Category: General

I recently read an article online about a gentleman who set a goal to purchase a home and then mapped out very specific steps as to how he would reach that goal. Personally, I was extremely impressed by his discipline and foresight. His goal had two parts to it: save $150,000 for a down payment and purchase a home. Before you choke on your coffee or spit soda through your nose, let me disclose here that the gentleman who is the subject of the article was purchasing a home in the New York City area. Now that your blood pressure is returning to normal and you’ve spared your freshly ironed white shirt from staining, I’ll give you a breakdown of his plan:

• Starting in 2007, he looked at his annual salary and then took a look at the amount of credit card debt he was carrying; he cut back on as many expenses as possible so he could pay off that credit card debt in the first year. Touché!
• He kept his lifestyle scaled back to the point where he had set it to pay off his credit card debt and put that additional money in the bank.
• After two years of doing this, he had quite a chunk of money set aside, and he invested it in a mutual fund for faster growth. Touché again!
• He continued in this vein – socking money away where he could and being careful about how his money was invested – until 2014. Yes, I did the math – that’s seven years!
• With $150,000 saved, he got prequalified and started looking for houses just outside the city. It took him until September 2015 to find what he wanted and within his price range, but his hard work and patience paid off: he purchased his first home.

There are some wonderful lessons in this gentleman’s story: the value of setting goals, the discipline to follow a plan, patience paying off, etc. These are all things that a lot of people have forgotten or refuse to implement in their own lives. There’s one more lesson that this story brings to light – and it’s one that the new homeowner in the article could have used.

The notion that you need to save 20% for a down payment is outdated – and it’s one that can really do a disservice to you. There are MANY programs available that require little or no down payment. Yes, I did say “no down payment” – and I’m not talking about a VA loan (which TOO MANY people fail to use although they’re eligible – that’s another subject for another day). Let’s say you had the foresight, patience, and fortitude to save just a third of what the gentleman in the article saved – that’s $50,000 that doesn’t need to go as a lump sum into a down payment. With interest rates as low as they are right now, pursuing a mortgage with a 3% down payment requirement, for example, allows you to take a VERY LARGE chunk of that $50,000 and do A LOT of great things – one of which, of course, is to reinvest it in something that is earning more than what mortgage interest rates are doing right now. Also, by taking advantage of one of these programs with a lower down-payment requirement, you can get into a house A LOT sooner – which could mean you could move out of that apartment where your roommate has a couch that smells like beef and cheese, and you’d have a little extra cash to buy a new couch. Touché!

This is nothing earth-shattering for any realtor who’s been around the block a couple of times and seen the market go up and down once or twice. Even though it’s not information that’s going to make you shoot soda (or any other beverage of your choice) through your nose, I thought it would be good to include it here as a gentle reminder – and perhaps allow you to share this with your clients. And if you’re new to the real estate world, this might have been covered in school, but it’s possible you might have been preoccupied with Pokémon Go or what our presidential candidates were saying about one another out on the campaign trail. I’m not asking that you provide me with a reason or excuse: I’m just going to share it with you for your own personal illumination.

The folks at Realtor.com were kind enough recently to offer up a cheat sheet for surviving a seller’s market. Times like these are not for the faint-of-heart buyers, nor are they ideal for sellers who don’t take the time to get educated (or get a really good agent – know any?).

Tip #1 to Buyers: Be on call. Many will say, “If you’re only looking now and then when it’s convenient, you’re probably wasting your time.” They suggest treating house hunting like job hunting. If someone calls with a lead, follow up promptly to gauge whether it could be a good fit – above all, don’t linger.

Tip #2 to Buyers: Bring the paperwork. To be taken seriously, buyers should get a mortgage pre-approval letter – we have something better – as well as a “proof of funds” form from their bank to show they have enough to cover a down payment. Timing is everything.

Tips #3 to Buyers: Limit the contingencies. In a seller’s market, buyers may need to drop some of the contingencies. Sellers want the fewest hurdles to closing as possible. If your buyers come in with several contingencies — such as “if” they secure financing — the sellers will likely bypass their offer and take another with less hassle. Also, don’t waste your time low-balling a seller – always put in an aggressive offer.

Tip #4 to Buyers: Cast a wide net. Search for homes outside prime locations if faced with limited or high-priced choices. Buyers need to carefully consider those things on which they’re willing to compromise. Sometimes properties sit, even in a seller’s market, because of a problem that is scaring other buyers away such as some renovation work that may need to be done. Those “flaws,” however, might not be a big deal to your buyers. Finding a house this way can also cut down on the amount of competition you will face.

Again, I know I’m not telling you anything you don’t already know, but it bears reminding: you’re the key to getting the buyers to follow these four tips. It might make you feel like you’re back at the kitchen table and you’re telling your high school child (or you’re the one being told by your parent) that the future rides on getting this project or homework done on time, but the payoff when it got done was well worth it, right?

Recently, I had the pleasure of visiting a large art museum, and I saw some very famous pieces up close and personal. And I saw some real “pieces,” too.

One exhibit in the Modern wing was a polished fiberglass plank approximately seven feet long painted bright red leaned up against the wall. Next to the plank was a card with this typed on it: “This is an archetypal example of the blurring of the line between traditional art and utility.” I read this in the voice of a cravat-wearing balding man with a monocle and aristocratic English accent, but what I pictured was a shady character explaining, “I swiped this from the bleachers at the high school football stadium, painted it red, and sold it to a snobby Brit for five large. I’m no Van Gogh, but I sure am good at shellacking, right?”

In the Early American wing, I noticed that all of the paintings of women looked like men in really bad wigs and ill-fitting dresses. I wouldn’t say they looked like drag queens because drag queens try much harder to look like women. Either there was a movement afoot in those days to seek out and only paint extremely homely women, or cross-dressing had much earlier (and uglier) beginnings. Either way, the artists must have been much more talented at painting a picture with words than with oils: “Dear sir, I believe I have captured the strength of your wife’s character through the dominant and handsome lantern jaw. And if you will notice, I subdued her bosom to assure you do not attract the attention of ungentlemanly oglers.” Perhaps in that exchange, the patron might say, “I’m no artist, but could you ‘subdue’ the Adam’s apple on her neck?”

The Sculptures area had me scratching my head, too. More than one of the female statues was dressed in a traditional robe slipping off one shoulder and exposing a . . . this isn’t like the Super Bowl and Janet Jackson’s split-second “wardrobe malfunction.” To the best of my knowledge, an artist will spend weeks if not months transforming a chunk of marble into a lifelike representation of the model – during that length of time, don’t you think the young lass is going to notice a draft and do a little adjusting? As they say, beauty is in the eye of the beholder.

As it is in art, so it is in real estate: What one person finds beautiful and priceless, another finds it ugly and overpriced. Like art dealers, real estate agents can’t control the inventory. The closest thing they can “control” is the deal itself – and there are still a lot of factors that could go sideways at any moment, so the sooner they can close the deal, the better. (Let’s not fool ourselves: in about 95% of real estate transactions, it’s an emotional decision.) So, the more factors that can be controlled, the better – and one of the biggest factors, of course, is money.

Any agent who was half awake during real estate school knows that before taking a client out to look at properties, the client needs to contact a mortgage company and get prequalified – and any agent who has done more than three transactions in his entire career knows that a prequal is NOT a guarantee that the client will ACTUALLY qualify. After the offer is made and accepted, there are still SO MANY things related to the client’s loan application that could go sideways and blow the deal. Wouldn’t it be nice if something existed in the lending world that was FAR MORE SURE than a prequal – something similarly sure as cash itself? Wish no longer: we have it. So, when your clients want to buy the real estate equivalent to an overpriced fiberglass plank, you can be sure they can afford it and the deal WILL close – even if you’re questioning their choices.

Saturday morning, I walked out into our backyard and noticed that the pool sweep hadn’t done a very good job the night before – it wasn’t covering the entire floor of the pool in its sweeps. I turned the sweep on to see what it was doing and quickly noticed that it didn’t like making right turns. While this is good for NASCAR drivers, this presented a problem for the pool sweep.

Fortunately, the pool sweep we have is a very simple mechanism with very few moving parts, so I was reasonably certain I couldn’t screw this up. I took it apart and soon figured out that there’s a group of small gears (not much bigger than the size of a half-dollar coin each) that are stacked atop one another that engage the rest of the unit and allow it to move in either direction. One of those little plastic gears (for a reason I still can’t figure out) refused to budge, so the rest of the gears refused to move, too. We’re talking about, probably, five cents worth of plastic in this little gear, but it was keeping the entire sweep from operating properly. Crazy! After replacing that gear (actually, I was forced to buy the entire gearbox package – and it was far more than five cents), I reassembled the pool sweep, hooked it back up to the hose, and dropped it back into the pool. The thing darts around the bottom of the pool turning in both directions now.

Like the small, seemingly inconsequential plastic gear in our pool sweep that has the power to stop the whole process, the lack of a small, seemingly inconsequential “thing” called customer service can derail an entire transaction. Let me give you just two examples:

• An agent referred a gentleman to us who wanted to purchase a home, but the gentleman only had Social Security as his active income. The agent and his client had been turned away by a handful of other mortgage companies the moment they saw how little the buyer received in Social Security each month. This transaction was obviously important to the buyer, and it was important to the agent – this was his means of supporting his family. Knowing that, we didn’t turn them away. We got a complete financial picture from the buyer and came up with a solution that not only got him in a home but . . . well, I won’t give away all our secrets in writing – if you call me, I’ll fill you in.
• One of the LOs in our office was working alongside a realtor in the process of getting a young family into their first home. The father/husband got a little excited in the process and went out and bought his family a new truck – before the home deal closed. Our intrepid LO, when he learned about the borrower’s exuberance, not only convinced the man to return the truck, he was able to convince the dealership to take it back and nullify the transaction. The family is in their new home now!

You may view those two examples above as a shameless commercial for our company (that’s your choice), but I put them out there for you to ask yourself a couple of questions: (1) Would you, as an agent, have given up at some point in either of the two scenarios above? (2) If not, why would you allow a lender to give up? It’s your paycheck; it’s your living.

Obviously, you all want to know what Brexit means to the economy and the housing market specifically. So do I! But since my crystal ball is at the cleaner’s, let’s give the Brits and the European Union a little time to work out the terms of their separation and look at something else.

What’s a “fad”? With the help of Google, this is what I got as a definition: “an intense and widely shared enthusiasm for something, especially one that is short-lived and without basis in the object’s qualities; a craze.” In April 1975, an advertising executive by the name of Gary Dahl invented the Pet Rock. The idea came from his sitting in a bar with some friends who were complaining about the cost and time required to take care of various types of pets. He marketed his “pets” by placing a rock in a box cut and shaped like one you would get at the pet store to carry home a puppy or a kitten. Along with the box and the rock, a booklet was included that detailed how to care for and teach the pet rock to do tricks – the booklet was written very tongue in cheek with gags, puns, and jokes. All told, he sold 1.5 million of these pets and became a millionaire.

Fortunately for Mr. Dahl, what made this whole thing so successful wasn’t the idea of selling a rock to a bunch of people; it was the booklet that he wrote to accompany the pet rock. Because it was well written and funny, people were engaged and hooked – they told their friends about it, and that’s REALLY what people were buying: a book, not a rock. Further, Gary Dahl wasn’t a one-trick pony: he was a very successful advertising executive with his own agency in California – the pet rock was just gravy (really, really rich gravy, but gravy nonetheless when compared against his career). In other words, he never stopped developing his talent and continued to come out with fresh ideas to keep his current clients happy and obtain new ones.

Recently, on NPR, the host of a particular program was interviewing a French scientist who is studying the different properties of sound and its . . . abilities. The scientist’s accent was awesome, I’ll admit. If I hadn’t known he was the leader in his field, I would have pegged him for a member of Monty Python doing a skit. One of the things he said that was absolutely fascinating (that I could even begin to understand) was that he was experimenting on how sound could enhance the processors in computers. What?! It seems the host was almost as confused as I was, but she soldiered on and asked how much sound could enhance the performance of processors. Answer: 100s of times faster! Wow! He then went on to talk about other sound-related stuff that flew miles over my head – no surprise there.

This scientist didn’t say to himself (I’m translating his French musings into English), “Well, someone’s figured out how to convert the Beatles’ ‘White Album’ from analog to digital while preserving the original recording’s integrity, so it looks like there’s nothing more we need to do,” and just call it a day. He took his expertise to a place most people would never associate with sound: the sterile and seemingly silent inside of a computer processor. If this guy’s studies bear out, can you imagine how awesome it will be to be able to download and watch cat videos or upload sarcastic memes 100s of times faster?!!!

In this crazy housing market that can be affected by everything from the price of oil to the desires of the British populace, people need real estate agents and loan officers who are intelligent and on top of their game – they don’t need the friend of a friend or a third uncle twice removed who does this as a hobby, whose last transaction was three years ago. The intelligent, top-of-game folks in this business are the ones who keep evolving and look at the next transaction – not the last one – to define them.