Brad Lynch

You know, it was only a couple weeks ago or maybe even 4-5 that "Old School" (my nickname for Allen Greenspan) used a phrase similarly tothis, "the housing turn is in sight". Then he went on to say that "in sight" meant 8 months or so. I hope Old School is right! The Dallas Morning News's Steve Brown reported that the DFDub saw an 18% fall in preowned homes this August compared to last year this time. Ooops! I guess it's got to hit rock bottom before it takes a turn for the better.

Additionally, Steve mentioned that the average sales price fell by 3%. That could happen without the price per square foot falling, but I bet that is not the case.

I had a client looking to buy more rental property. She owns 4 properties now, that are all financed I might add. At the time GMAC/Homecomings was the only lender I knew of that would lend money on a borrower that had four or more financed properties, so she'll have to pay off some mortgages before we can get her another with traditional loans. Anyway, they asked me, "is this just a bad time to buy rental property"? Now I should have just said, "I'm sure if you send that question into the Rain, you'll get a number of different answers"...I didn't. I told her and I believe my answer is right on. Now is a tough time to buy. Some of the good deals aren't as good by comparison to 3-6 years ago, and if you have intentions of buying, fixing up/rehabbing, and them selling, then you probably aren't in a timely buying window. On the other hand, if you are looking to build a portfolio, like they were, then for the long term goal you are great. Where the same home 3-6 years ago that in good shape was worth $120k, and foreclosed or had foundation issues and so forth it could be sold at $108k. That same deal today in good shape is probably worth $115k and under duress sold at $106k. So 3-6 years ago you had $12k to play with for profit and costs. Today that same home in this example is only $9k. This example should show that for buying and selling, right away it doesn't look like the profit margins are as available, but since we all know that Real Estate eventually always appreciates, this example would say that buying homes for your long term rental portfolio makes this the best time to buy them. Buy low and sell high.

It seemed like only a matter of time. CNN reported this weekend about the major change of leadership in our American financing department. The government stepped in to take over Fannie and Freddie, the governing bodies of home loans in America. The old saying goes, "I brought you into this world, and I can take you right back out of it". At least $5 Trillion in home loans are currently backed by these monster fortune 500 companies. With additional $200 Billion being added into treasury support, Washington needs a little "home team" management before they feel comfortable for America's future when so much is riding on their shoulders. So, Treasury Secretary of Washington is placing both companies into a conservatorship. (define conservatorship- appointing a guardian over someone for financial reasons typically when said person is incapacitated or disabled). The plan will be to return Fannie and Freddie to it's original administration once balance and control is regained. So, this conservatorship is only temporary.
Are Americans and advisers "down with this"? Bush, and just about anyone else that has commented on the change are satisfied and believe it is necessary to get our housing market under control. Just since last summer, $12 BILLion$ dollars (said like Dr. Evil from Austin Powers) has gone lost between the two companies.
What does this mean to you? You won't feel the change, it's just hopeful that our economy who's economic foundation is our housing market, will see a faster turn for the better.

There was a story out this week about Fannie & Freddie not needing an injection of capital from the US government, and that they have enough saved to weather the current problems.


Wouldn't that be nice? I imagine that government and finance officials have found out that these companies, and their financing, are so much more complicated than anyone ever imagined. The public and banks own huge numbers of shares, with the banks holding preferred stock. If the preferred stock's value goes to 0, it would put many of these banks out of business. So news like this morning's is welcome.

Quick story, and to the point. I decided to write this blog because sometimes you get in the grind of your business and the intensity or volume of your "RADAR" gets turned down. If you have kids and used the "walky talky" so you could hear them cry when you were in the other room, you might be able to reflect. When your kiddo is sick with a cough or wheezing, you might turn that volume up a little so you can hear ALL the little breathes and sounds. When your kiddo has had a dry nose for weeks and you feel a little more confident in their health, you turn that "volume" down and don't hear thelittle details in your kiddos coughs and sniffles while they sleep. That happens in our day to day business. We have some 4 or 5 perfectly smooth transactions, the phones are ringing, our team is smiling, and BAM our "volume" gets turned down and the little details of our business my get missed. Working in Frisco TX, I don't see home values under the $175,00 much, but because I work from time to time with people from my home town, I get some of the business there that doesn't always come with such sales tickets and also get a little of the "rif raf". I was working on a $76k purchase price and just trying to get it closed for a Realtor I have known, or I should say, has known me since I was born...he's mostly a part time Realtor and runs a salon as a full time job. The loan was a VA and honestly, the home wasn't in good enough shape for a conventional loan and yes VA wasn't happy with the conditions either. The selling Realtor was obviously needing a pay check, or trying to "unload" this home since the commission was small and intensity of the labor wasn't congruent I assume. She was trying to cut corners and make short cuts and so forth. Long story short, the VA appraiser began to copy in VA directly on emails and our underwriters suggested that this file will probably be red flagged for auditing. We sent out an email and made a phone call that pretty much said, "here is what you need to do, and here is the order in which you do it or we are advising our client to move from this transaction..."...for our own protection. In hindsight, I don't think she was intentionally "walking the line" of fraud, but all signs made me and our team feel like she knew something we didn't and she wasn't wanting us to find out. Moral of the story, keep your "radar" volume up because I can promise you everyone else is. If you hear a little "static" on your "radar", tune it in and turn UP the volume.

After working in this industry for 6 years, I have finally decided to do some "warm" calling. Up to this point, I have worked almost primarily By Referral Only. Now, I have been a pretty active person all my life...numerous sport activities, church, etc. I used word of mouth, attention to detail, and lots of hand written letters to people I networked with. Every year I have increased my loan volume, but I am at a point now that I want to make a significant increase and, well, ITS TIME!

I've started calling on Realtors or builders that I either know, know through someone else, see around quite a bit (example: CCAR, Chamber), or at some point closed on a transaction together when they were a seller agent. I'm not that mortgage guy that wants to work with JUST ANY REALTOR...not that "just any Realtors" is bad, I just believe 100% that you should work with people who fit your relationship type and philosophy type. After all, we spend more time working than any other activity in our life.

So, what is the number one thing most Realtors want from their trusted and exclusively referred lender alliance? LEADERSHIP?

This is sometimes where I don't fit into a realtor's alliance model. There has been too many lenders in this industry who simple don't "get'r done", and too many Realtors have been burned and can't "let go of the wheel" because of that. I'm sure that micro managing your lender works to a certain extent, but the ultimate scenario seems that it would be that the Realtor can have two "steering wheels", since there are two parts that need "driving" in a transaction...lending, and Realtor driven side. I have to have my own wheel, because I can't bring value to the relationship or alliance if I don't have the wheel. I don't think the Realtor or the lender get the highest rate of referral return from current and past clients if the lender is forced to be in submission to the Realtor. What is the number one action, activity, or quality that a successful realtor appreciates most in their transactions with their favorite alliance?