Real Estate. Economics. Business
Title-1 introduces an online tool that allows home buyers and real estate agents to get an accurate estimate of what it’s going to cost to close on their real estate transaction. Be sure to check out their Purchase CalcuRator!
Congratuations to Title-1. I think this is a fanstastic too!
No doubt this was a phenomenal Parade of Homes for the Twin Cities new construction market. According to the Builder Association of the Twin Cities, this was the best Parade since 2007. It probably helps that the number of builders who were presenting their homes is down substantially since 2007, but the foot traffic really was excellent and the sales were well beyond expectations. I recall at the top of the housing market that there were 1,100 to 1,200 homes that were being shown in the Parade of Homes. If I’m not mistaken, I think this year the number was less than 400. Those who have stuck it out are doing well!
First of all, congratulations to home town business giant, General Mills for being named the most reputable big company in America according to the story published in Forbes Magazine. Forbes partnered with the Reputation Institute to conduct the annual research.
Not surprising was to hear the news that my old friend, Freddie Mac was named the least reputable big company in America…closely followed by Fannie Mae and Goldman Sachs.
The least reputable company on the list this year: Freddie Mac. In dead last, for the second consecutive year, the home mortgage financier earned a pulse score of 26.01, which is 3.46 points less than last year. Fannie Mae did only slightly better with 29.52 points. Goldman Sachs proves the third least reputable company, with a score of 36.95.
I’m still involved in one of the worst transactions of my career right now with a Freddie Mac owned property. What a delight.
There are a number of properties that are in multiple offer situations right now. I’m working on a bank deal right now and we don’t know the final tally, but we know for sure that there are 10 offers on the property. That was within the first four days the property was on the market. It’s a newer town home in Maple Grove priced under $110,000. If it were priced at $120,000 it would not have garnered nearly the interest that it has just $10,000 lower.
Any home can be sold. It’s all about value. It’s not about the marketing. Trust me. When you see the “marketing” that the REO (real estate owned) agents do, you will know that marketing doesn’t sell homes. Is it priced aggressively? Is it on the MLS? If so, it will sell.
Photo: MSNBC NY LaGuardia Airport
Remember when the airlines absolutely sucked? (Pardon my language but how else to describe?) Remember how awful the customer service was in the airline business in the 1980′s and 1990′s. They seemed to have no care for their paying customers. Service was terrible. Response times were terrible. Few if any seemed to go the extra mile to take care of an issue. It was terrible.
Well I think the banks are the new airlines. And when I mean banks, I don’t mean the front end of the banks – the retail side. Those are some of the nicest, most polite and pleasant people you’ll ever meet. I’m talking about the REO (real estate owned) and foreclosure side of the house. The communication is stunningly poor and ineffective. They are unresponsive. There is no appreciation for those of us in the field trying to “get things done” for our buyers on their properties. We are on an “as needs to know” basis and when we need a response, it might be days to get something back from them. However, once they send us something they DEMAND that it be turned around in 24 HOURS or the deal is potentially DEAD.
It’s difficult to know where the problem lie exactly. It could be the bankers themselves or it could be their asset managers that they’ve hired to “dispose” of their housing inventory.
They are now costing my buyers money because of their unresponsiveness and lack of attention to detail. The latter has really been incredible lately and it’s amazing anything gets done. If you’re reading this as an end consumer, you may not care in a broad sense what real estate agents get paid to put these deals together, but I would hope you care about your own particular agent. Freddie Mac has started to cut commissions to Realtors now I guess perhaps because their deals are so easy that Realtors shouldn’t get paid their 3% 
Currently I’m working on a Freddie Mac property where they misspelled my buyers name. It’s a common name and they added a letter that should not have been there. They have to send it back to be revised. That was last Friday. It’s now Wednesday afternoon…5 days later…still no revised contract. It has to work its way through the bureaucracy for one letter!!! Meanwhile, this is costing my buyer money as interest rates slowly tick higher.
I’ve had other dealings with Freddie Mac and they would definitely get my vote as the worst bank in America to buy a house from. Bank of America might be a close second after the debacle I am currently working through right now. There are plenty of characters who might, on any given day, might earn the award of being the worst bank in America when it comes to buying REO property.
One thing is for sure, these parts of the banking business and asset management business charged with disposing of these properties must have taking their customer service training from the same folks who trained the airlines many years ago.
The latest Case-Shiller Home Price Index was released today and it seems to be a bit of a mixed bag of results for many cities. However, in Minneapolis, home prices declined by 1.8% year over year. Data was reported for the month of January 2012. I have been saying for some time that as we started to move in to 2012 that the Minneapolis area would start to print much better numbers in the Case-Shiller Index. It wasn’t that long ago and we were leading the nation for several months with the largest percentage of year over year declines. That now appears to be behind us.
Overall for the 10 and 20 city composites, home prices declined year over year by 3.9% and 3.8% respectively. Most housing analysts and the economists I read have generally been predicting that we’d see about another 5-6% decline in home prices this year. Based upon activity I’m seeing in some markets, we may do better than that.
Atlanta now has the distinct honor of being the worst performing market in the county with home prices down by 14.8% year over year according to this report.
Detroit gets the honor of being the best performing market with home prices up…yes, up, 1.7% year over year. I know that doesn’t sound like a lot, but that’s great news for the Detroit area which has extremely difficult the past several years.
Below is a table showing the scores for the 20 cities studied by the Case-Shiller Index.
(Click on Image to Enlarge)
The lead-based paint regulations that came down about a year or so ago really are ridiculous, but what would you expect coming from the EPA? I would bet that at 80-90% of the work sites in the Twin Cities that an inspector or regulator could find something wrong with the way the contractors are doing their work and fine them $37,000 per incident, per time, per day. All the while, no ones lives are being made safer given the EPA’s Lead Renovation, Repair and Painting (LRRP) rule.
According to the BATC blog, Plumb. Level, & Square, there is an effort by the U.S. Senate to revise some of the rules that they have implemented. It’s nice to see that someone has some common sense. Senator Inhofe (R-Okla) doesn’t go far enough in my opinion, but it’s a move in the right direction from the extreme nature of the rules. The proposed bill is called, Lead Exposure Reduction Amendments Act of 2012 (S. 2148).
I remember reading the EPA documents and arguments why they needed to do this. One of the things they said was it would add only $27 of costs to the average remodeling or painting project. Contractors I’ve talked with say put two more zeros on there and it might be more accurate.
If you own home built before 1978, expect to pay significantly more for your remodeling work because of the lead-based paint rules.
Rochester Minnesota, home to the world renowned Mayo Clinic, has been showing signs of improvement for new construction. Commercial construction is up 14% (2011 vs. 2010) but according to the Post Bulletin story about Rochester construction, the permit numbers don’t tell the whole story because some of those commercial projects are very large.
According to the Post Bulletin, there are new Mayo medical facilities to be built as well as a new Lourdes high school. Home remodeling is also showing signs of strength in Rochester much like it is across the U.S.
I just had to post this. We were out looking at homes this weekend and found this gem. Sorry I’m reverting back to my college days by posting something like this, but how cool would it be to have a urinal especially with a house full of boys or young men? Are you envious?
Home with urinal
Most people don’t know how Realtors get paid. Generally we get paid a certain percentage on every deal. The government requires that we state that commissions are negotiable…frankly, just like everything else in life, no? I’m not sure that I am allowed to talk about how Realtors make money in an open forum or not. This is not to create a conspiracy or collusion…all I can tell you is my experience. Generally the deals are done with 6 apples. With bank owned property it’s usually 3 apples goes to the listing broker and 3 apples go to the selling broker, or the buyer’s agent. In traditional sales, it’s usually a 3.3 apples/2.7 apples split.
I’m working on a deal right now where the listing shows 2.5 apples. I asked the listing broker if Freddie Mac changed it’s compensation and the response was yes there has been a change. I’m going to be in touch with Freddie Mac to see if indeed this is a corporate decision or not.
I realize many of you may not have any sympathy or appreciation for this inside baseball post, but that’s approximately a 17% reduction in the overall amount of apples the buyers agents get paid for their involvement in the transaction. Just curious to know how many of you would feel, whether or not you are an employee or a self-employed entrepreneur if you’d appreciate a 17% cut in pay.
Fannie Mae, HUD, Bank of America, Citi, Wells Fargo, JP Morgan etc., etc., etc. make sure to compensate the buyers agents fairly and are paying 3 apples for those transactions. Once in a while there might even be an additional $1,000 – $2,500 selling bonus for those agents. The fact of the matter is a bank owned deal, whether it’s HUD, Fannie Mae, Freddie Mac or one of the big banks, takes a lot more work for the buyers agent than it does for traditional transactions.
It’s not a great idea to short change the sales people who are really doing a lot of work to keep a transaction together and yet that’s what Freddie Mac appears to be doing. If that’s the direction they are going, perhaps they can just keep going and cut the buyers agents out completely. Good luck with that one buyers. You can deal directly with the listing agent. If you do that, you are best to make sure you understand “The New Agency Laws in Real Estate – Understanding Agency, Dual Agency and Representation as a Home Buyer or Home Seller.”
I will do a follow up if I hear from someone directly from Freddie Mac who can officially confirm this commission change. Sometimes there are asset management companies that try to step in between the investor owner (like Freddie Mac) and the listing broker. I’ve seen where those guys take a referral fee or percentage of the 6 or 7 apples which of course leaves the agents with less.
