a check because I dig into this by talking about what kind of value you bring to the marketplace and pose the question are you just in it for the money or are you in it to build a brand and a presence or chasing a check?

The new housing market; the new economy; the new way of doing things will be far different than what it was before. We'll be in a wet, sloshy, and muddy waters for some time to come. Call this cycle the "cleansing"...

Because while the wannabe's are going to be stuck in the mud, trying to figure out why the same things; the same talk; marketing schemes, advertising; and using old tricks that work in a booming economy where EVERYONE gets a piece... are not working anymore.

The Champions are flying above looking down for just a second then back up focused on achieving their next level.  See there are walkers and talkers ladies and gentlemen and their are people who talk a lot of "stuff" but are not getting the results.

What are you going to do in this new housing market?  Are you going be those stuck in the mud or are you going to build your brand and following, and create your own economy out of the ashes and prosper for the next year?

Ignore the governments numbers - people will always need housing.  Ignore the FED and the news talking about interest rates - interest rates can't and won't go anywhere for a while.  Stop focusing on where the market is everyday - unless you're a stock broker; investment adviser or something because that's just  a distraction...

What you need to do are these simple steps:

1. Have a clear vision
2. Decide on a strategy
3. Simplify and implement the strategy at the same time building value
4. Take MASSIVE freaking action.

Want to know the secret?....

That's it, there is no secret... YOU are the secret...

Clock's ticking....every second you let pass by with indecision is another second lost that you could be working on becoming the person you want to be. 

So in conclusion; we are in a new housing market, a new economy, but the best part is WE make our own economy.. so lets get to it.

Are You Building a Brand Or Chasing a Check?

Building Your Brand

Are you working toward building a brand and a following OR are you just chasing your next commission check? 

The truth is if your focus is on the money and not building your brand or following; you'll always be chasing the money.  What do I mean? I mean you'll be the hunter ALL the time...

The goal is not to be the hunter but the hunted.. You want people that are coming to you practically begging to do business with you because they are "know" you; have heard of you; when people talk about real estate; condo's, houses over a million, whatever your niche is --- when you have a brand you'll be the hunted.

Stop focusing on the check because this is where your emotions start to get the best of you.  When things pop up or go wrong; you become upset easily because the only goal you have is the check at the finish line.  When you have a brand; the money takes care of itself because money then chases you and not the other way around.

See this is hard for us to understand because we know we need money to buy things.  We need money to pay bills, take vacations, and quite frankly having money in your bank account makes life a whole lot easier.  

The truth of the matter is when that's your focus people can see that and you seem desperate.  Focus on building your brand and following, creating value to your marketplace and.....

....... you'll have all the business you'll ever need or can even handle.  

You can't be everything to everybody; you need a laser sharp focus on what you want.  

Steps To Building Your Brand

These 4 simple steps I swear, if you follow them, will change your business and bank account like magic.  You just have to decide and take action.  

That decision can be tough; I know because I was there.  I struggled a lot deciding because I thought "oh, well what if this doesn't work"; "what if I waste all this time and effort going for this and it doesn't pan out." 

You absolutely CANNOT think like this because you've already punched a hole in your boat and as soon as you set sail, shortly after you'll sink...

Your mind has to be convinced in your decision that you will make it work no matter what it takes.  

Who says it won't work? 

Who gives you permission to live your life and chase your dreams? 

Stop looking for permission; just decide and do it.  Build your brand and following and trust in the process you've laid out for yourself...

And Then...

Take MASSIVE freaking action.  So here's the steps:

1. 1. Decide and pick your focus and intention and see it clearly.
2. 2. Pick a strategy or two, or combination, or whatever the case may be but pick one
3. 3. Simply and break down to actionable steps
4. 4. Take MASSIVE freaking action

That's it.  When you do this the magic will happen.  

So are you going to build your brand and following or chase checks the rest of your life?  Decide; pick your strategy, simplify, and then ACT...

Let the magic happen baby...

Strong Warning From CFPB On Misleading Mortgage Advertisments

CFPB- Consumer Financial Protection Bureau

Just last week a warning was sent out regarding misleading mortgage advertisements.  You can read full release here.. What this is saying is they've found some recent advertisements are misleading to consumers and not disclosing all the information about true costs and terms of the loan agreements. 

I actually think this is a good thing.  All the ads out there that show 1% interest rate or super low fees or whatever the case may be is very misleading and I can't tell you how many times customers tell me about these deals and I let them know that those are just bait and switch ads but you won't find out until deep into the process or it's too late and by that time you're pissed off.

Sometimes it works and sometimes it doesn't and they have to go and find out for themselves the truth.  The problem is...now they don't trust anyone and that makes it hard to do business in the future...

...and we wonder why consumer confidence is low with lenders and loan officers in general.  

Now all companies don't do this type of activity but you do see some "creative" advertising to get people to pick up the phone and call.  

I take a different approach because what I have found is people just want you to be real with them.  

They will do business with and buy from people they like and trust and if I can develop a relationship with them; they will not only do business with me but will send referrals. 

Most companies are just in it for the quick buck and that should not be the approach.  

You'll make money and get some business in the short run, but this isn't how champions and professionals do business and it surely will kill you in the long run.  

Anyway...that's my two cents on it. 

I aim to build value and confidence so that customer has a great experience.  And truthfully, if you just explain things to people in plain English; all the terms, go over the benefits of how the loan will solve their problems and have a solution based presentation, people will come chasing you to do business with you.  

I don't really have to prospect anymore I just get referrals from clients, agents, and other sources because they know I'm for real; I don't sugar coat, I know what I'm doing, and I give realistic expectations.  

It's not rocket science here folks...

Just a little warning...for those of you who buy leads from these crap companies, I would stop because they have ads on the web for all kinds of ridiculous things that are misleading to get people to click and give up their information.  

So as the CFPB comes cracking down if you're buying from them ---guild by association.

Plus their sold to multiple people and companies.  The best way is to build your business organic which takes time.  

Check out the release above on the CFPB site and look out for more announcements like this as the CFPB gets up and running on all cylinders inspecting the practices of the all the lenders and brokers out there.  

Get ready we're headed for more changes in the future.  

Who will win in this environment? The Champions will... all the weanies will be pushed out and quite frankly...can't wait to see ya go...

How Can Realtors Sell Renovation

Selling Renovation

This is becoming so hot right now with all the foreclosures on the market but you have very few lenders who know how to originate, process, and close these.  Aside from that, you have few loan officers who are specialists in this area (and by the way you want to be working with a specialist) which creates issues because loan officers not familiar with the process on these are "winging it" and this is where your horror stories come from.

So work with a specialist!

Anyway...the topic for today is how can Realtors sell this in the marketplace.  Part of my continuing education class curriculum is going over how to sell this and quite frankly it's really easy.  You're doing it right now and you don't even know it.  Here's how..

When you're taking a client through a property do you ever make suggestions on carpet, paint color, or possible improvements they can make to the home to "make it theirs"? Use phrases such as "add your own personal touch"?

Sure you do.  What you're doing is selling renovation financing already it's just you're not connecting the dots with the client which is letting them know they have a way to do this now instead of later and over time (this is where you direct them to the specialist you've teamed up with to explain further, just leave it at that)

Let's face it...

They may say they are going to do it but over time that intent diminishes because life is busy, they will get distracted with other things and it will never get done; so by letting them know that this is an option now and that they can finance the cost of repairs into the loan along with their purchase - and they can move into the property and quickly begin and finish their desired improvements, is really really powerful and motivating.

Why? This creates the vision in their mind what the home will look like completed and we all know visuals are extremely powerful and will move people to action.  You're selling feelings here.  Besides, I would rather make the home my own then rely on the seller making improvements or "settling"on a house that was newly renovated that isn't just right but "will do" paying a premium for that house... and heck maybe over time even redoing those renovations to satisfy my own liking...

What a waste of time, money, and effort.  I would utilize the opportunity to do it now and turn the home I "just like" into the one "I really love" now.

More Ways To Sell Renovation

That's just one way.  Another way is to overcome property condition objections.  Ever have somebody walk in and before they even see the rest of the house, and say "nope, no way, carpet is ugly, cabinets gotta go, I'm done here"? 

Yea, you've been there before.  Use this as a tool to again, describe in short, what they can do.  Find out if that's really the objection.  

If the area is great, price is great, school district is good (if applicable) just ask this simple question to intrigue them and get them thinking... If I could show you a way where you could replace all of these ______ (whatever it was they had a problem with) brand new roll it into your loan and have it done the way you want, and have it done right after closing, would you be interested in knowing more and would you want to move forward on this home?

Spark interest; find out what is really bothering them about the house.  Will this always work? Will this be the answer for everybody? No, of course not but just like in baseball, can't hit the ball unless you take the bat off the shoulder and swing.  Same goes here, you won't know unless you ask...it's just another tool in your toolbox you can use to sell more homes.

Properties in need of repairs

Renovation financing is perfect for those "ugly properties" that need repairs just to get the financing done because standards, lets face it, have tightened up.

Instead of avoiding these, if you have a client interested in one of these properties, you should be smiling from ear to ear as they are already sold on this property and plan to make improvements as they want "the good deal" since it needs repairs. 

This is where you sell renovation financing and let them know they are creating additional equity through the improvements and they are able to obtain the financing with a low down payment solving two problems - purchasing the property and renovating it - all in one loan.

Example:

Purchase price - $50k

Estimated repairs - $40k

As is value - $50K due to condition

After-improved value - $120k once fixed up (which by the way is how we base their maximum financing off of, after-improved value which is why this option is so appealing)

Options to buy - cash as financing it with a regular loan will not fly due to repairs needed

Money needed for repairs - $40k

Total cash out of pocket - $90k

Now Using Renovation Financing See the Difference

Same as above for price and repairs so total NEW purchase price- $90k

After-improved value - $120k

Down payment on loan (depending on program) - either 3.5% or 5% (investor loans 20 and 25%) based on the $90k

Total cash needed - 3.5% of $90k = $3,150 5% of $90k = $4,500 + any closing costs that are not covered by the seller.

Difference $90k in cash OR

Put down $3,150 to $4,500 and use renovation financing to get this property.

Total equity - $30k
Total money out of pocket saved = $THOUSANDS

Not too shabby huh?

Either pay $90k out of pocket to pay cash and fix up or use renovation financing with minimal cash out of pocket and use banks money at low interest rates.  Fully amortized loan over 30yrs

Option 2 is definitely the smarter one.  This is an easy sell.

Some More Options

Now you can use this loan to sell updates to a badly outdated property as well.  Needs completely updated to modern standards - no problem - you can do anything from light to moderate (painting, carpet, cabinets, to plumbing, electrical) all the way up to tearing the house down and rebuilding on same foundation.  Has mold or lead based paint? No problem there either - done! 

More complex properties such as mixed use or manufactured - done! 

Conclusion

So you see, there are many ways to sell this and we are in a very wet, muddy, crazy marketplace right now but there is a way for you rise above the competition and dominate this piece of the market and do very well because I'll tell ya...

Nobody else is focusing on this at ALL.  They are scared of it.  That's because of the stories that they've heard and been told but then again were they working with a specialist and what was the whole story, would be two questions I'd be asking. 

Don't be scared of it - learn it, sell it, dominate, and have a monster successful 2013 because again, this will be the next real estate trend...

You can read When To Use Renovation Financing post as well here.. http://swigartsmortgagejournal.blogspot.com/2012/10/when-to-use-renovation-financing.html

Dustin

FHA Fund In Deep Doodoo

FHA's Finances

You're probably laughing at the title but it's true folks...FHA is in DEEP doodoo (my spelling I don't care) and has been for a long time.

Rueters released an article recently stating that unless FHA does something soon it will be drawing money from the Treasury...

So what's new in Washington? More taxes, more bailouts, more losses being covered up and now FHA will increase fees yet again to try to shore up the balance sheet and avoid a so called bailout.  However what's the difference right? All of us as consumers are bailing them out by paying higher fees for the mortgages.

The fund is a total disaster and the program is so outdated it's had little changes since it's inception in the 30's.  They know it needs restructured but choose to kick the can down the road. (just like everthing else, ha)

FHA now insures 1.2M mortgages and their share of the market has increased to 15% from 5% in 2006. The article went on to say that it missed needing to draw from the Treasury due to $1B in settlements from servicers...hmmm.. could that be why Wells was the next target?

Estimation is the fund will not be back to it's 2% capital ratio requirement until sometime in 2017...this just strengthens my prediction we're not going to see rates go anywhere upward - they just can't - anytime soon; they're relying too much on new activity and higher fees to keep the ponzi going.

Plus with the lawsuits they're hoping to generate some more revenue for the fund.

We're playing a dangerous game of Russian roulette here.    Just see this quote from Maxine Waters below

"At a time when the private market constricted, the FHA stepped up, providing crucial liquidity and access to the mortgage market," said Representative Maxine Waters, a senior Democrat on the House Financial Services Committee.


She warned against taking any actions that would "precipitously" choke off loan availability.

Oh yea...they know what's up.  If we choke off credit - crash and burn baby...

So What Mindset Should You Have About All of This?

So what does this mean for those in the industry? Consumers? Well folks you can't change it; it's happening and you're not personally going to do anything about it so if you're shopping for a loan and all you qualify for is FHA, you're just going to have to take it from behind...and you'll be forced to like it.

If you're in the business like I am I know what's going on and I understand it.  For the consumer I know it's hard as you don't go through it every day like we do.

The good news, because I try to focus on the good because you'll cause nothing but anxiety and stress if you don't, is that there is a real opportunity to utilize a program FHA offers and to take advantage of it.

What is it? It's the 203k renovation program.  I've said in earlier posts that this will be the new real estate trend, and it already is beginning to be, for some time to come.  Without going into full detail as my blog post will explain, you can buy a fixer upper and finance the cost of the improvements into the loan...
and your maximum financing is based on after improved value of the property...This is an awesome program but it does suck that it will be more expensive now...

However - if you find a property that is priced well below market value and put the right improvements into it, you CAN create instant equity.  Go here for details and read my blog post on it. 

Again folks, please keep in mind it's not your loan officer or realtor who caused all this mess...(see below)


Yeah Buddy!



It's these guys...they know, knew it, and let it happen because there buddy lobbyists were filling their pockets full of cashish. 

Stayed tuned and lets see what happens now that the election is over and we'll get to hear some nice juicy stories like we've been like the General Petraeus's little affair and whatever else they want to release now that Obama is back in for 4 more years.

Hold your hats...