David Boyer’s Blog

We all can read about the terrible real estate market or hear commentators or politicians whine about how terrible housing is. You know, you would think the world had ended. My take is that 2007 was a TERRIBLE year for real estate, and that 2008 won’t be a lot better. That said, it WILL be better, and I believe that 2009 will be better still. We have a lot of hard work ahead, but for those who stick with it and continue to work, this will turn out okay in the end. For investors with some courage AND patience, the investments they make now and in the near term will make them wealthy over time. It probably won’t be dramatic, but wealth is there for those with the foresight to invest wisely.

Here’s some data from our MLS that may be of interest. From January 1 through April 30 of this year, there were a total of 6229 residential closings. This compares to 7240 for the same period in 2007. That equates to just under 14% fewer closings. Now that is not glorious news, but it somewhat belies the article I read late in March that claimed sales were down “over 40%”.

Also, for the first time this year, in April closed transactions were up from a year ago, in this case 14% over April of 2007. Now one month does not a trend make, but it sure is nice to report!

So I’ve put together a complete package for my short sale listing, and sent it by DHL to the loss mitigation department of the lender. Now, by my calculations the lender will take a loss of about 2/3 of the principal, so it is a bad situation for them. However, if they started a foreclosure, by the time they actually acquired the property and sold it off, their loss might get close to 100%. So you would think they would try to be accommodating.

Instead, the manager of the department could not find the HUD-1 estimate in the package, even though I had a copy of it in hand. Again, you might think the manager might have had one of her minions call or email and tell me I had to send another HUD-1 before the package would be considered. You would be wrong on that assumption too. The manager noted the computer that the package was incomplete, then discarded it completely without bothering to call me! Had I not called to check on the status I wouldn’t even know!

When the gatekeeper in the loss mitigation department confirmed the above facts, he also allowed as how the manager could not be expected to actually pick up the phone, else how would she get any work done? Hello–anyone there? Needless to say, I immediately faxed the entire package back to the manager directly. We will see if she actually does her job this time. More later!!

Back in 2004, along with daughter Julie and son-in-law Chris, Jan and I purchased a home in Gleneden Beach, Oregon at a resort named Salishan. It has proven to be a great spot for getting away from it all and unwinding. What with business being harder than in the past, Jan and I hadn’t been able to get up here since Labor Day last year. It’s hard to imagine how much we like getting up here until we can’t do so! Just a few hours of hearing the ducks or seeing the waves on the beach and I can feel my tension ease away and my muscles unlock! The first couple of days, Jan and I just mostly sleep and eat.

We had some big changes in the house this trip. Last year we noticed the foundation was starting to fail in a couple of places. That’s not too surprising, since we are built on what is essentially a pile of beach sand. Not only that, the lady who built the house in the early 70s didn’t always use the best contractors or best materials! That said, we put Chris to work interviewing contractors and obtaining estimates. The solution, it seems, is something called “helical piers”, which are screwed into the ground until they reach the hard strata below. The support piers are then attached to these big screws and the house is stabilized. I’ve cut out about 10 steps I’m sure, but you get the idea. Anyway, the first thing that has to happen is the old decrepit carport needed to be removed, along with the old elevator shaft, containing a non-working elevator. They block easy access to the are under the home where the piers need to be screwed into the ground. You can see them both in this picture from the first set of pictures we have of the home.

The carport was held up by 4 spindly legs made of re-bar. So was the elevator shaft, which you can see in the background here. It made our house distinctive, but with winds in excess of 100 mph this winter it was time they were pulled down. The contractors said that as soon as the elevator shaft was unbolted from the balcony at the top it just collapsed on its own!

You can see the difference with both removed. What we didn’t realize was how much better the views would be from the balconies! Now we are rethinking where to put a new elevator shaft in so it won’t block the views. If the house didn’t have over 40 steps from the parking area to the main level we probably wouldn’t replace it. But since my mother is in her 80s and Jan’s mom in her 90s we want to make it accessible to them. Of course in another 20 or 30 years I’ll probably need the elevator too!

Now, you may wonder what all of this has to do with real estate. The answer is absolutely nothing. But as professionals we’re human too, with hobbies, families, and lives outside the profession. If all I did was work, I wouldn’t be worth much to my customers and clients. I’m convinced that if I relax periodically, I will be a better agent for my clients.

I’ll be back in the office on Wednesday the 30th. In the meantime, I’ll be sleeping, walking on the beach, and generally recharging. Have a great day!!

Well, the market in Las Vegas continues to slowly improve. As I have commented upon, the inventory of available homes continues to decline. Just in the last six weeks, the number of available listings in the Las Vegas Valley has dropped from 22,717 to 21,780. At the same time, listings under contract has increased in the same frame from 3945 to 5619. While not all of those homes under contract will actually close escrow, many will. Our rate of actual closings is running just of 1000 per month year-to-date. Finally, the number of members of the Multiple Listing Service has been reduced from just of 17,000 at the beginning of 2007 to about 13,900 as of last Friday. That means fewer agents are chasing more transactions!  Hurray!

All of this means that while we still have a ways to go, we have certainly improved dramatically in the last 6 months. If you think that you want to wait to buy, maybe you will want to rethink that position!

For any of you who have been reading my blog for awhile, you know I’ve been involved in a few short sales. You can also probably read between the lines and know that I’m not real high on some of the so-called “loss-mitigation” counselors working for some of the lenders. Here is an update.

Recently I put a complete package of all of the documents required by the lender so that we could start the approval process for one of my Sellers. It was sent by overnight mail and was received on April 21st. Knowing that it would take at least a week to have anyone review it, I actually waited until yesterday to call for followup.

Now understand, I was not looking for an answer, but since the offer is at least $25,000 more than what the comps reflect (the home is in very good shape) and is exceptionally clean, I am hopeful the lender will react quickly. Imagine my surprise when the gatekeeper in the loss mitigation department told me to wait another few days, because it is always “six to ten WORKING days” before a counselor is assigned to any file. Amazing! What happens when the Buyer walks away from the deal while the lender is trying to decide what to do.

Here’s another story. A couple of months ago I made an offer on a home priced at about $180,000. The buyer was my self-directed IRA, so I had to have one of my colleauges represent me. I provided all of the required information to the listing agent, including loan approval from my lender, IRA statements, comps, the whole works. At that time however, I warned the listing agent that if the lender tried to extort commission from either the listing side or the selling side I would cancel the transaction. I explained to the other agent that I am opposed to any party attempting to get in the pockets of the profession. Well, after 9 weeks of waiting for a response, the lender still had not provided a written short sale approval, but did let the listing agent know that it was going to be approved, but only if the agents gave up 1%. I don’t know if the loss mitigation counselor was misinformed, stupid, couldn’t do math, or was just plain venal, but needless to say I believe that counselor was stunned when he or she heard from the listing agent that the transaction was cancelled. I hope they learn to do math because by the time they start and complete a foreclosure sale, then hire an agent to resell the property, something tells me they will lose far more than the $1800 they tried to extort from the listing agent. For the record, the listing agent was willing to do it, but did not fight me when I cancelled. I think she may have been relieved that someone else was deciding for her so she did not have to make the decision herself.

My colleague will get paid, of course, when we find another property to buy.

The morning paper had a great article this morning, indicating that closings in March were up 34% from February. While still down about 8% from last year, closings have definitely been increasing. I note with interest that a large percentage of the closings are foreclosures or short sales, and that our local title companies are backed up.

In doing my own unscientific research on the MLS for the last 7 days, I found the following bits of data. There were 247 single-family closings in the last seven days, and the listing inventory is down by over 266 last week. Additionally, another 166 single-family homes were put under contract. For condos and townhomes, the numbers over the last week were 30 closings, 26 newly under contract, and 13 fewer listings than last week.

Now these numbers may seem modest, and compared to 2005 they certainly ARE modest. But over the last 10 or 12 weeks, these modest improvements mean that there are nearly 25% fewer listings than at the first of the year. Additionally, there are over 30% more homes in escrow than at the first of the year! We’re certainly not out of the woods yet, but I think that 6 months from now we’re going to look back and say that we hit bottom in the first quarter of 2008 and things started getting better.

Well, as you know, I have been trying to sell a couple of my listingsthat are in short sale mode, as well as purchase an investment property for myself that happens to be a short sale. I have to tell you–no joy on any of it! Both of my short sale listings are being crushed by REO properies dropping the prices of competing homes, which makes my listings seem overpriced. I certainly understand why the REO owners are doing what they have to do to sell homes, but it certainly makes selling other homes a LOT tougher!

As for trying to invest for myself (actually my IRA), I’ve been in escrow for 60+ days, after offering full asking price for a cute home, and the lender has changed loss mitigation people 2 or 3 times, delayed getting a BPO, ordered a second BPO, and finally this week said they “might” have an answer in a week or ten days, but “Oh by the way–the listing agent needs to reduce the commission to make this work.” While the listing agent is willing to do this, I am not willing to participate in a transaction involving a commissionectomy, even if it is not happening to me or my agent. Until we in the profession quit allowing lenders to extort our commissions from us, it will continue to happen! Needless to say, I will be looking for another investment property to purchase next week. Maybe the third time will be the charm!

I would be an idiot if I didn’t mention that on Sunday the 30th I got to celebrate my 23rd anniversary of becoming the luckiest man alive. That beautiful woman in the picture in the upper right corner of this page is the best thing that has ever happened to me! Thanks Jan–I love you!

It has been a crazy and hectic couple of weeks since I have posted! As I have mentioned, I took a new position with our company founder Jack Woodcock. Figuring out his current system for how things are done and making plans for the future have been enjoyable, but very time consuming. We are making great progress, and I will start interviewing new sales executives to add to our team next week. After 30+ years in the industry it is great fun to have a new challenge, and with our improving market now is the time to make changes and improvements in our business models.

Here is what I mean about an improving market. At the end of March, we had about 500 fewer homes on the market than at the end of February. This trend is accelerating, which means that our inventory is being sold faster than it is coming to the market. We are far from out of the woods, but even if we only reduce the inventory by the same rate each month, at the end of the year we will have nearly 25% fewer homes listed than we had at the beginning of the year.

As for sales, through the end of February we had closed escrow on just under 2000 homes, townhomes and condos through the MLS. In the month of March we closed 1167 homes, townhomes and condos, showing again that the trend is upwards. Las Vegas and the surrounding areas of Henderson, North Las Vegas, and Clark County are still growing by about 5000 net people every month. This shows that more and more people are moving here to take up the jobs that are being created by our growing tourism economy.

I sound like a broken record, but all of this is good news for real estate going forward!

One of the unfortunate side affects of a go-go market is the lowlife agents who crawl out of the slime to prey upon the unsuspecting public and the hungry members of the real estate profession. I can’t speak for any other market, but we certainly have our share here in Las Vegas. I’m happy to say that one of them was indicted this week, along with her husband. The US Attorney has more counts than I can count.

The fraud with which she has been indicted was a variation of the kickback scheme. As the story goes, the crooked agent solicited parties with good credit to purchase homes, with the promise there would be a kickbacks at close of escrow. The buyer was then instructed to deed the property to a new LLC, controlled by the crooked agent. Of course, the buyer was generally not told that the price of the home had been inflated; in some cases as much as $100,000 it is alleged. There must have been an appraiser involved, but that is yet to be announced. There probably were escrow agents also involved, but that too is yet to be announced. Anyway, the crooked agent arranged for the buyer to make an offer at, for example $25,000 OVER the list price, but would also place a clause in the offer that called for a $25,000 fee to be paid to a construction firm for “upgrades.” Of course, the kickback went to a construction company owned by the husband, and the lender was given a false HUD-1. Many listing agents cooperated in the scam, by changing their list price to reflect the higher price, so that to the untrained eye it might look like the market is going up. The upshot, of course, is that the crooked agent then flipped the property (sometimes 2 or 3 times), taking a cut each time.

The fraud started to fall apart when the crooked agent could no longer flip the homes, and could not make payments. Additionally, in what has to be one of the stupidest moves in a universe of stupid, the crooked agent started to cheat her buyers out of their small piece of the action. One of them turned her in and the house of cards came crashing down. According to the local news, there may have been over 200 fraudulent transactions and over $100 million in fraudulent loans. Almost every one is now a lender-owned repo, dragging down the values of the neighboring homes. As much as $9 million may have been diverted to the crooked agent and her husband, of which the feds could only tract $5,000 or so! UNBELIEVABLE!!

It never ceases to amaze me that these crooks work so hard to cheat. If they spent that much effort doing things properly they would end up with nearly as much money but would not be facing long stays as guests of the government.

Can we bring back the stocks—or better yet some other type of public humiliation?