Entries from Searchlight Crusade tagged with 'markets'
Mortgage Markets and Providers and Yield Spread Explained
There are actually several distinct marketplaces consumers can obtain their funds from, and several types of providers. John the wealthy highly salaried person with great credit and a substantial down payment should not and usually does not obtain his mortgage...
The Are No Schools That Teach What A Good Agent Needs to Know
I find it fascinating the number of people who will claim that because no college degree is required to become a real estate agent, that agents can't possibly be worth any significant amount of money. The reason no college...
Negotiations After the Purchase Contract: Seller's Allowances and Fixing Problems
I had made a request to repair that included $3700 credit for closing costs. I wanted to get things done like safety issues and more critical maintenance issues done. Our estimate said that it would be about $4900 to...
Pocket Listings: Out of Sight, Out of Mind
Every so often, you will see references to a "pocket" listing. These are usually bad for owners, and usually bad for buyers, but good for agents. A "pocket listing" is one where there agent keeps the listing "in his pocket"...
Conforming and Jumbo Only Apply to "A Paper" Conventional Financing
This is something that many folks don't understand about the loan market. The labels "conforming", "jumbo" or, more accurately, "non-conforming" and "temporary conforming" only apply to so-called "A paper" loans, largely underwritten through Fannie Mae and Freddie Mac standards....
Virtues of the US Real Estate Loan Market
The scope of the problems that exist in the United States consumer mortgage market are huge. Enormously, mind-bogglingly, "How Big Is Space?" type huge. Yet, the problems are almost entirely on a retail level, when one provider works with one...
Buy Now vs. Wait: Some Practical Hypotheticals
The original appeared in April 2006, but has been updated for changes I am hoping to buy in the (city) area and am reviewing the possibilities. While I fear that the local market may be peaking, I intend to live...
Agents "Buying" Listings: Promising the Undeliverable and Hurting Their Clients
Quite a lot of the time when I view a property, I get requests for feedback. Usually it's an automated email. Other times, it's some office assistant who wants to fax me a form which will "only take a...
What is Real Estate Worth?
One of the most common questions in real estate is "What is this property really worth?" The easy answer is the same as the deepest, most profound one I can come up with, "Whatever you can get someone to pay...
Trying to Buy Real Estate Below Market
This question: What real estate office can I trust to help buy below market house in (location) California? brought someone to the site and I have not previously written a real answer to the question. The short answer is "nobody."...
Fixing The Real Estate Mess - Proposing Some Small Changes That Would Make A Huge Difference Over Time
Yesterday, I published the first half of this article, describing the issues currently preventing a return to a more normal real estate market, and the facts that any proposed solution needs to be built upon. At a quick recap, the...
Fixing The Real Estate Mess - Describing the Situation
Lots of folks have offered lots of different proposals for fixing the real estate markets and the mess we're in. All of the ones I have seen have suffered from one or more of about three problems. First, the...
What is Reasonable Loan Officer Compensation?
I get people asking me about how much their mortgage loan providers make, usually with an idea towards negotiating it down but often with the idea of choosing one loan or the other based upon the loan officer's compensation. This...
Debunking "Lenders Are All The Same"
Just like Mohandas Gandhi and Genghis Khan and Attila the Hun were all human beings, lenders make money by lending money to people who want it. That's about the limit of the truth in that statement. Lenders do, by and...
Pretending the Service Equation is Simpler Than It Is
Way back when I was just out of high school, I was doing a lot of things with my time. Working, dating, competing on the fencing team, gaming of various sorts. But every once in a while, I dropped...
My Sixty Second Public Service Announcement about Buying Real Estate
Here was an idea I had: Pack a list of the most important things consumers need to know about buying real estate, as packed into the words I can say in sixty seconds without sounding like an over-clocked squirrel. Here...
Selling In Buyer's Markets: Do You Need to Sell Or Are You Part of The Problem?
One of the things that sticks out about buyer's markets is that there are two sorts of listings: Those who are willing to do whatever it takes, anything it takes, to get the property sold, and the other who apparently...
How to Tell A Good Real Estate Market Article From A Bad One
Don Henley has a fun song off his second solo album called "Driving With Your Eyes Closed". I can't find a video performance, but here are the lyrics. It's got a chorus that ends with the line, "You're gonna hit...
Racial Gap In Home Loans
Racial Gap in Loans Is High in California. I can give a variety of reasons for this. First off, especially in Los Angeles but to a lesser extent throughout the state, there is a huge "Spanish speaking only" community. When...
The Mortgage Loan Market Controls the Real Estate Market
One of the things I keep telling folks about the real estate market, whatever area you live in, is that it is controlled by the loan market. If you want to understand where real estate in general is headed, look...
FHA Loans: Salvation For First Time Buyers
I want to state that I am in no way shape or form an FHA loan guru. Between my general knowledge of loans and this information from someone who is an FHA guru, I think I can make some...
Changing Rates and Streamline Refinancing - Reasons to Love Zero Cost Loans and Hybrid ARMs
(NOTE: AT this update, laws exist enacted in the latter part of the previous congressional session that essentially outlaw zero cost and low cost loans by outlawing yield spread. If you can't make yield spread, you can't use yield...
The Self-Fulfilling Prophecy of Lender Fear
Most people, particularly first time buyers, want 100% financing or as close as they can get. Actually, most first time buyers don't have a down payment and couldn't put a significant down payment (5% or more) if they had...
"All Mortgage Money Comes From The Same Place"
This sentence is a textbook illustration of the most effective way to lie. Tell the truth, but not all of it. Not that I'm trying to coach habitual liars, but I am going to deconstruct this astoundingly dishonest claim that...
What Drives Loan Rates?
Supply and Demand. Now that I've given the short answer, it's time to explain the macro factors behind interest rate variations. But I'm going to keep referring to those first three words. It is a tradeoff between the supply of...
How Can Buyers Get the Lowest Possible Price on the Best Possible Property?
The first piece of advice I have for buyers who want to get a fantastic bargain is to find a good buyer's agent (this guy is one of the best in San Diego County). Nothing else will make as...
Why the Current State of New Developer Housing
I've seen many new home developments with vaulted ceilings, mini-vineyards, huge houses on little tiny lots...Why can't some developer built some homes for us regular people? A normal sized home with plenty of closet space and a decent (not...
Buyer's Markets: Time for Listing Agents To Earn Their Money
One of the most common things I'm seeing as I roam about the East County looking for bargains: Agents not doing their jobs. Even when there were 40-plus sellers per buyer, single family detached homes that are priced appropriately were...
Buyer's Markets Are A Great Time For Moving Up
I have said repeatedly that buyer's markets are not the time to be selling a property if you have any choice. There is one exception: People looking to turn around and buy a more expensive property. It's still better if...
Fear and Greed, or How Did The Housing Bubble Get So Big?
(This was originally written February 16, 2006, but more people are interested in it now) One of the occasional questions I get from people has to do with why the housing bubble got so big (or if you're one of...
What Do You Mean Back To Basics?
For a period of several months when the market started imploding, I got mass messages from basically every lender I do business with, saying it's time to "get back to basics". My favorite A paper lender became the last to...
Yield Spread is a Beneficial Tool That Can Be Misused
If you read the papers and the congressional record on the current housing crisis, you might think yield spread is the central culprit for the entire meltdown. You would be wrong. Yield spread is a beneficial tool, offered voluntarily by...
Manufactured, Modular, and Site-Built Homes: How Lending Practices Drive the Sales Market
Many people are unaware how profoundly lending policies influence the market for residential property and the various kinds of housing and methods of construction. So I am going to go over the various gradations in available loans for various types...
The Doctrine of Delaying The Moment Of Truth
One of the worst things about the loan process, and indeed, found throughout the whole real estate industry, is the idea that if you can just delay telling the client about something they won't like, it's more likely they'll continue...
"Contractor's Specials"
I was looking through some real estate listings and saw one property described as: "Contractor's special, first time buyers and investors. House needs TLC." Does contractor's special mean u better be a contractor if you wanna buy this place? It...
The Era of Make Believe Loans and The Law of Unintended Consequences
One of the things I've heard and read other agents complaining about is that they can't find qualified buyers to represent. Welcome to Unintended Consequences 101. The way that the market had been working is this: Young, often unmarried, buyers...
When Selling, You Need To Understand Your Target Market
One of the hard things to get through to sellers is to understand the characteristics of the sort of buyers they need in order to have a successful transaction. If a given set of prospective buyers can't afford the property,...
Where Would I Invest A Million Dollars?
Somebody asked me that. Well, I'd want to set some aside for liquidity and reserves, in case something happened where I needed money now. invest those funds in a diversified mutual fund and money market portfolio. Once that's done, I'd...
Economics of Housing in High Density Areas
Here are the facts of the situation, whether you're talking about San Diego or Manhattan, the Bay Area, Los Angeles, or any of the other densely packed, high cost areas where all the employment and career opportunities are. Fact 1:...
When You Should Not Buy Real Estate
Okay, I did an article called Why Renting Really Is For Suckers (And What To Do About It). Fairness demands that I do a companion article on situations where buying is not a good idea. There actually are some. First...
Some Secrets to Good Transactions
Be prepared for trouble before it happens, know how strong your position is or isn't, and don't ever overplay your hand. Real estate transactions are the largest transactions most folks get involved in. Even small percentages of $500,000 or more...
I'm Competing Against Multiple Offers. How Do I Proceed?
The first thing to consider is that maybe you shouldn't. You never want to get involved in a bidding war. There's a classic riddle I ask every single one of my buyer clients at least once. "How often does...
Full Circle: Back to More Traditional Lending Standards
I've seen more changes in the lending industry in the last few months than the previous five years. But those changes mostly restored us to the place we were a few years ago. There is plenty of money available, rates...
The Measurement Unit For Desirability Is Dollars
I have been asked by more than one person how to measure desirability of real estate objectively. Fortunately, the Phoenicians did all the hard work for me three thousand years ago when they invented money. Precisely what that measurement unit...
Efforts to Rehabilitate the Negative Amortization Loan
The negative amortization loan is a very popular loan with certain kinds of real estate agents and loan officers. It has two great virtues as far as they are concerned. First, it has a low payment, and despite the fact...
You Want an Agency That Can Pay ENOUGH Attention to YOU
A lot of advice gets given to choose a "top producing" agent. These highly corporate offices may have the name of an individual agent attached to them, but they are in fact transaction mills. They have done pretty well for...
What Do Buyer's Agents Do?
Got this search: "should I get a buyer's agent if I've already found a house" The answer is almost certainly yes, but I am going to examine both the pros and cons. Full disclosure: This is what I do for...
Listing Agents Claiming There Are Multiple Offers
Once upon a time, this was a good way to get more money for your listing. This led to a classic tragedy of the commons. Because it didn't take hardly any extra time, and there was no reason not to...
100% Financing or Low Down Payment or Low Equity: PMI May Be The Only Option
One of the casualties of the lending meltdown is the high loan to value second mortgage. With many properties locally having lost twenty percent or more of their value, a second mortgage on a property that ends up in default...
Good Intentions and Over-Extended Homeowners
(I do use one piece of non G-rated language below. I hope you'll agree with me that it was necessary to convey the proper sentiment) USA Today had an oped, "3 ways to help borrowers without bailing them out" Their...
Who Has An Interest That Should Be Protected In A Real Estate Transaction?
I've been answering this question for a long time. Whose interests do we need to be concerned about, in a "If they are harmed, we've got a problem" sort of way? Who has a primary stake in a real...
Buyer's Markets
One of the phenomena that I am encountering is fear of the market in buyers. They are concerned that prices are falling, and that they will lose some or all of their investment if they buy. Well, the first...
Top Twelve Things That Help You Buy Property At A Bargain Price
Quite a while ago, I wrote Top Ten Reasons You Bought The Wrong House and Top Ten Reasons Your Home Isn't Selling. In that vein, I'm going to write a list of the most important things when you're shopping for...
What Are Your Options If You Can't Make Your Mortgage Loan Payment?
I found you on the Web after doing some research for my parents regarding short sales and foreclosures. I appreciate your straight talk regarding the whole loan and real estate process which I know they find incredibly intimidating. Right...
You Must Be Willing To Act In Order to Get Any Benefit
On a very regular basis, pretty much every buyer's agent who's worth anything gets clients who have difficulty making a decision. Not too long ago, I found a solid property with great potential that nonetheless needed about $20,000 of cosmetic...
Why It May Be Costly to Reject Paying Points
I hear it and read it all the time - advice that says to pre-emptively reject the possibility of paying points. People that talk to me about loan rates that tell me they will not consider any loan that...
Confusing Past Performance and the Present Situation with Future Planning
The most common mistake in real estate (and every other aspect of financial planning, for that matter) is to assume the situation now is going to continue indefinitely. In the stock market, people chase last year's returns. They "wait for...
Just Because Compensation for a Loan Isn't Disclosed Doesn't Mean It's Free
I am continually confirming that a large percentage of people can't handle negotiations like an adult. They focus in on garbage and ignore what's really important. I recently was going to deliver a loan that cost less, as well as...
Considering Condos, Townhomes, and PUDs
The vast majority of the population out there wants single family detached housing. The virtues and benefits of the single family residence have been extolled ad nauseum, and the drawbacks of the alternatives are the stuff of urban legend. Unfortunately,...
Real Estate is More Local Than Most People Think
When I'm doing my initial automated search for properties for my buyer clients, I always pay close attention to listings represented by agents out of the immediate area. Why? Because an agent from fifteen or twenty miles away probably has...
Investment Property and Loan Qualification
One of the things that has constricted the most with the current paranoid lending environment is the ability to use rental income to qualify for a mortgage. It seems that lenders are seizing upon any excuse to deny income...
Reasons Why You Want A Buyer's Agent
There's an awful lot of nonsense out there that advises people to do without an agent. Quite often, first time buyers of real estate get seduced into not having an agent by this stuff before they get into the market,...
The Division of Labor Between Buyers and Their Agents
During the initial interview with prospects, I like to cover the division of the labor that goes into a purchase that makes the buyers happy. I have to know what's important to the buyers, how important it is, and what...
Government Policy, Economic Consequences, and Following The Trail of Logic
Something I feel the need to point out when people talk about current issues with the real estate market, for instance, housing prices fall yet again, mortgage rates hitting new lows yet again or the Federal Reserve indicating a need...
Low Price: "Quantity Has A Quality All Its Own"
This saying comes to us courtesy of our military. They use it in the context of ten million peasants armed with stone age weapons will swarm one man, no matter how well armed or how well supported. In my work,...
Some Free Advice About Real Estate Transactions: If You're Spending Money, Make Sure You Get Something Valuable For It
Most days I get loan wholesalers coming into my office. I'm always happy to talk with them, providing they want to talk about what I want to talk about. They usually want to talk about this gimmick and that gimmick...
What Types of Mortgages Are Available?
So what else is available, besides the thirty year fixed rate loan? There are many kinds of loan out there. Here's a quick overview: A Paper In addition to the thirty year fixed, there are several other varieties of fixed...
Why You Should Not Walk Away From Real Estate Because You Owe More Than It's Worth
I keep reading stuff on the internet advising people who are upside down to just walk away if they are a upside down on their mortgage. This has got to be right up there with the worst financial advice...
How to Succeed at Low Balling on Real Estate
A while ago now, I spent several hours showing properties I had found to a couple of investors. One was a lender owned fixer, fairly priced at $440k. It needed carpet, paint, landscaping, and some facade work. The last comparable...
Pocket Listings: Out of Sight, Out of Mind
Every so often, you will see references to a "pocket" listing. These are usually bad for owners, and usually bad for buyers, but good for agents. A "pocket listing" is one where there agent keeps the listing "in his pocket"...
Fixing The Real Estate Mess - My Grunt's Eye View - Proposing Some Small Changes That Would Make A Huge Difference Over Time
Yesterday, I published the first half of this article, describing the issues currently preventing a return to a more normal real estate market, and the facts that any proposed solution needs to be built upon. At a quick recap, the...
Fixing The Real Estate Mess - My Grunt's Eye View - Describing the Situation
Lots of folks have offered lots of different proposals for fixing the real estate markets and the mess we're in. All of the ones I have seen have suffered from one or more of about three problems. First, the...
Federal Reserve Changing The Rules: Was This Supposed to Be Helpful Regulation?
The main body of this article is a reprint from December 2007. I will add some comments as to how this has shaken out thus far. I was thinking we were ready for a recovery here in San Diego, but...
I'm Competing Against Multiple Offers. How Do I Proceed?
The first thing to consider is that maybe you shouldn't. You never want to get involved in a bidding war. There's a classic riddle I ask every single one of my buyer clients at least once. "How often does...
The Measurement Unit For Desirability Is Dollars
I have been asked by more than one person how to measure desirability of real estate objectively. Fortunately, the Phoenicians did all the hard work for me three thousand years ago when they invented money. Precisely what that measurement unit...
Debunking the "Record Wave of Foreclosures Coming" Myth
Articles like this one: Foreclosures: 'April was a shocker' have gotten an awful lot of play in the media these last couple weeks. Here's what they're not telling you - or not explaining why it's important: This particular article...
You Want an Agency That Can Pay ENOUGH Attention to YOU
A lot of advice gets given to choose a "top producing" agent. These highly corporate offices may have the name of an individual agent attached to them, but they are in fact transaction mills. They have done pretty well for...
Who Has A Legitimate Interest In A Real Estate Transaction?
I've been answering this question for a long time. Whose interests do we need to be concerned about, in a "If they are harmed, we've got a problem" sort of way? Who has a primary stake in a real...
Top Twelve Things That Help You Buy a Bargain Property
Quite a while ago, I wrote Top Ten Reasons You Bought The Wrong House and Top Ten Reasons Your Home Isn't Selling. In that vein, I'm going to write a list of the most important things when you're shopping for...
State of the San Diego Real Estate Market March 2009
Reminds me of this gold rush movie (one that I recommend watching if you have a chance) Okay, it's not quite like that, but correctly priced properties are flying into "Pending". It has to do with supply and demand. At...
Why It May Be Costly to Reject Paying Points
I hear it and read it all the time - advice that says to pre-emptively reject the possibility of paying points. People that talk to me about loan rates that tell me they will not consider any loan that...
Confusing Past Performance and the Present Situation with Future Planning
The most common mistake in real estate (and every other aspect of financial planning, for that matter) is to assume the situation now is going to continue indefinitely. In the stock market, people chase last year's returns. They "wait for...
A Good Proposal For Dealing With The Mortgage Problem
Megan McArdle on Obama's proposed bailout So the plan: 1. Forces the bloated and undercapitalized mortgage agencies to take on more debt without regard to creditworthiness 2. Cleans up only the least toxic loans 3. Will cost some unknowably...
Investment Property and Loan Qualification
One of the things that has constricted the most with the current paranoid lending environment is the ability to use rental income to qualify for a mortgage. It seems that lenders are seizing upon any excuse to deny income...
Reasons Why You Want A Buyer's Agent
There's an awful lot of nonsense out there that advises people to do without an agent. Quite often, first time buyers of real estate get seduced into not having an agent by this stuff before they get into the...
Jumbo Loans and The Current Market (January 2009)
One of the salient facts of the current loan market is the fact that pretty much nobody is offering "jumbo" loans at anything like a "par" rate One of the saving graces is that this is a lot less...
"Quantity Has A Quality All Its Own": Low Price
This saying comes to us courtesy of our military. They use it in the context of ten million peasants armed with stone age weapons will swarm one man, no matter how well armed or how well supported. In my work,...
Housing Bubble Death Trap
(This blast from the past originally appeared June 7th 2006, and it wasn't my first such article. It's still relevant, though. Keep in mind that San Diego has been on the bleeding edge of all of this, so we're likely...
Why You Should Not Walk Away From Upside-Down Real Estate
I keep reading stuff on the internet advising people who are upside down to just walk away if they are a upside down on their mortgage. This has got to be right up there with the worst financial advice...
A Highly Leveraged Way to Ameliorate the Financial Crisis
There's a program that President Bush got Congress to pass in late summer 2007 called FHA Secure. As passed, it was horribly limited by Loan to Value restrictions (97%), when the problem is that most folks are actually upside down...
The Are No Schools That Teach What A Good Agent Needs to Know
I find it fascinating the number of people who will claim that because no college degree is required to become a real estate agent, that agents can't possibly be worth any significant amount of money. The reason no college...
Is San Diego Market Underpriced or Overpriced? - A Thought Experiment for August 2008
Let's do a thought experiment. Any market in any commodity has two components: The demand, or willingness and ability to pay for that good, and the supply of that good. Let's consider the demand half of that first. Specifically, ability...
Conforming and Jumbo Only Apply to "A Paper" Conventional Financing
This is something that many folks don't understand about the loan market. The labels "conforming", "jumbo" or, more accurately, "non-conforming" and (for the rest of 2008) "temporary conforming" only apply to so-called "A paper" loans, largely underwritten through Fannie...
Agents "Buying" Listings: Promising the Undeliverable and Hurting Their Clients
Quite a lot of the time when I view a property, I get requests for feedback. Usually it's an automated email. Other times, it's some office assistant who wants to fax me a form which will "only take a...
NEWSFLASH! SAN DIEGO DECLINING MARKET DESIGNATOR REMOVED!
I have just gotten an email from one of my wholesalers (who shall remain publicly unnamed) removing the "declining market" designation from San Diego loans! This particular lender is still not willing to do 100% loans, but they will...
San Diego Real Estate Market: June 2008 Advice
My advice to sellers is very simple: Hold off if you can. Things have already improved, but better times are coming once more inventory clears. The prognosis for this is very good. I'm seeing fewer short sales, at least...
April 2008: Why Loan Rates Are Cheap
Despite all the hype, rates (or, actually, the tradeoff between rate and cost) are pretty darned good right now. I'm at home right now, but yesterday, for someone with average credit (national median) and 20% down payment or equity, I...
What $5 (and Higher) Gas Means to Suburban and Exurban Real Estate
Most of the articles and things I read about the price of gas seems to be based upon an implicit assumption that the price of gas is only as high as it is temporarily. This is not the case....
Pretending the Service Equation is Simpler Than It Is
Way back when I was just out of high school, I was doing a lot of things with my time. Working, dating, competing on the fencing team, gaming of various sorts. But every once in a while, I dropped...
My Sixty Second Public Service Announcement about Buying Real Estate
Here was an idea I had: Pack a list of the most important things consumers need to know about buying real estate, as packed into the words I can say in sixty seconds without sounding like an over-clocked squirrel. Here...
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