Know the Inventory

by | Feb 28, 2019 | Jim's Take on the Market, Realtor, Realtors Talking Shop

Here’s a good example of what makes us old-school agents good at our job – we know the inventory.  Seeing the new listings every week enables us to recognize the features/nuances of each home and how they compare to other active, pending, and sold listings. It also gives us a chance to network with the other agents, get tips, and build alliances – and find good matches for our buyers.

You never see discount or disrupter agents on tour – ever:

DRE on Coming Soons

by | Feb 28, 2019 | Coming Soon, Ethics, Jim's Take on the Market, Realtor, Realtors Talking Shop | 3 comments

The DRE has finally issued ‘guidance’ on the Coming Soons.  Ignored are these facts about agents making off-market deals with no MLS exposure:

  1. We see top agents doing it regularly,
  2. There is no enforcement whatsoever, and
  3. You give us the forms to CYA (last paragraph).

Burying this advice in the back of the bulletin isn’t enough.  Until we see realtors being prosecuted and found guilty, nothing will change.

DRE Weighs In on “Coming Soon” Advertising: “Be Sure to Maintain Fiduciary Responsibility for Your Client or Face Civil and Regulatory Liability”

The Department of Real Estate has included in its 2018 Winter Real Estate Bulletin an article which discusses the risks of “Coming Soon” marketing. It includes a statement of the DRE’s view of “best practices” for listing agents:

“Coming Soon” advertising CAN benefit the seller if handled properly. Such advertising can increase exposure time of the property and generate interest in the public about a soon-to-be marketed property, helping potential purchasers prepare to tour the property or make an offer when the property is put up for sale. A practice of “Coming Soon” advertising coupled with initially not showing the property is sometimes known as a “Coming Soon—No Showing” strategy (or similar) and can well serve a client. In such a strategy, the property may show as “Coming Soon” on a multiple listing service, but also as not yet being shown to potential buyers. After a time, the property is broadly marketed as for sale. There are likely multiple listing service requirements that must be met to advertise a property as “Coming Soon—No Showing” or similar.

The potential conflict a “Coming Soon” strategy can have with a licensee’s fiduciary duty comes when the listing agent begins accepting offers before the property is exposed to a larger audience via a multiple listing service or by other means. When a property is not exposed to the full market, a client’s best interests might not be served, even when a full price offer is received (because the property may well have sold above the marketed price if better advertised). Imagine the dilemma for a listing agent if a seller accepts an offer on a poorly marketed property and then receives much higher backup offers as the property receives greater exposure.

At a minimum, an agent should disclose that a better sales price could be obtained if the property were to be marketed on a multiple listing service and obtain the seller’s prior written permission that she or he agrees to not fully market the property.

A listing agent who encourages the use of a “Coming Soon” program, without broadly advertising a property via a multiple listing service or other means, especially exposes himself/herself to the potential for an increased chance of civil liability and regulatory action when the agent also then represents the buyer in a dual agent capacity. Such a dual agent would need to be able to demonstrate that the agent acted in the best interests of the seller to obtain a purchase price that was as high as could be expected for a fully marketed property. This agent, who receives commissions on both ends of the transaction, could face scrutiny questioning whether they worked to obtain the best offer possible for the seller or was acting in such a capacity for personal financial gain.

The following are some best practices for agents when representing a seller:

• Market the property via multiple listing service or other broad advertising means.
• Make sure the seller agrees to and understands how the property will be marketed.
• If using a “Coming Soon” strategy, do not accept and act on offers until a property has been broadly marketed.
• If the property will not be fully marketed, obtain prior written permission from the seller that demonstrates they understand that such a “Coming Soon” strategy may not result in receiving the best sales price.
• Avoid double-ending a property that is not fully marketed—it is best to refer potential buyers to another agent.

The C.A.R. Residential Listing Agreement explains the benefits to the seller of using the MLS and the impact of opting out.

For the seller to instruct the agent to opt out of the MLS, the seller and broker must initial paragraph 5 of the RLA. Additionally, the seller must sign form SELM (Seller Instruction to Exclude Listing from Multiple Listing Service) or the comparable form provided by the MLS.

Link to Bulletin

NRT Rips Compass

by | Feb 21, 2019 | About the author, Compass, Jim's Take on the Market, Realtor, Realtor Training, Realtors Talking Shop | 4 comments

Today, Ryan Gorman, the CEO of NRT which owns Realogy (Coldwell Banker, Century 21, Corcoran, etc.) took a major shot at Compass.

He released this two-page ‘questionnaire’ for his agents to use when interviewing with Compass, but he sure comes off as desperate and paranoid:

Help-Agents-Avoid-Being-Thrown-Off-Course-by-a-Spinning-Compass-CB-NRT

Our CEO, Robert Reffkin, shrugged it off, which is fine and what he should do:

“What you talk about is a representation of what you are focused on,” Reffkin said. “We don’t tear down competitors, we don’t pay attention to the noise, what we focus on is empowering agents.”

But as a Compass guy, I’m going to address some of Ryan’s specific concerns for those consumers and agents who might be curious and want to know the truth:

1. Robert Reffkin told us that because we’re in the Top 20 markets, the company was going to concentrate on supporting and growing those already in play – which sounds great to us agents.  I don’t know how you rate the Top 20, but here’s where we are: Atlanta, Boston, Chicago, Dallas, Denver, Houston, Los Angeles, Miami, New York City, Orange County, Philadelphia, San Francisco, San Diego, Seattle, and Washington D.C., plus nine other smaller cities – which makes 24 markets.  Close enough.

2. Compass agents grow their business quickly after joining Compass? I don’t remember that claim specifically, but every agent knows your business usually takes a hit when you change companies.  Ryan said York at MoxiWorks contradicted the claim, but that’s not true. York said that the Compass market share was lower than claimed, but he checked the Compass production only, when Compass said it was the agents’ cumulative total for the year.  Agents count their annual sales volume, regardless of their brokerage, so the Compass and MoxiWorks measurements were apples and oranges – for Ryan to misconstrue what happened is disingenuous.

3. Ryan says Cigna isn’t our insurance company, but looks like they are to me:

We saved $4,000+ per year and have a lower deductible.

4. Ryan claims Compass is losing money and wants to know about the turn-around plan?  There’s $1 billion in the bank, and Compass will likely do an IPO in the next 24 months.  But agents are focused on selling homes – if we make any money on stocks or stock options, it will be icing on the cake.

5. Ryan said that Compass ‘strongly encourages’ agents to use the in-house tools. Nobody has ever asked or told me to use the Compass tools.  Furthermore, the Compass agents I know are all seasoned professionals who used their own tools long before working at Compass.

After his release went public, Ryan said this:

“I believe competition raises the level of play, and I welcome it,” Gorman said. “But when a competitor fails to uphold the basic ethics and integrity that this industry has together worked so hard to build, and puts the people I care about in jeopardy, I cannot sit on my hands.”

“The ‘talk’ coming from Compass behind closed doors is disturbing, and yet even in public forums, such as this publication, the inconsistencies, exaggerations and flip-flops by Compass executives are deeply concerning.”

The NRT sales volume is around 5x what we sell at Compass, and this guy goes ballistic over half-truths and innuendo, most of which is wrong or inconsequential?  Why?

Embezzlement Reimbursements

by | Feb 21, 2019 | Jim's Take on the Market, Real Estate Investing, Realtor

Hat tip to Mark for sending in this conclusion to a previous story seen here:

CARLSBAD, Calif. (KGTV) – More than two and a half years after Team 10 first reported about a North County property management company accused of stealing money from clients, the victims are finally getting their money back.

Kelley Zaun owned Carousel Properties, a Carlsbad property management company. Victims first told Team 10 in 2016, they hired her to pay fees associated with their rentals. They said she did not pay those fees. She was accused of taking roughly $200,000 from victims, according to investigators.

In 2018, Zaun faced 29 felonies for embezzlement, according to Deputy District Attorney Anna Winn. Zaun entered into a plea deal and agreed to a year in custody. With the help of the DA’s office, Zaun’s former clients were able to get their money back through the Department of Real Estate’s Consumer Recovery Account.

Stephen Lerner, the Assistant Commissioner for Legal Affairs for the department, said so far, 23 victims have been reimbursed through the account. Other victims’ payments are still processing. They have been able to reimburse $172,084.68 thus far.

The Consumer Recover Account is an option for fraud victims when trying to recoup money from the person who took it from them. In order to utilize the fund, Lerner said there must be a criminal or civil court order for the defendant to pay back money he or she took. If victims cannot get refunded from the person who stole it, they can apply through the Department of Real Estate.

Winn said she volunteered to be the victims’ liaison with the DRE, as the process for reimbursement is lengthy and many of the victims were elderly. One of Zaun’s victims told Team 10 he is “extremely grateful” for the DA’s office work on this case.

Victims started receiving reimbursements within the past couple of weeks.

Money for the account comes from license fees. Lerner told Team 10 there are approximately 421,000 people with a license under their department, which includes broker and salesperson’s licenses. 12 percent of the license fee paid goes to the account.

Since 1964, the DRE has paid more than $61 million to victims. Approximately 54 percent of all applications are approved.

Link to Article

Mortgage Business Shrinking

by | Feb 15, 2019 | Jim's Take on the Market, Mortgage News, Realtor | 3 comments

Reader SM sent in this story on a mortgage company shutting down – and this one had a Carlsbad office:

https://www.ocregister.com/2019/02/14/provident-savings-bank-to-shutter-mortgage-banking-arm-cut-133-jobs/

Provident Savings Bank, the largest community bank in Riverside County, is discontinuing its mortgage banking operation, the company said in a statement.

The decision, announced by the bank’s board of directors Feb. 4, was based on a lack of profitability given the current financial environment. The operations are scheduled to cease on or before June 30.

Layoffs of 133 employees, of which 83 are in Riverside, were posted this week on the California WARN Act website, which requires layoffs to be publically reported. The others were at satellite offices in Brea, San Bernardino, Glendora, Carlsbad, Placer County and Northern California.

This one was even bigger:

https://www.housingwire.com/articles/48196-homestreet-bank-moves-to-sell-off-almost-entire-mortgage-business

HomeStreet announced Friday that it is planning to sell off its entire retail mortgage operation, which includes 72 home loan centers in five states, as well as nearly all of the mortgage servicing rights associated with loans originated in those retail outlets.

According to HomeStreet’s website, the company has 72 home loan centers: 37 in Washington, 16 in California, six in Hawaii, five in Idaho, and eight in Oregon.

According to the bank, it is making this move due to the “persistent challenges facing the mortgage banking industry.” The bank cites “the increasing interest rate environment,” which has reduced the demand for refinances, and higher home prices that have decreased the affordability of homes.

The mortgage business thrives on refinances in the ultra-low rate environment, but once rates rise, those refis dry up in a hurry.

A long-time local lender told me this week that two years ago there were 8,000 licensed mortgage originators in San Diego County, and today it’s 4,200!

We speculated that many of them became agents – another industry that is overdue for constriction.  There are over 15,000 realtors in San Diego County, and last month we sold 1,770 houses, condos, and mobile homes countywide.

Real Estate for the Older Crowd

by | Feb 13, 2019 | Boomers, Jim's Take on the Market, Market Conditions, Realtor, Realtors Talking Shop

According to the Realtors Confidence Index national survey, 89% of home sellers were at least 35 years old, and two-thirds were selling their primary residence:

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Of those who bought a home, 72% were at least 35 years old, and 40% came from a home they owned. Mix of those buying up or down? Maybe 50/50?

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The REALTORS® Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices and market conditions.

Link to NAR Survey

Realtors & Guns

by | Feb 11, 2019 | Jim's Take on the Market, Realtor, Richard Morgan | 1 comment

Hat tip to Richard who sent this in, but honest, I’ve never seen him packing! There are 1.3 million realtors, and 2-3 get killed every year – I’ll take my chances. But I don’t think women should do open house by themselves.

Realtors often go into houses they don’t know, with people they’ve just met. Safety efforts have become a real focus, but the potential for violence has some of them taking up arms.

Scott Smith spends a lot of time at the range, making sure if he has to use his gun, he’s fully trained and ready.  But Smith doesn’t just shoot for sport. He legally carries a concealed gun for his job as a realtor.

“People think realtors have a lot of money, that they are rolling in the dough, so people automatically think – ‘there’s an easy target.'”

Link to Full Article

Redfin Estimates

by | Jan 18, 2019 | Jim's Take on the Market, Listing Agent Practices, Operation Transparency, Realtor, Why You Should List With Jim | 6 comments

Be careful with those Redfin estimates – they are tied to the list prices.

The snip above was taken on January 15th, and the one below was taken last night.  It’s hard to believe the actual value went up 12% in 48 hours:

Should they have the ability to revise their estimate once they get new information?  I suppose, but they should state that clearly for those who believe what they read on the internet.

But they flat-out lie to you – their estimate was $465,166 on Tuesday.

This is what they show today – 12 months of estimates over $500,000:

I won’t mind if the Redfin estimate helps me start a bidding war, but I’d rather operate in a pure, non-manipulated market.  Once buyers get burned enough, they shy away, which isn’t good for anyone.

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