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A conversation I had yesterday with a mortgage broker about the Fed’s interest rate announcement yesterday reminded me of the days of Alan Greenspan and his amazing obfuscatory comments, with pundits parsing his every word in an attempt to decipher his real meaning.

It got me thinking: What if Greenspan were to become a Realtor? How would he describe this home? (Standard Realtor description: Charming 1-bed beach cottage, needs TLC.)

Here’s my attempt at Realtor Greenspan’s description:

This residential domicile, hewn from lumberine products in a fashion not dissimilar to the dwelling place of the great wordsmith of yesteryear, Ernest Hemmingway, appears to have capacity of sufficient magnitude that an individual of the homo sapien species — or perhaps a pair of same, provided both parties were of such a relationship and disposition that proximity, especially of the nocturnal variation, would not lead to vexatious reactions — could conceivably dwell therein, albeit with perhaps a tinge of claustrophobic sensation. While the proximity of this structure to an environment of both an acquine and saline nature would be considered, by certain individuals, to be of a desirious nature, leading perhaps to irrational exuberance on the part of prospective purchasers to the point where the pecuniary compensation attached thereto could conceivably lead to sensations of regretfulness, I would nonetheless recommend caution as a desirable trait when approaching this particular purchasing decision, as the frothiness, undulation, and boisterousness of the whitecaps could, in some individuals, lead to a feeling of discomfort. Additionally, those harboring any intentions of transforming this structure into a domicile of sufficient satisfactoriness should exercise caution regarding their due diligence with respect to the structural integrity, desirability, durability, and construction of same.

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I wonder if I may be making history here as the first person to ever be live-blogging a real estate legal update seminar.

Twice a year my broker, Alain Pinel Realtors, runs attendance-mandatory legal update seminars hosted by Bill Jansen of Broker Risk Management.  Most of us look at these events akin to a trip to the dentist:  painful, but necessary and perhaps even good for us.  Fortunately the company provides a breakfast to get us all there on time — a fairly reliable ruse in the case of Realtors.

Bill does his best to liven up his talks with anecdotes, pithy lines, and the occasional joke.  Some of his best lines today were on disclosure obligations:

1) Seller:  “Do I have to disclose–”

Agent (interrupting):  “Yes.”

The point?  If there’s any doubt about whether something should be disclosed, the answer is “yes”.  In legalese, everything material has to be disclosed, which is of course a subjective standard.  Since the likely plaintiff in any lawsuit is a buyer, their interpretation of material could come back to bite you.

Disclose, disclose, disclose.

2) “What buyers learn before escrow, they forgive.  What they learn after escrow, they sue.”  Buyers hate surprises, especially expensive ones.  Attorneys, on the other hand, simply luv ‘em!

——————–

Disclaimer:  I am not an attorney, so don’t make any decisions or take any actions based on what I’ve written above.  Consult your own attorney for advice related to your particular situation.

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There, I knew I’d grab your attention with a headline like that!

Imagine you could wave a magic wand and, presto! our whole industry structure disappears and gets replaced instantaneously with whatever you decide.  What would the new real estate industry look like?

Would you want to recreate what we have now, with some 1.x  million independent contractors working under the casual-at-best supervision of brokers who then help themselves to a significant chunk of the commission pot?  Would you recreate an incentive system that encourages churn-and-burn of new agents?
Think about it: In order to be really successful in this business, you’ve got to be pretty handy in at least these completely different areas:

1. Attracting new customers
2. Managing client relations
3. Negotiating
4. Providing counsel
5. Managing transactions and work flow

Is it any wonder so many agents don’t make it through the first year?  You could be the world’s best haggler, able to sell ice cubes in winter to my Dutch kin at $50 a pop…but if you’re not also good at shaking new clients from the tree, you’ll never get a chance to demonstrate your negotiation prowess.  Or, you might be really skilled at building up a client base, but detail-oriented paperwork isn’t your thing, so your deals have a tendency to self-destruct.

Most well-run companies cater for people’s diverse skill sets by specializing.  Marketing and sales teams fish for new clients.  Account executives manage the client relationship.  When there are deals to be made, other folks step in.  A back-end team handles the paperwork.

As it turns out, this is pretty much how perennial bad boy Redfin seems to run its business.  The agents who show houses at $x/hr may not be the same as those who write up and negotiate the contract, and they’re certainly not the same folks who make their web site oh-so-web-2.0-sticky or write content for their blog.  And open houses?  Well, they sub that work out to the cheapest labor force imaginable:  their own clients!
Redfin may or may not succeed in the end.  If they do, a big part of their success will be the leveraging of their employees’ different skills to achieve cost savings…which they then, to the chagrin of their competitors, pass on to their clients.  If they don’t succeed, it will largely be because of the resistance of the Coldwell Bankers of the world to doing things any differently.

[Yikes, do I sound like a recovering management consultant, or what?]

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Inman News just announced the list of finalists for the 2007 Inman Innovator Awards. I started reading through the list and saw many familiar names and companies…

Most Innovative Brokerage or Franchise…Coldwell Banker? Check. John L. Scott? Check…

Most Innovative Web Service…Trulia Voices? Check. Zillow Q&A? Check. vFlyer, Wellcomemat, and Cyberhomes? Check…

Most Innovative Technology…Google Street View? Check. Meebo? Check. Jott? Check. MyBlogLog? Check. Altos Research’s Market? Check.

Most Innovative Blog…now this should be interesting. Transparent Real Estate? Check. Patrick.net. Hmmm, not sure about this one, but yeah, ok, Patrick was certainly an innovator on the “Sky is falling” side of the equation. Bloodhound Blog? Check. Redfin’s Sweet Digs blogs? Check. Real Estate Tomato? Check.

And then…??? Little old me?

Don’t know what to say. I’ve been working on this blog for some 9 months now, have made a lot of friends, have learned a lot, have gotten some exposure, and have had a lot of fun. If the powers that be at Inman decide to nominate 3 Oceans, who am I to argue?

My thanks go out to the awesome contributors on my site: Chris Iverson and Bart Marchioni of Keller Williams, Ana Hays of Alain Pinel, Christine Kani of Equitas Capital, Ann O’Connell of Solstice Staging, and David Roberson of Rossi, Hamerslough, Reischl, & Chuck.

See you all at Inman!

—————–

P.S. In the fully transparent spirit of Web 2.0, I should reveal that:

1) Pat Kitano, author of the Transparentre.com blog which was also nominated, is my  business partner in a new venture that he and I have started.

2) This new venture, which, amongst other things, provides consulting services, is currently engaged by Trulia, also mentioned above.

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I recently stated that as of July 1st, 2007 — 6 days from now — California’s new ban on holding a cell phone while driving would go into effect.  It turns out I was wrong, and for that I apologize.  Mea culpa!

Reader Jennifer pointed out in a comment that the ban doesn’t take effect till July 1st, 2008, not 2007.

Indeed, she is correct.  That means instead of having only 6 days to mend our ways, we have a full 371 days to continue our driving-while-cell-phone-multitasking routine…

Thanks Jennifer!

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Lest those of us practicing real estate in the great state of California forget, July 1st is the first day of a ban on holding a cell phone while driving.  Those Realtors who don’t already have those cool Bluetooth Trekkie ear pieces better go out and buy one now!

Better yet, get your car kitted out with a complete hands-free kit, plus a voice-activated cell phone, plus — if you want to be really fancy — a subscription to Jott.  My Motorola Q and my hands-free kit play together quite nicely, and combined with Jott, I have a surefire recipe for either technological coolness or complete frustration.

Need to listen to my voice mail?   Easy!  I press the button on my dash, wait for the beep, say (clearly and loudly), “Call voicemail!” and voila!

Need to call client John Smith?  Same routine:  press button, wait for beep, say, “Call John Smith.”

Need to email client John Smith?  Here’s where things get really fun.  “Call Jott.”  When the Jott service answers, I say, “John Smith.”  Then I dictate the email message and off it goes!

Just as often, unfortunately, this happens:

Press button on dash.  Wait for beep.  Wait for beep.  Wait some more.  Glance down at Motorola Q.  “Out of memory.”  Reboot phone.  Press button on dash.  Wait for beep.  “Call Jott.”  Response (in confident computer voice):  “Calling John.”  Press hang-up button.  Press button on dash.  Wait for beep.  “Call Jott,” this time speaking very slowly and clearly.  “Calling Jott.”  Much better.  Jott answers.  “John Smith.”  “Did you say…Abigail Zarathrusta?”  Give up.  Decide email message to John Smith can wait till I reach my destination.

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You gotta love NPR – except when they launch another one of their interminable guilt-inducing fund raising drives.  Heck, I’m not even Catholic, but every time I hear one of their spiels and decline to donate, I feel an urge to go to confession!  Speaking of drives and NPR, however, I was going to a final walk-through inspection this afternoon and heard an interesting snippet about Colma, a small town of just over 1000 people south of San Francisco on the 280.

Apparently, San Francisco has banned burials within its limits for at least a century, and Colma has the nearest cemetery.  In fact, there isn’t much else to Colma apart from cemeteries, and a decade-old snippet on NPR calls the town “the country’s only official necropolis.”

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Greg Swann and his merry band of re.net bloggers have published — in blog format, of course — a guide to real estate blogging, consisting of many of their finest articles on the topic.  Having been a faithful reader of Bloodhound since nearly its inception, most of the content is familiar to me, but it’s refreshing — and invaluable — to see it all in one place, nicely packaged and indexed.

RealEstateWebLogging101.com is likely to quickly become one of the best go-to places for information on blogging in general, and real estate blogging in general.

Stellar work, gang!

Bloodhound announcement

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As a real estate consultant, I often get asked questions about foreclosures, especially as the number of these distressed properties skyrockets. According to a recent RealtyTrac press release, there were a total of 176,137 foreclosure filings in May of this year, a 19 percent increase from the previous month and up nearly 90 percent from May 2006.

Purchasing a foreclosure property is a little-understood process, so I thought I would help by explaining a bit about them, and answering a few of the most commonly-asked questions I get.

The very first question I can answer is,

Q: What is a foreclosure?
A: Foreclosure is the process by which a lender or creditor can recover an amount of money owed on a loan which is secured by real property (the house) that is in default. The process starts when a borrower/owner does not pay their bills for a period of time, and the lender files a public notice with the County Recorder’s Office, called a “Notice of Default” (NOD).  The borrower has a grace period, called ”Pre-Foreclosure” during which they can bring their account current.  If they do not, or the property is not sold to a third-party during this time, the lender then files a second notice with the County, called the “Notice of Trustee’s Sale” (NOT), which describes their intent to sell the property at public auction, usually on the County Courthouse steps. If the property does not sell to the highest bidder at the public auction, then it goes back to the lender, and becomes what is known as “bank-owned property” or an REO, which stands for “Real Esate Owned (by the bank).”  When the bank gets the property back, they list it on the open market through the Multiple Listing Service (MLS) with their team of Realtors they specifically use to list these types of properties.

So to recap, the three categories of “foreclosures” are:

• Pre-Foreclosure. Begins when the NOD is filed.
• Foreclosure sold at auction. This is the Trustee’s Sale.
• Bank-owned property (REO). Begins when the property reverts to bank ownership.

Q: How do I find a foreclosure?
A: There are several ways to find foreclosures:

If you are looking for pre-foreclosure properties, the most obvious way is to check with the County Recorder’s office.  Since these filings are made public, you have access to them.  Simply go down to the recorder’s office and ask to see this week’s filings.  Or, you can subscribe to my weekly distribution list of pre-focreclosures (NODs and NOTs) in Santa Clara County, which will update you every Wednesday when the county publishes the new pre-foreclosure filings.

If you are looking for Trustee’s Sale auctions, they are published in the newspaper on a weekly basis under “public notices.” Notices are also posted at the entrance to the courthouse in the County or City where the home is located.

If you are looking for bank-owned properties (REOs), you can also check sites like RealtyTrac. You can also go directly to the major banks, like Wells Fargo, Bank of America, Washington Mutual, etc., and ask to see their list of REO properties for sale.

Q: How do I buy a pre-foreclosure?
A: Pre-foreclosures are not technically “for sale.” These are simply homeowners who are having difficulties paying their bills. They may be experiencing financial difficulties, medical problems, having family troubles such as divorce, job loss, or any other myriad of problems people have paying their bills. Buying a property in pre-foreclosure involves approaching the borrower/owner directly and offering to buy the property outright. You would likely offer the owner a price that pays off the obligation (allowing them to avoid the bad mark on their credit), plus some extra money so they can walk away with something to show for any equity in the property. You will have time to research the title and condition of the property during this process.  If researched thoroughly, you may be able to get these properties at discounts of 25-50% below market value.

Q: How do I buy a property at auction?
A: Simply go down to the County courthouse steps at the pre-determined auction time.

Q: Should I have financing arranged before the auction?
A: California state law say that you need to have enough liquid funds to buy the home when your bid is accepted.  The Trustee will accept cash or cashier’s checks, that’s it.  So, you need to have enough money to buy the home at the final bid price, right there, at the auction, on the spot.  Many buyers will have several denominations of cashier’s checks with them, $100,000 each for example, up to the amount they are willing to pay for the property they want to buy.  If you have two $100,000 cashier’s checks, and the property ends up with a final bid of $150,000, the overage ($50,000) will be returned to you.

Q: Why is the auction price listed so low?
A: The price listed is the principal loan amount plus back payments and foreclosure costs incurred by the foreclosing lender, it is NOT the asking price of the home. Sometimes, this lender may be a second mortgage, and that amount is typically far less than the first mortgage. Foreclosure of the 2nd mortgage is always subject to the covenants of the first mortgage (meaning that the 1st mortgage must be paid off too.)

Q: Can I preview forclosures before I bid on them?
A: If the property is listed on the open market (through the MLS), or as a For Sale By Owner (FSBO), then yes. If it isn’t, then probably not. All foreclosure sales are “As-Is”… buyer beware!

Q: Do I need a Realtor® to attend the auction?
A: Whether you are buying a pre-focreclosure from the owner directly, bidding on a property at auction, or purchasing an REO property from the bank, I recommend having professional buyer representation. Everyone’s situation is different, and due to the fact that you are entering into a legally binding contract, it’s always a good idea to have a skilled consultant give you help and guidance along the way.

If you have any more questions about the foreclosure process, please feel free to contact me!

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