Hemet, CA

I could not believe it, as I was doing my morning surf of the web looking for relevant industry news on what is going on in the housing industry across the country I come across a short blurb from the Aldine/North Houston News

Unfortunately, this is a very short article of only 116 words - but powerful words that got me to sit up straight in my chair and take notice. Powerful enough for me to put out a warning - not only to my own team and office but to everyone in the real estate industry that reads what I share.

The short version is that 3 people went to a vacant home for sale at 8 o'clock t night, 2 were let in and then ambushed once inside by a pair of armed gunmen. They were robbed at gun point. When the crooks fled, apparently they were not counting on the 3^rd person waiting outside by the car - a woman whom the thieves shot in their get-a-way. The woman was treated for a non-life threatening injury - but just the same, she got shot looking at a house she wanted to buy. The bad guys got away.

I wish there might have been another 100 words or so top answer some of the questions I have. Apparently the woman was the sister to one of the men and the other was a friend that they wanted to show the home to. The article says ‘another man' let the pair in. He later disappeared and has not been found.

So who is this ‘other guy? A bona-fide agent...or? Was he in cahoots with the bad guys? What kind of neighborhood was this...multiple-million dollar homes - working class neighborhood or inner city ghetto?

Does it matter? No, what matters is your safety - so please be careful whenever approaching a vacant home.

Real Estate Sales is just as complex as the markets we serve. As the market evolves so do the strategies of agents trying to get their next deal into escrow. This is a tale of what is going on in the Hemet - San Jacinto CA Valley and what one REO listing agent is doing to try and stop the process before it ever gets out of control.

I realize that first time buyers are frustrated by ‘the system' and that they want to take advantage of the current real estate market while they still can. Many fear that the market will quickly turn and they will be unable to afford a home ever again, once the market changes and goes back up. Many are anxious and even stressing over the thought of not being able to take advantage of the Federal Governments $8.000 tax credit for first time homebuyers.

Regardless of the circumstances, agents are enabling their clients to commit some fraud in the hope of earning a commission. Or perhaps, some of the slickest buyers are being even more despicable by bringing in multiple real estate agents into their web of deceit, in an attempt to buy a home in this current market and times of financial uncertainty.

The frustration for many wanna be home buyers escalates week after week as their agent takes them out for a tour of new homes on the market followed by an hour or more of paperwork and several days before finding out that the home they wanted to buy has been sold to another buyer.

THE MULTIPLE OFFERS BUYER

Whether it is buyers instructing their agents or agents suggesting to their buyers is unclear; but buyers are now writing offers on multiple properties at the same time. In essence, they are treating our industry like a pile of SH*T - thinking they can throw enough of it against the wall to see what sticks.

My personal frustration comes from one of my active bank owned REO listings that has had 4 offers accepted by my asset manager only to have the buyers turn not sign the counter offers and addendum's - because they bought another home.

So the thinking is if you write 10 offers and one comes through, great, you got a new home. If two offers are accepted - even better you have a choice. When three offers are countered then buyers are feeling like they are in control.

HOMEY DON'T PLAY THAT GAME

OK. I may be dating myself to the 80's variety show that launched the Wayan Brothers and Jim Carry - In Living Color. That's OK, it just lets you know I'm old enough to have gone around the block myself once or twice and I am not going to be a participant in your games.

So how do I stop you, you want to know. That's easy - If you want to play you are going to have to pay.

Here is the new rules:

One, If you are an out of town agent and you don't have access to my electronic lock boxes then you are going to have to come to my office and pick up a key - leaving a $25 key deposit.

Two, if you want to submit an offer I will only process it once I have your clients earnest money deposit and yes I will deposit it directly into the trust account on the day it is received. If you are not accepted your money will be refunded right away. If you have opened escrow on another home then we will have to figure out what steps to take to see if you are or not entitled to a refund of your deposit. I'm sure it will take at least a week or two to have my attorney review the situation and offer me the proper legal advise...something I would strongly suggest any agent who willingly plays this game to get. I can't tell you where it is - but as one professional to another, we both know this is not the way we are expected to treat one another or the public - and yes my corporate / bank seller is still the public. Lets not forget who is taking the bath here - not your client with the sense of entitlement.

So go ahead. And "Make My Day". For those who are too young to remember that was a very famous Clint Eastwood line form one of the Dirty Harry Movies.

UPDATE - The Morning After (Sunday)

OK, I am a little blown away with the responses I have received and was really blown away when I realized this blog post was Featured by ActiveRain. I know there will be a lot more than the 15 or so comments I have already, by the time this day is done. My last Featured Blog Article, The Next Wave of Bad Loans - Option Arms, currently has 115 comments - none of which I replied to. In part because I did not want to influence the conversation and in part because I was over whelmed. I did not allocate the time necessary to get back to everyone. Well, my commitment - at least for today - is to answer everyone's comment and engage in the conversation - so please leave your comments and lets discuss this through.

U P D A T E M O N D A Y M O R N I N G

Yikes, it looks like I am in for another busy day - today this blog went FEATURED (yeah :-) ) so I am expecting a wave of additional comments - which I welcome with open arms. This blog has become a true conversation with me answering each and every comment - one-on-one.

However, many of the comments allude to the same issue - that the banks are taking forever to respond to offers. Well, that is NOT the case in my office with the banks I work with. I have a set procedure that my team and I follow - I spell it out in this post: REO LISTING AGENT OFFERS INSIDE SCOOP ON "HOW TO WRITE AN OFFER FOR A HEMET - SAN JACINTO CA BANK OWNED HOME FOR SALE" My offers are presented in a timely fashion and responded to within a day or two, 95 times out of 100. One exception is a rule one of my banks imposes is to help you and that they require the listing to be on the MLS for 72 hours before they will consider any offers - so this means I can't pre-sell the deal and get it approved before it even goes on the MLS (but I do love it when that happens - and you would too!)

I would also like to point out that Broker Bryant has weighed in on this topic (#4 & #5). Like many of you I respect BB and the opinions he offers. However, in this case I want you to fully understand that when BB is discussing this issue, he is referring to a CASH OFFER and NOT an FHA FINANCE. Now my fault for not making this clear - but please understand that the scenario above is just that - an FHA offer and as we all know, FHA is low on the food chain (right or wrong) with anyone considering multiple offers.

OK, I promise I will answer every comment posted here - so if not today, please check back - and don't be bashful about jumping in on other conversations - there is a lot of good talk going on in both directions here. I am not an REO Agent that is afraid to talk about what I do - everything I do is above the table with the end result of looking out for the best interest of MY CLIENT - The Seller.

Oh, and one more thing - a couple of requests have come in to reblog this conversation and this is fine. I think I have the correct setting now - if not let me know and I'll figure it out.

Now have a blessed day - I have some offers to process!

John

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Successful investors always have a plan. They have a strategy for getting into a property and they will have multiple strategies for getting out of a investment property.

I offer a blueprint to success in real estate investing...

1) Know what is Important to you in your life. I'm not just talking money - life itself has value - what is it that makes you tick. Figure this out and if real estate investing is not for you, then it's not for you.

2) Clean Up Your Act - If you have issues with credit, taxes, ex-spouses - anything that disrupts your life or has the potential to - get it together and deal with it. If your life is over-complicated then you can be certain these negative forces will have a negative impact on your real estate investment strategy.

3) Know what you are doing. Yes, I understand there is nothing like experience to figure things out but for crying out loud have an idea of what you are getting into. If you haven't ready any books on the whole idea of real estate investments, then go to the book store and start reading. Go to seminars and classes - both online and in hotel rooms and the local community college.

Figure out where you want to invest and regularly drive through the area. Find yourself a local REALTOR to work with and get familiar with the local market trends.

4) Have your REALTOR refer you to a lender that can work with you in your situation. Will you be using conventional financing? How about Hard Money? Maybe you have your own cash to spend. In an event every type of financing available is as different as every home that you will look at. So, start to build your Personal Real Estate Investment Team now so you have the resources ready to roll when your first golden opportunity presents itself.

5) Find the right deal. With the help of your local area expert REALTOR, you should be able to find a bank owned REO home priced 10%, 20% or even 30% or more below other homes in the neighborhood. Make certain that you don't get over excited and fall in love with the first house you find. Remember, you are an investor now and this is business. Save the emotion when you buy your wife the big house on the hill with the pool and view that you always wanted...let me repeat myself...THIS IS BUSINESS.

So, first, once you have determined that the money and value is in the right range you'll want to inspect the property. Don't start getting cheap on me here. Do yourself and everyone else a huge favor and hire either a general contractor or a real estate inspection company to go through the entire home with you. Don't do it yourself, please. I don't care what you know - the idea is to have an OBJECTIVE set of eyes on the property.

Next, you are going to have to figure out an ESTIMATED repair cost. Break each project down to individual projects. Estimate time and materials as well as an allowance for overages. Do this for the interior and exterior.

Finally, look at all the numbers and complete your due diligence to make sure this home will meet your goals.

6) Have your REALTOR write the contract and present the offer. Again, know your limits and don't spend any more than you have allocated - knowing that there are still some hefty expenses to be paid, if you are fortunate enough to close escrow.

7) Now that escrow has closed - get to work. You should have set side the time to take care of all the work that needs to be done. If this is going to be a series of weekend projects, then you better have some hefty reserves to cover the several mortgage payments you'll be covering while strolling through the repair process and getting the place either rented or sold -depending on your strategy.

No one can expect you to do all the work yourself - but do as much as you possibly can. Don't be afraid to learn as you go on some of the basic projects and repairs. On the other hand, there is nothing embarrassing about hiring a professional to do a professional job.

8) Marketing begins the day you own your investment property. Start with a "For Rent" sing in the yard. As the home gets closer to rentable condition, start with other forms of marketing including classified ads and places on the Internet, like Craig's List..

As you begin the interview process, you'll need an application as well as either a rental agreement or a lease - choice is yours. Ask lots of questions, like, "Why are they moving?" and "How many people will be in the home?" Be careful of your questions - if you ask about kids and spouses you might not like what you hear and you can end up discriminating and explaining your decision to a judge.

Make sure you thoroughly investigate all references - including former landlords and employment. It is too easy these days for renters to fake this type of information, with all of the cell numbers and VOIP (Internet phones) that are easy to access. I find the best way to check anyone out is to Google them - especially if they are a credible reference.

A term you may want to consider is paying for the water and a gardener to keep the place looking good. Factor the cost into the rent, but this way you have eyes on the property every week. If you, as the landlord were to show up that often you would be perceived as a stalker and a nuisance and most judges would love to slap you around for these infringements on the civil liberties of your tenant...so send the gardener instead.

Then you just have to do your paperwork and collect your money.

9) Talking about money, I recommend a separate bank account for each investment property. This may be pre-mature, but consider a separate LLC for each property as well. All of your communication should be separate from your personal life. Use a PO Box and a cell phone.

It is very important that you keep good records of both the financial aspect of the real estate investment as well as any and all conversations you have with your new tenant.

10) Figure out what you did right and what went wrong. Learn form it and grow with the experience and lets go do it all over again.

I received this photo taken by the NASA Terra satellite on August 30, 2009. Here you can see all of Southern California and get a pretty good idea of just how much was on fire at the time. If you look to the South East - you'll see a small lake that is pretty much surrounded by burnt area - well, that fire, known as the 2400 acre COTTONWOOD FIRE came within a mile of my home in Hemet, Fortunately the winds were blowing the other way and there were no evacuations or injuries/casualties.

Follow this link if you want to see a series of 41 photos - mostly taken from the deadly STATION FIRE.