Tuesday, November 23, 2010

Shadow Inventory and the Housing Market

I know people hate those that "toot their own horn", hell I usually do too.

But I simply can't resist...(and am taking my horn out of its case right now) :)

Last year I posted this blog entry about the shadow inventory in this country. I even posted a solution almost two months prior (and now nearly a year old).

It may not be the perfect solution, but at least it addressed the core issue.

With this being said, I just came across this article in today's Barron's, the preeminent weekly of Wall Street.

According to the article: "The so-called shadow inventory of residential properties on the market jumped 10% in August, the most recent month for which data are available, to 2.1 million units, CoreLogic reported Monday...The latest month's data represented an increase from 1.9 million units a year earlier, equal to five months' supply.

The visible supply of properties listed was flat, at 4.2 million units, in August but because the slower pace of sales, this represented 15 months' supply, up from 11 months' a year earlier. All told, the visible and shadow supply totaled 6.3 million units, or 23 months' supply at the current sales pace, up from 6.1 million a year earlier, or 17 months' supply back then. In other words, we're falling farther behind."


I'm sure I speak for many in the Real Estate and Mortgage industries when I voice my utter frustration at the Olympic FAIL that is the Government "solutions" to the housing crisis.

Rather than confront the problem, and really look, we have seen two years of ad hoc "solutions" meant to do nothing but keep the current house of cards propped up.

From the chaos at the major banks with their foreclosure procedures and document disasters, to the current investigation (finally) of MERS (Mortgage Electronic Registration System) the Government seems to be years behind.

It will be very interesting to see what comes of the current investigations.

Stay tuned folks, this is just starting to get interesting.

Tuesday, October 12, 2010

An Interesting Turn of Events

Today Fannie and Freddie took a bold move. They are holding the major banks accountable. According to the Washington Post "Fannie and Freddie have threatened to penalize thousands of lenders if they fail to rapidly fix the way they seize the homes of borrowers who missed their payments, according to letters sent by the firms to lenders".

The interesting thing is this IS the free market checks and balances WORKING. Who else has the clout and power to take on the corrupt banking industry.

Hats off to Fannie and Freddie.

Put those Ethics in!

Saturday, October 2, 2010

The Latest Deal. Lennar spends $740 million on real estate

Very Good Article.

My feelings about Bank of America!

Here is some interesting news from one of the largest banks in the country. I can personally attest to the nightmare of doing short sales with them. Deadlines routinely missed, employees that really don't care. One of my good friends and clients just lost their $8000 tax credit because it took B of A 9 months (that's right), 9 MONTHS to process paperwork.

There are millions of people out of work and the bank took billions from the tax payers and they can't either hire enough people, or otherwise make it go right to get a deal done in 9 months?

Anyway I find it interesting that they now have to "freeze foreclosures" to do an internal audit of their foreclosure process to make sure there were no errors. But of course it only applies to current foreclosures so they can “amend all affidavits in foreclosure cases that have not yet gone to judgment.” This of course begs the question what about the thousands that may have been erroneously kicked out of their homes already?.

Anyway here is the article. Enjoy!

Tuesday, August 24, 2010

Sobering News. Existing-home sales plunge 27.2% Inventory of unsold homes jumps to 11-year high

The National Association of Realtors said existing-home sales fell to a seasonally adjusted annual rate of 3.83 million in July from 5.26 million the month before. Sales of single-family homes fell to the lowest rate in 15 years.

Rest of the Article Here.

Thursday, July 8, 2010

Real Estate Rant

I haven’t posted for a while as I’ve been working night and day for the last 6 months. I’ve mainly been renting homes. I like rentals as they pay quickly, and although they are much lower commissions, I am now renting 6-8 homes per month which equals about 1 sales transaction commission-wise. At least I can survive.

The Economy drove me back into Residential Real Estate (not to mention the fraud in the Bulk REO/Note arena), and having been immersed in it for 6 months I remember why I left in 2004 and practiced commercial for so many years.

I have noticed that most of the Realtors I engage are very poor. They don’t return calls or emails in a timely manner, have very poor communication skills (meaning they can’t duplicate) and often make errors. Maybe I am just an ass, but almost on a daily basis I have to repeat myself several times, over several communications, just to be duplicated. Or worse I’ll send an email, text and voicemail, the other agent won’t bother to look at any of them, and then when we speak they are oblivious. Why have all this technology for communication and not use it? Or better yet, I’ll give the exact data needed in an email and they will respond to the email asking for the data. I then have to respond by saying “READ THE EMAIL!” It gets truly exasperating as it happens daily and by most agents I deal with. I can honestly say that more than 75% of the work I do is fixing others errors, or having to redo or re-communicate something that I already did or said several times.

I routinely get told I’m the “best agent” my clients have ever worked with. I’m not trying to toot my own horn here but I understand what they mean. Most agents I deal with are just horrible. And I don’t do anything that special. I simply communicate often and in a timely manner. That’s all people really want anyway. I even find it amazing since sometimes (depending on the day and how exasperated I have become dealing with this) I am quite “foul-mooded”. Yet my clients LOVE me. I’m blunt, direct, honest, sometimes a rude ass, but communicate immediately. I guess this is better than the alternative, so they love me (or at least tolerate my moods).

Why am I saying all this? Well aside from just wanting to rant, there is a point. If every agent simply decided they would have a firm policy to return calls, texts and or emails in a timely manner, to read texts and emails or write down what we spoke about, or simply DO WHAT THEY SAID THEY'D DO they would eliminate a large portion of their OWN frustration (not to mention mine).

I left residential real estate partly because of this phenomenon, that most residential agents I encountered were clueless unprofessional amateurs. I now find myself immersed in it. So my options are:

a. Scream, rant and rave, and give myself a stomach ache
b. “Kill” them
c. Try and help them

I've done "a" to no avail (except the stomach ache), "b" is still socially unacceptable, so for now I chose “c”.

Friday, March 26, 2010

Long Time No Post


It's been a while since I last posted and you may have wondered what happened to me and my crusade to clean up the Bulk REO field.

Well, to be blunt, I moved on to other things.

After nearly 2 years and over 50 offers totaling over 500,000,000 I have come to the conclusion that Bulk REO is mainly a fantasy, that most banks ARE NOT operating in this space, and very few trades are getting done, if at all.

Don't get me wrong, I know some deals are being done. One of my client's purchased 2000 homes last year and has bought another 1000 this year already. But like most of my big client's they are very well connected and usually have seen any "deal" I manage to throw their way (and usually directly from the institution selling it). The real elusive deals, the bulk pools of homes over 200k, are still a "flying pink unicorn" as far as I'm concerned.

So I decided as part of my New Year's resolution to go back to basics in my Real Estate career. For the past few months I have been renting and selling houses. I do see an occasional bulk pool of REO or NPN 1st Resi, but these are in the main the internet junk shopped from "broker" to "broker".

Things are starting to pick up however and I have a lot of great clients, and 8 figures under contract in short sales right now.

I hope you are doing well and I will keep you posted on how the short sale game is going as the year progresses.

2010 has GOT to be better than 2009!

To our mutual success!

Saturday, January 30, 2010

Broker Chains: The Real Reason They Don't Work

If you've been working in distressed assets and Bulk REO for a while you've undoubtedly run into "broker chains". You know the scenario: a "guy" who knows another "guy" whose partner knows the seller (or buyer's) "rep", etc.

But why don't they work? Leveraging relationships is the key to success in any business. And personally I have a small core of "brokers" who I DO work with. So why do MOST broker chains end up a tangled mess. And more importantly how do you avoid them, or when in one, how do you navigate it.

The first thing to consider is the nature of communication. Ask yourself this question: "Do you know the formula for communication?" (Yes, there actually is a formula). And if you don’t, chances are your associates don’t either.

This formula is rather simple, yet VERY powerful. It consists of:

The Cause Point (the one originating the communication)
The Receipt Point (the one receiving the communication).
The "particle" (word, email, letter, etc.) that “thing” being communicated across space from A to B

These first three components most people intuitively know. But even here there can be trouble. What about the person who just “won’t listen”. They are unwilling or unable to be a Receipt point, thus they never “receive” any communication.

Some might believe that effective communication ends here. But in fact this is where it begins.

So what else is needed?

The first is Intention. Cause point A must INTEND that receipt point B receives the "particle" (word, email, letter, etc.). I'm sure you can think of a time when someone spoke to you or you to them, and you were thinking about or doing something else. Did you really get it? Or did they get you? Chances are there was very little INTENTION on the communication line. And thus that "particle" never really made it across. Without Intention, communication cannot happen (and I will show you why in a moment).

The next component that is usually missing is ATTENTION. If Receipt point B is not really paying attention to Cause point A (for any number of reasons least of which is they are trying to be a Cause point instead of the receipt point, meaning they simply are trying to talk, not listen) then they WILL NOT receive the "particle". They won't get the communication, even if they nod or gesture, or even say, "yeah, yeah I got it". And I’m sure I don’t have to mention the instance when 2 or more people are talking over one another. Without ATTENTION, no communication can take place.

The final component to a true communication is DUPLICATION which leads to UNDERSTANDING. And it is here that most communication fails, and what makes "broker chains" a true nightmare.

What is Duplication? Simply did the particle sent form A (cause point) arrive UNALTERED to receipt point B. If it made it unaltered, and the other points mentioned above are in, then it can and usually IS duplicated. You said “the sky is blue”, and they heard “the sky is blue”. Thus DUPLICATION and UNDERSTANDING.

Ever get on a deal and find out what you were told from another “broker” isn’t what the Buyer or Seller actually said. For if the aforementioned points are not IN, FULLY (meaning one is not aware of their existence, necessity, or importance), then the receipt point WILL NOT duplicate and understand what is being said (the particle being sent from Cause to Effect). Yet being unaware of any of this, they usually THINK they understood just fine, and then relay that "particle" of communication on in its ALTERED state as if it were the truth, fact or thing told to them. And thus we have the nature of broker chains in this industry and why they almost NEVER produce a successful trade.

This is a technical way to describe a phenomenon we all played as a kid: the game of "telephone".

This is also the exact mechanism of WHY most broker chains (and sometimes even direct buyer/seller communication) fails. One or more of these component parts are missing from the communication.

People are talking (sometimes a lot). But they are NOT communicating. No duplication and understanding was received. Nor imparted (as the formula works exactly the same way when Receipt point B, becoming now a cause point, returns a communication particle back to Cause point A, which becomes a receipt point). And with a breakdown in communication, all else will fail.

Knowing this data has saved me A LOT of heartache. When I am given information, I always assume the person relaying it to me did not fully or properly duplicate what they were told. This isn't to say they are bad or stupid (though sometimes both are also the case), but simply they are unaware of what TRUE communication consists of. The only way to avoid this situation is to track back to the "source" of the communication to make sure what you are told is in fact true. And then make sure all these points are in.

This one activity, if done by all trying to do business in this space, would eliminate 90% of the tail-chasing, mind-numbing aggravation so prevalent.

Why not try it?

Thursday, January 14, 2010

CRE Loan Benchmarks and the FDIC

As the new year began, the Federal Deposit Insurance Corp consummated its second largest (only Starwood's 2.77B purchase of the Corus Bank CRE portfolio last year was larger) CRE loan pool sale.

Using Deutsche Bank as an advisor, The transaction included "1,200 loans with an aggregate unpaid principal balance of $1.02 billion, consisting of substantially all senior secured commercial real estate loans. Approximately, 70% of the loans were delinquent and about 75% of the collateral of the portfolio is in Georgia, California, Nevada and Florida. About one-third of the total was reportedly backed by land and not buildings. All of the loans were from 22 banks that have failed during the past 18 months.

The portfolio was effectively acquired at 44% of the unpaid principal balance of the loans, with a purchase price by the Colony Investors of $90.5 million (exclusive of working capital and transaction costs) for its 40% equity interest."

The article goes on to state that "from last January through Nov. 30, the FDIC announced loan sales with a total book value of $1.66 billion. The commercial real estate loans sold went for about 51% of book value combined. Broken down by quality of loan, the bulk of those sales were for performing loans ($1.16 billion), which sold at 57% of book value. The FDIC sold $387.5 million in nonperforming CRE loans last year at 39% of book value. The remainder of those loans sold last year were for mixed portfolios of performing and non-performing loans.

Those totals do not include Starwood Capital Group's winning bid of $2.77 billion for a portfolio of distressed commercial real estate assets valued at $4.5 billion that the FDIC seized from failed Corus Bank NA. Starwood's bid came in at 61.6% of book value."

Here is my question. Do the FDIC benchmarks established by these trades translate into an industry wide "standard" of expectation?

What do you think?

Wednesday, January 6, 2010

And the Circus Begins

I was wondering how long it would take for me to run into my first "broker joker" of 2010. Well I've now dealt with two and it's only Jan 6th.

I have a question (real question feel free to respond). How can one agree with my Bulk REO Fact vs. Fiction posts, tell me they agree with my data and experiences, and then ask me to jump through the VERY SAME HOOPS to get access to their "source" that they just finished agreeing with me is broker-joker BS?

I just don't understand.

On a positive note this year has gotten off to a fast start. Several offers are in to banks and several more are in the pipeline.

I wish you all a great 2010. Flourish and Prosper!

Happy New Year! Have any good Intel?

Happy New Year!

I'm glad 2009 is over. Hopefully we are one step closer to a true "marketplace" for distressed assets.

As 2010 begins, I am looking to gather as much ACCURATE information as I can to help one and all navigate the "landmines" of last year.

I am open to "anyone’s" data.

All that I ask is to PLEASE make sure you vet the data.

Meaning: is it firsthand (from the source) or down a chain of people. And if the latter, were you able to pull it back to the "source".

Feel free to email me at ronmeyerson@gmail.com