Your Exceptional Life

There’s a thing out there that occurs now in nearly every area. It occurs during the week. It’s called Broker’s Open. The way it works is there is an association for each area. Like Walnut Creek/Concord/Martinez/LaMorinda/Alamo is on Tuesday. San Ramon/Danville/Alamo is on Thursday. Pleasanton/Dublin/Livermore is on Friday. Hayward/Castro Valley/San Leandro is on Wednesday. Like that. Real estate professionals, realtors, lenders, title folks and affiliates to the business get together for breakfast and pitch each other our new listings. And then we hold them open and showcase them to one another. I frequently hear agents say that it’s a waste of time, but I disagree. As an agent we have to know who we’re dealing with on the other side. If I know Bob Smith at XYZ Real Estate because I’ve had breakfast with him every Thursday for three years, I can call him up and say “Hey Bob, my client would like to make an offer on your listing.” Bob knows me so he’s going to say “That’s great Val. My guy isn’t that stuck on the listing price, don’t insult him, but he’d really like a rent back for a couple of weeks”. Then I know how to structure a successful offer for my client. I just got better over breakfast. Right now, if you’re in this market, you need every single advantage you can get. Representation that can think out of the box is critical.

The other reason I like Broker’s Opens, besides it’s an easy way to see all the homes in the area in about ninety minutes, is the conversations I have with other professionals. Something that I noticed, and I always notice trends on the ground before everyone else, is that the phone quit ringing.  I call it “crickets”, because it’s so quiet all you can hear is the crickets singing.  I’m currently advertising seven properties, I have signs on another 11 properties and no one is calling.  I listened to the lenders talking and the interest rate is below 5 with a point right now.  That’s beautiful money.  So why is it so quiet?  I talked to several of my colleagues about it yesterday.  They all noticed it too and one of the prevailing theories was that people are scared.  We are living in scary financial times.

We’ve just watched businesses go under, many of us have lost our jobs and can’t get new jobs.  We’ve watched friends lose their homes.  We’ve watched families on the brink of ruin and marriages collapsing under the pressure.  It’s scary out there.  For the risk adverse home purchaser it’s very hard to get off the sidelines right now.  But it’s necessary, because the market is going to change again later this year.  The opportunities that exist right now will be gone forever.

I’ve talked before about how real estate is one of those industries that anyone thinks they can be an expert at, whether they’re in the industry or not.  Last week I fought a traffic ticket.  I haven’t been in traffic court to fight a ticket since 1989.  I got demolished.  Because I don’t do that every day.  It should have been a simple process, but I should have hired an attorney.  If you’re not living and breathing an industry every day, you’re going to get demolished going it alone.  Real estate is no different.

Yesterday one agent told me that he heard that the banks were going to release all the foreclosures in June.  Really?  No, he laughed.  Some soccer mom told him that while he was waiting to pick up his kids from soccer practice.  I work for one of the biggest REO brokers in the area.  We’ve been hearing that directly from the asset management companies since March of last year.  It’s just wishful thinking on the part of the asset management company.  They ain’t coming.

Why?  Because 2008 was essentially a run on the banks.  It sent this country to the brink of ruin. Banks failed under the weight of it.  They drove down prices by dumping into the market which made people walk away, driving the market down even further in a snowball effect.  The banks aren’t stupid.  They’re not going to do it to themselves again.  They will release these foreclosures, but in a measured fashion over a long period of time.  There are several factors that make this favorable to the banks.  One, tax treatment.  There have been changes in the rules that allow the banks to go back three years and take the whole loss off of their profits.  Win.  Two, some of these loans are government insured so they are made whole anyway.  Win.  And dumping them on to the market has been a PR nightmare.  I truly believe that the CEO’s of the banks saw what Obama did to the CEO of General Motors and don’t want to be next.  They like their salaries and bonuses.  If hanging on to these assets for an extra six months keeps them off of Obama’s radar, that’s a good thing to them.

How does that affect the local market?  We’re bottomed out.  We’ve been skipping along the bottom for a while now. I called the bottom back in April and I was pretty darned close in most local markets.  In spite of the gloom and doom reporting out there, we’re done.  It’s over.  Now is the time.  It’s not going to get any better than this.  The one thing that is going to change is if the interest rates pop up.  That will lessen affordability and box some people out of the market.  That’s why the time is now.  Are you ready?