I know, it’s been a while.
I wrote a story about the time that I went fishing with Fidel Castro, in Havana. We decided not to run it. Too controversial.
I wrote a story about my experiences as a time and space traveler, but decided not to send it out. Too controversial.
I wrote a story about my psychic abilities and mind controlling experiences, but decided to pass on that one too. Too controversial.
I was going to write about the health care issues, but decided to let it play out a little longer first. I’ll take that one on next.
A few weeks back, when the weather first got cold, very cold, I stayed home one day to write.
The change of seasons is brutal to me, because my hearing doesn’t work properly when Mother Nature can’t make up her mind to be hot or cold. Actually my hearing is always the same, but during periods of change of barometric pressure, stress, and rapid fluctuations of hot and cold weather, I develop tinnitus, or ringing in the ear. Once it finally settles on cold, my hearing gets okay, the best that it gets altogether. In fact, this one day I had my best hearing day in years. I took all of the calls on my cell phone, and actually got to speak to people. Felt great.
But anyway, with cold weather, comes heat. We tried to turn on the furnace, and weren’t able to, so we decided that the best thing to do is to call someone. The best they could do was Monday (this was Friday). This is the best time of the year for plumbers. They are at their busiest as the beginning of the heating season. On the first cold days, they work around the clock. 24/7. Good for them. Wish Realtors® had busy seasons. We used to.
The good old days, Realtors® Rush Season: Super Bowl Sunday through Mother’s Day, Realtors® working round the clock to deliver houses for their clients.
Anyway, no heat that weekend, which happened to be the introduction to winter 2009, meant sleeping in sweatshirt, flannel shirt, sweat pants, and socks for three nights. Drinking lots of hot coffee to keep warm, people freezing at Yankee Stadium watching the Yankees beat the Angels. I watched the game, wrapped up in a blanket, and it felt just like I was at the stadium. I could see my breath when I exhaled, just like on TV.
So the guy comes Monday morning and can’t get it going, tries to add water and it comes out the bottom, and says, the furnace is cracked, you need a new boiler, it can’t hold water. “It cracked because I didn’t flush it out properly last winter,” he said “the new furnace would be $7,500, 200,000 mega something’s with all the bells and whistles, including removal of the old one”
Billed us $145 for the house call.
Now I know a couple of things about boilers. One of them was that my boiler has an automatic water feed, and does not have a low water shut off valve, to be flushed.
So I did what I tried to do earlier, I called Mike, the boiler expert.
Mike came over and analyzed the situation, said that the reason water came out was because the boiler was full. There were no cracks. The problem had to do with the pilot and some sensors. He took a wire brush and cleaned the pilot, replaced a sensor, and just like snap crackle and pop, we had heat, better than ever, and at a savings of over $7,000.
My wife asks does this only happen to us? At the beginning of cooling season last summer, one of our units wasn’t working properly. We called 1-800-AC person who said that our compressor was blown, shot, and kaput.
Once again I got Mike to come, he looked at it, and found that the fuse was blown, and replaced it.
I told her that it happens to everyone; just that not everyone gets a second opinion from someone that they know isn’t going to rip them off. Problem with Mike is getting him, because he is so good, he is always in demand and hard to get.
Today I stayed home all day because my wife had her car inspected and the mechanic held it for 6 hours to find things wrong. He wouldn’t inspect the car, but he found $500 worth of work that needed to be done, for which he charged $43.40.
What a world we live in, where you need second opinions on plumbers’, and mechanics for fear that they rip you off.
And don’t let me get started on Doctors.
Which somehow brings us to the subject of this story.
What’s happening in the real estate market?
(It really had nothing to do with the rest of the story, but I thought that it would be a nice transitional phrase
In the beginning, when I first started working on my list, after I had called my friend Randy at Merrill Lynch who told me that they didn’t own any real estate, after they had written down $6 Billion in bad real estate loans, before any of us knew what sub-prime mortgages and derivatives were, before I had a book with an official name of Lasher’s List, but after I had gone through every single listing in the MLS, all 3600 of them at the time, I had a pile of 35 properties, in no particular order, that were bank owned foreclosures- REO as we say in the trade. 35! (I never was able to find out if Randy was one of the traders at Merrill with the big bonuses- he was a “director” which is like partner).
I counted all of the active listings in my Lasher’s List of foreclosures’, short sales, estate sales, and fixer uppers binder, which by the way was just expanded from a 2 inch binder to a 2 ½ inch binder, and now contains (drum roll) 275 listings.
That’s right folks.
And what a job it is to maintain this list as current. If I fall behind a day, there is hell to pay. There are sometimes 200 items on the hot sheets in a day. Sometimes more, sometimes less.
Today I saw a new listing and the owners name was someone who I had been dealing with a couple of weeks prior, on a bunch of stuff. Always one to give the other person the benefit of the doubt, I sent the listing to them, to see if in fact it was his home, and he responded yes.
This also happened the week before with a different customer. He wouldn’t even acknowledge my email, but continues to demand information on listings.
So it has dawned on me that many of you don’t realize that I am a hard working, real estate broker, who sells real estate for a living. There are two brokers in every transaction- the one who lists it onto the MLS, and the one who sells it. Through my emails I hope to be a selling broker, but would also like to be a listing broker. Although I enjoy writing, and I hope that my comments are witty, and enjoyed, and while I realize that I am performing a service for all of the brokers on Staten Island and my readers, by disseminating so much information, on so many properties, there is no one paying me for my time. Some of you take my listings and go to other brokers. Some of you go to the listing brokers thinking that it helps get you a better deal.
Please consider me when thinking of selling. I think I am a marketing genius, well versed in selling properties, yet I remain humble. I haven’t had that many listings, but have sold all I have listed. I take a personal interest in my listings, and will be brutally honest with you about your property, if it is necessary. I could be sending out your listing to over 1500 people, many of whom send them to their friends and others.
As far as those two customers who listed with someone else, my broker Jon Salmon (always the salesman) said to leave them on the list, continue to send them stuff, and hope that at some point they will see the error in their ways, do the right thing, and if they should see something they like, call me.
Do unto others as you would have others do unto you!
So what’s happening?
In the good times, the mortgage brokers and underwriters’ had their organizations where they partied, exchanged information and got paid vacations from the banks they work for.
In 1989/90 I was promoting a young company that I had started called the Landmax International Corp. Landmax was and is in the business of making land ready to be built on, because land that is ready to build on is worth more than land that isn’t. Helping landowners realize the maximum value of their property. (Since Landmax is no longer a new company, does it mean it is now an old or middle aged company?)
A friend of mine is a very famous Bankruptcy lawyer in Manhattan. He represented Bacharact in the Bloomingdales Bankruptcy, he represented the pilots on disability when one of the airlines filed.
Anyway my friend Harris brought me to the National Association of Bankruptcy Judges conference that was held in Boston in 1988 or 1989 as an exhibitor (vendor). So I set up my Landmax Display, created a special bankruptcy brochure for the event, and sat there while the judges and bankruptcy lawyers had their meeting.
Well at night, after the meetings, the Big 10 accounting firms threw parties for the assembled multitudes, with the most opulence that I had even seen in my life. Certainly the most extravagant parties I had ever attended. There were bankers and lawyers from all of the big institutions who were forecasting doom and gloom for the world and how good things would be for them, (followed shortly thereafter by bankruptcies, foreclosures, banks going under, the RTC, the first President Bush, the failures of all the banks, etc.). The late 80’s early 90’s were bad times for the country, especially real estate.
I remember breaking bread with a guy who was a big mucky muck at Manny Hanny (Manufacturers Hanover Trust) - remember them?
As a result of my exposure at the convention, I was flown all around the county for my opinions on several properties and portfolios in bankruptcy.
The REO trade organizations must be having incredible parties thrown by the servicing companies that are servicing all of the foreclosures now.
I was listening to a radio program about companies who try to recast loans for people to reduce the payments, and they had a whole discussion on the whys the wheres and the therefores, about it, and a discussion about how successful they were and the reasons for the successes and failures.
What was not discussed, and what is not being discussed anywhere else that I can see, is that notwithstanding Government initiatives, besides the programs of the major banks, (Chase, Citigroup, BofA,) who own their own mortgages and in whose own interest it was to make the loans performing instead of non-performing, and with the help of the Stimulus packages, is that the banks that are not going along with the programs, and whom are continuing the large numbers of foreclosures, are the dirty old derivatives.
The mortgages where no one owns the real estate.
Where there is no one who cares about cutting losses, because the government has stepped in to guarantee these toxic loans, so there is not pressure on anyone to do the right thing.
I believe that the real villain, the group that is not part of the solution, so therefore are the problem, continues to be the servicing companies.
You might want to go back and read one of my prior emails at my Blog at http://lasherslist.blogspot.com/ where I started that we should have known something was wrong when the banks became MERS (Mortgage Electronic Reporting Service).
Q. Whom do the servicing companies answer to?
If it makes the most sense for a bank like Chase, to reduce the principal amount on a mortgage, and/or lower an interest rate, to take all of the arrears and add it to the top, or even waive them, in the long run, that’s what they do, did and continue to do.
The servicing companies don’t think that way. They think how they can make more money. (Same story as the health insurance industry, but let’s leave that for another email).
When the bank or servicing company decides whether to do a short sale, or reduce a price, they act based upon information provided through BPO’s. Broker Price Opinions. They charge the customer $150 for this, and pay the broker who does it $50.
When the servicing company has determined that they are going to take possession of a house, they have companies that go in to break the locks, and drain the water. Their criterion for hiring these companies is price and results. The less that they are charged, the bigger their profit. Ergo the “mutts” that do the winterizing, instead of disconnecting the radiators, they hit them with a plumbers wrench to crack them. More to fix. It’s easier for them. Rather than nicely open a lock, they break the doors. We see this all of the time.
The servicing company doesn’t care, as long as it is collecting fees for “servicing the asset”
Same with the foreclosures.
The servicing companies get paid for participating in the foreclosures. Signing documents, meeting with lawyers, hiring the foreclosure lawyers, hiring the brokers, every step of the way, it is the servicing company that is making fees. They even get paid to go to lavish parties at REO conventions. And think about it, these are the same people who made the bad loans in the first place. Only in America.
So what is the incentive of these servicing giants to stop foreclosing?
THERE IS NONE!
If they make the loans performing, reduce principals, the people will be eventually able to refinance at the real banks, they will lose business.
Sure there are still waives of new foreclosures, sure there is record unemployment, but how is it that CHASE, CITIBANK, and the others, that are responsible for their own loans, are able to reduce their foreclosures dramatically, yet Deutche Bank as trustee of series of bonds #1-1000, dated June 2004, continue and increase their rates of foreclosures.
Because it’s good business.
Changes in the Marketplace
I started talking about the trade conventions earlier, (probably held at beautiful resorts in hot climates). The reason I spoke about them was that there are people out there who really want to dispose of the REO. Ultimately the bankers, the REO officers, have to answer to someone, and there are always those spreadsheets and monthly, quarterly and annual figures that must be presented and justified, and improved.
These people who are selling to the Banks and Servicing Organizations, have their resources that at this point are developing strategies to help sell the property. Think tanks, marketing research, and all that, their own branch of Madison Avenue except they aren’t selling Coca Cola and M&M’s.
One of the marketing techniques that I am noticing quite frequently is the lowering of prices dramatically.
For the past few years, when a REO is first put onto the market, it would remain at the same price until there was no longer any activity, and it didn’t sell. Then every month or two, the price was reduced $10,000, or so. It was so consistent that I was almost able to predict the reductions.
Recently, I noticed it with the HUD listings. Two of the houses that I have been following were lowered dramatically and one of them rose dramatically. I am talking about reductions of almost $100,000, or increases as large. I expect the one that they raised to be lowered at some point.
My guess is that HUD, Fannie Mae, Freddy Mac, and the servicing organizations too, all utilize the same technique.
I’m noticing some properties being listed, priced exactly right.
I’m noticing some properties being listed much too high, but being followed with huge reductions in price after 2 weeks.
Big price reductions definitely get my attention. I’m sure it gets others too.
I’m noticing a lot of the REO listings going to off Island brokers, and I’m noticing a lot of REO sales being made by Off Island brokers too. Staten Island is still the bargain basement of New York City. Houses cost fractions in Staten Island then they do elsewhere in the City. That is why we have such a high percentage of city workers living here, because to work for the City, you have to live in the City. Staten Island is the affordable borough. Add to that low crime and good schools and you wind up with a great standard of living, notwithstanding the commute. However, add to the equation, closeness to public transportation- i.e. bridge or ferry, then Stapleton and Concord, become hot areas, and those are the areas that I especially notice being sold off Island. Finally, I notice some population shifts in Stapleton, Concord, as well as the social changes, i.e. rock and roll shops, and you have what someday will be remembered as gentrification.
I’m noticing more people looking to buy. I’m not seeing more sales, but I am seeing more interest.
I think that a lot of people are looking. They know that there are good deals to be had, but are still nervous. Afraid to make the move.
So what should you do?
There will definitely be more good deals coming to the market in the weeks and months ahead.
While there is still record unemployment, although the indicators indicate that the recession is over or ending, it will take some time before prosperity kicks in. The stimulus programs are working, and in the process of trickling down.
Lowes broke ground on a second Staten Island store. That is a real positive economic indicator.
Macy’s has an ad on SILIVE.com today that they are hiring.
The tax credit for first time home buyers has been extended and expanded. To receive the $8,000 that does not have to be repair, provided you live in the house for three years, you must be in contract no later than April 30, 2010, and must close title within 60 days thereafter.
Additionally, if you have lived in your home for 5 years or more, and wish to buy up to an $800,000 home, you can receive a $6,500 tax credit.
I believe that there will be no more drastic price decreases. The world has more or less settled at where it is, because the worst is over. Not to say that prices won’t come down, especially the overpriced properties.
But I believe that the time has come, that when you see something that you like, that you think is a good deal for you, that it is time to act. We aren’t going to see that many more 2 family homes in good condition for around $200,000. We aren’t going to see semi’s and townhouses, that are priced $100,000 below the market that much longer.
The days of the disposal of the derivates are numbered.
There are only so many toxic loans left. The fire sale is going to end.
Don’t allow yourself to wind up in the never never land of shoulda
………………………….to be continued