Posts from 'I Survived Real Estate 2008'
Thank you so much to the Northern California Real Estate Investors Association (NORCALREIA) and David Granzella for sponsoring a table at I Survived Real Estate 2008. David and the NORCALRIE club could not make it down to Southern California for the evening but instead donated the table to cancer survivors. Thank you David and NORCALREIA for your huge hearts and for helping make the event even more special.
Info on NORCALREIA: http://www.norcalreia.com/
About Northern California Real Estate Investors Association (NORCALREI)
NORCALREIA is Sacramento’s premier real estate investment club. NORCALREIA provides quality real estate investment education and resources for our members, guests and friends. Our emphasis and commitment to solid real estate investor education enables our members to make CALCULATED investment decisions for continued wealth acquisition and wealth retention in this rapidly changing market environment. Since 2004, our associations and relationships with successful investors and educators such as Bruce Norris, Jack Fullerton, Peter Fortunato, Jack Miller, Dave Wilson and many others have allowed NORCALREIA to provide its membership with the most current and essential real estate investment techniques, strategies, and industry analysis. The capstone of success is not merely monetary, but relationships fortified by honesty, integrity, consistency and hard work. In other words, “suit up - show up- be honest.” We invite you to build wealth and success together, as NORCALREIA provides you with real estate knowledge, and solutions for today’s real estate market!! “Building wealth and relationships together” David Granzella http://www.norcalreia.com/
A very big thank you to Robert Frye, Nate Wiles, and the entire Frye l Wiles team for their contributions including the I Survived Real Estate 2009 logo, website, and look and feel concept for the event. Their work was a big part in helping The Norris Group win a Platinum Hermes Creative Award in the Events category. This is also the second year they have helped us with the event.
Frye l Wiles is not only web design geniuses, they are a complete creative team that specialize in making Inland Empire businesses thrive. From illustration to websites, to search engine marketing to product photography, from illustration to copyrighting; the Frye l Wiles team combines all their skills to create what businesses in the Inland Empire must have to stand out as professional outfits.
The Norris Group contacted the team after admiring from a distance their work on such projects as the Riverside Renaissance, the Riverside Arts Museum, and the Riverside Plaza. Their beautiful web layouts, creativity, and impressive design skills had us hoping we'd get a chance to work with them.
If you're in need of marketing assistance, web design, photography, search engine optimization, search engine marketing, branding, and anything else marketing related, please call Frye l Wiles first.
http://www.fryewiles.com/
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A Powerhouse Lineup of Eight Top Industry Experts Presents the Insiderb€™s Edge on The State of Real Estate 2009
The Norris Groupb€™s award-winning event returns September 11, 2009 to the Nixon Library in Yorba Linda, California. In this critical, final quarter, web€™ve assembled a Gold Star panel of accomplished industry specialists to discuss the impact of seismic economic shifts, head-scratching regulations, challenging legislation, micro and macro industry reforms, and the accelerated pace of opportunities emerging for real estate professionals.
Welcome to I Survived Real Estate 2009
New guidelines affect every sector of our industry, from novice investors to veteran builders to REO Realtors. In a climate ripe for both miscalculation and profitable advances, how are our colleagues and partners navigating an industry in transition? This timely symposium gathers a Whob€™s Who Round Table Including:
Bruce Norris David Kittle Pat Vredevoogd John Young
President 2009 Chairman Combs Vice President
The Norris Group Mortgage Brokers 2007 President California Builders
Association National Association Industry Association
of Realtors
Tommy Williams Christopher Joseph Rick Sharga
2008 President Thornberg Magdziarz Senior Vice President
National Association Principle Vice President RealtyTrac
Last year we covered the dramatic shifts in store for the real estate community in 2009. The response was enormous, beyond our expectations. Now web€™re here, living through the forecasts and predictions, in the midst of an evolving market primed for motivated professionals to thrive.
100% of the proceeds benefit the Susan G. Komen for the Cure of Orange County. The Norris Group is currently seeking Platinum and Gold Sponsors for the event. Sponsors will be positioned in premium advertising spots, including radio, video, signage, mailers, the event program, and website. See back for more details. To find out more, please contact Diana Barlet at 951-780-5856 today.
Please join us for what we hope will, again, be an educating, stimulating, and inspiring presentation.
See www.ISurvived2009.com for more details.
We extend a HUGE THANK YOU to all of the Platinum and Gold Sponsors for making this very special event possible. Without their help, none of this would be possible.
Platinum Sponsors
Gold Sponsors
This week Bruce Norris is joined by David Kittle, the Chairman of the Mortgage Bankers Association. David began his mortgage banking career in 1978. He opened Associates Mortgage Group in 1994 and sold it in 2006. He is currently the Vice President of Vision Mortgage Capital.
Bruce begins by asking David if he chose a good time to sell his company and become the chairman of the MBA. David says that selling his company worked out well for him, and he does not wish that he had changed his plans. David feels that he has the opportunity to make a difference this year, and he is looking forward to it. Bruce agrees with David, and he feels that there are going to be a lot of important things occurring within the next 12 months, and it will be very significant to play a part in them.
Bruce was watching Ben Bernanke being interviewed by the congressional staff, and he noticed that there were a lot of empty seats. Bruce asks David if it is common for there to be many empty congressional seats when he appears before congress. David says that it can be because they can be busy with other votes and opponents.
There are a lot of important political issues being dealt with right now, and it can be easy for real estate and the mortgage world to be ignored because of things like health care and cap and trade. Bruce asks David and the Mortgage Brokers Association keeps mortgage and real estate issues a priority to the government. The MBA has staff members for government affairs who work with committees like the financial services committee and the banking committee to make changes occur.
Bruce asks what the differences are between the Mortgage Improvement Regulations Act and HR 3915. MIRA is actually an example of the MBA calling in a strike on itself. The MBA is saying that there is need for more regulation. Net worth needs to be increased for the brokers and make sure there is increased net worth for the lenders. The difference between a broker and a lender is that brokers have no skin in the game, few education requirements, and they have different disclosure practices. Because brokers have no risk, and they do not lend their own money, they need to disclose the yield spread premium that they earn on a loan. Brokers claim that they have no responsibility to anyone in a loan. MIRA is working towards improving truth in lending, so that there are fewer opportunities for predatory lending. They want to improve trust in lending, good faith estimate, and make sure that matches the HUD-1 at closing. The other legislative options are more confusing than MIRA, and they require more paper work. David thinks this is a bad thing because we need legislation to be simple, so that customers can understand. Under the Bush administration an act was created to take a one page good faith estimate and turn it into a four page estimate. There needs to be less paperwork and more transparency.
Bruce recently filled out a loan application that was 12 inches deep, and he is worried about how large the loan documents are going to be. There are four lines on the loan application in which the applicant must say whether or not they will be occupying the property, and David feels that is over the top. Over a year and a half ago, the MBA presented HUD with a new GFE and a new HUD-1 in which every line matched. You cannot have predatory lending until you lend. If we have complete and understandable disclosure at the closing table then there is less chance for someone to be preyed upon.
In one way, Bruce looks at the process of legislation as very slow, but then it scares him when he sees people trying to pass legislation quickly, because they can do it without having a complete understanding of what they are supporting. Bruce asks if there is a chance that Congress might pass legislation that will not do what we want it to because they are in too much of a hurry. David believes that we have a system that helps prevent hurrying from being a big problem. Bills are first read by people who can explain them to Congress, then they are sent to the House of Representatives, and then they must also go to the Senate. Groups like the MBA help protect U.S. citizens from bad legislation because Congress knows that the MBA is truly there to protect consumers and support transparency.
Bruce asks how transparency failed in 2005 and 2006 when there were very different lending policies. David thinks that just about everyone involved in the industry can be blamed in some way for the failures that occurred in those years. Bruce and David both feel that even the borrowers can be blamed for the failures because they borrowed money knowing that they couldn’t make payments. We cannot just blame brokers or any one specific group of people.
Fraud is rampant, but we are getting better at detecting fraud. The MBA has been lobbying for a new regulator for Fannie Mae and Freddie Mac, and it took this crisis for people to realize that these changes need to occur. For the last 16 years, the MBA has been pushing for a new Fannie Mae and Freddie Mac regulator and it took this situation to finally get it through. Same goes for modernizing FHA which finally happened this year. Many of our current problems would not have occurred if we had gotten a new regulator and FHA reform.
In about 35-40% of the overall country, in some areas it’s higher, FHA is still using a computer system called Cobalt which was developed before DOS and Windows. It is ridiculous for FHA to have equipment that is that old.
Fraud is getting worse because of the difficulties in getting mortgages and refinances. The FBI says there are two types of fraud: fraud for property and fraud for profit. Unfortunately, they are only investigating one type and one they won’t. Individuals who had the stated income loan will not be pursued. Bruce feels like we’re teaching the consumer that it was all OK.
Right now there are a lot of loan modification occurring, but a report has shown that 70 percent of the loan modifications done in 2008 are either delinquent or they have been foreclosed on. Bruce asks David if he thinks loan modifications are an effective way to deal with these problems. David says that loan mods are just one way to fix these problems. There are other ways to solve these problems such as short sales and deeds in lieu of foreclosure. You cannot modify a loan for someone if they lose their job or can’t pay.
Bruce asks if David thinks that the U.S. is headed down the right path to create more jobs. David thinks the best way to get this economy started is to take the $8,000 dollar home buyers tax credit, and expand it so that it is worth $15,000 and everyone can use it. Taxing small business would be the wrong way to go.
Bruce asks if this tax credit should be given to investors as well. David thinks that the program should be limited to owner occupants, any income, and price. On every purchase, regardless of new home or existing home, the buyer goes out after the closing costs and spends an average of $7,500 dollars on their house purchasing things like furniture. That money goes right back into the economy.
The U.S. is currently having trouble with appraisals which is affecting Realtors and lenders who are trying to make refi loans and purchases. David says the HVCC is an issue. MBA is currently speaking out on this issue and there is legislation for a moratorium being pushed right now.
In the 1004MC (market conditions report) the appraiser is asked to tell which direction the value of real estate is going in that area and it also asks the appraiser to come up with the median value. Market value is the common number that appraisers usually come up with. Median valued houses in California are almost all vacant REOs and every time there is a sale that is higher than that median value they consider it to be an anomaly. This is making it difficult to resale properties.
Bruce asks David where he thinks the real estate market is headed in the next year. David thinks that we will recover next year. In multiple places like Oklahoma City and the state of Alaska, property values are going up right now. Things are more stable in places like California, Florida, Nevada, and Arizona. David hopes that people are not afraid to make purchases because energy costs and health care taxes are going to go up. David fears that certain political issues in Congress might slow down the real estate market.
David says the shadow banking system is currently in bad shape because people have no confidence in the rating agencies. We need to find a way to ensure that investments are producing quality loans. We need to set the bar higher for people entering the mortgage business.
Bruce begins by asking David if he chose a good time to sell his company and become the chairman of the MBA. David says that selling his company worked out well for him, and he does not wish that he had changed his plans. David feels that he has the opportunity to make a difference this year, and he is looking forward to it. Bruce agrees with David, and he feels that there are going to be a lot of important things occurring within the next 12 months, and it will be very significant to play a part in them.
4 Ways to Listen
- Click HERE on the player launch below to stream our shows as you surf the web.
- Visit our Radio Archives to download shows in mp3 format.
- TNG Real Estate Radio Show is now on iTunes! If you have iTunes installed click HERE or simply do a search for "The Norris Group" while in iTunes.
- If you use an RSS Reader: Click Here
*******************************************************************************************************
Bruce was watching Ben Bernanke being interviewed by the congressional staff, and he noticed that there were a lot of empty seats. Bruce asks David if it is common for there to be many empty congressional seats when he appears before congress. David says that it can be because they can be busy with other votes and opponents.
There are a lot of important political issues being dealt with right now, and it can be easy for real estate and the mortgage world to be ignored because of things like health care and cap and trade. Bruce asks David and the Mortgage Brokers Association keeps mortgage and real estate issues a priority to the government. The MBA has staff members for government affairs who work with committees like the financial services committee and the banking committee to make changes occur.
Bruce asks what the differences are between the Mortgage Improvement Regulations Act and HR 3915. MIRA is actually an example of the MBA calling in a strike on itself. The MBA is saying that there is need for more regulation. Net worth needs to be increased for the brokers and make sure there is increased net worth for the lenders. The difference between a broker and a lender is that brokers have no skin in the game, few education requirements, and they have different disclosure practices. Because brokers have no risk, and they do not lend their own money, they need to disclose the yield spread premium that they earn on a loan. Brokers claim that they have no responsibility to anyone in a loan. MIRA is working towards improving truth in lending, so that there are fewer opportunities for predatory lending. They want to improve trust in lending, good faith estimate, and make sure that matches the HUD-1 at closing. The other legislative options are more confusing than MIRA, and they require more paper work. David thinks this is a bad thing because we need legislation to be simple, so that customers can understand. Under the Bush administration an act was created to take a one page good faith estimate and turn it into a four page estimate. There needs to be less paperwork and more transparency.
Bruce recently filled out a loan application that was 12 inches deep, and he is worried about how large the loan documents are going to be. There are four lines on the loan application in which the applicant must say whether or not they will be occupying the property, and David feels that is over the top. Over a year and a half ago, the MBA presented HUD with a new GFE and a new HUD-1 in which every line matched. You cannot have predatory lending until you lend. If we have complete and understandable disclosure at the closing table then there is less chance for someone to be preyed upon.
In one way, Bruce looks at the process of legislation as very slow, but then it scares him when he sees people trying to pass legislation quickly, because they can do it without having a complete understanding of what they are supporting. Bruce asks if there is a chance that Congress might pass legislation that will not do what we want it to because they are in too much of a hurry. David believes that we have a system that helps prevent hurrying from being a big problem. Bills are first read by people who can explain them to Congress, then they are sent to the House of Representatives, and then they must also go to the Senate. Groups like the MBA help protect U.S. citizens from bad legislation because Congress knows that the MBA is truly there to protect consumers and support transparency.
Bruce asks how transparency failed in 2005 and 2006 when there were very different lending policies. David thinks that just about everyone involved in the industry can be blamed in some way for the failures that occurred in those years. Bruce and David both feel that even the borrowers can be blamed for the failures because they borrowed money knowing that they couldn’t make payments. We cannot just blame brokers or any one specific group of people.
Fraud is rampant, but we are getting better at detecting fraud. The MBA has been lobbying for a new regulator for Fannie Mae and Freddie Mac, and it took this crisis for people to realize that these changes need to occur. For the last 16 years, the MBA has been pushing for a new Fannie Mae and Freddie Mac regulator and it took this situation to finally get it through. Same goes for modernizing FHA which finally happened this year. Many of our current problems would not have occurred if we had gotten a new regulator and FHA reform.
In about 35-40% of the overall country, in some areas it’s higher, FHA is still using a computer system called Cobalt which was developed before DOS and Windows. It is ridiculous for FHA to have equipment that is that old.
Fraud is getting worse because of the difficulties in getting mortgages and refinances. The FBI says there are two types of fraud: fraud for property and fraud for profit. Unfortunately, they are only investigating one type and one they won’t. Individuals who had the stated income loan will not be pursued. Bruce feels like we’re teaching the consumer that it was all OK.
Right now there are a lot of loan modification occurring, but a report has shown that 70 percent of the loan modifications done in 2008 are either delinquent or they have been foreclosed on. Bruce asks David if he thinks loan modifications are an effective way to deal with these problems. David says that loan mods are just one way to fix these problems. There are other ways to solve these problems such as short sales and deeds in lieu of foreclosure. You cannot modify a loan for someone if they lose their job or can’t pay.
Bruce asks if David thinks that the U.S. is headed down the right path to create more jobs. David thinks the best way to get this economy started is to take the $8,000 dollar home buyers tax credit, and expand it so that it is worth $15,000 and everyone can use it. Taxing small business would be the wrong way to go.
Bruce asks if this tax credit should be given to investors as well. David thinks that the program should be limited to owner occupants, any income, and price. On every purchase, regardless of new home or existing home, the buyer goes out after the closing costs and spends an average of $7,500 dollars on their house purchasing things like furniture. That money goes right back into the economy.
The U.S. is currently having trouble with appraisals which is affecting Realtors and lenders who are trying to make refi loans and purchases. David says the HVCC is an issue. MBA is currently speaking out on this issue and there is legislation for a moratorium being pushed right now.
In the 1004MC (market conditions report) the appraiser is asked to tell which direction the value of real estate is going in that area and it also asks the appraiser to come up with the median value. Market value is the common number that appraisers usually come up with. Median valued houses in California are almost all vacant REOs and every time there is a sale that is higher than that median value they consider it to be an anomaly. This is making it difficult to resale properties.
Bruce asks David where he thinks the real estate market is headed in the next year. David thinks that we will recover next year. In multiple places like Oklahoma City and the state of Alaska, property values are going up right now. Things are more stable in places like California, Florida, Nevada, and Arizona. David hopes that people are not afraid to make purchases because energy costs and health care taxes are going to go up. David fears that certain political issues in Congress might slow down the real estate market.
David says the shadow banking system is currently in bad shape because people have no confidence in the rating agencies. We need to find a way to ensure that investments are producing quality loans. We need to set the bar higher for people entering the mortgage business.
This week Bruce is joined by Pat Vredevoogd Combs. Pat is a Realtor from Grand Rapids, Michigan. She is the immediate past president of the National Association of Realtors. NAR is America’s largest professional association representing more than 1.3 million members involved in all aspects of residential and commercial industries.
In 2005-2006, Bruce had to change his hairstylist every few months because they would quit hairstyling and they would get into real estate. It seemed like everyone was getting a real estate license. Bruce asks Pat if this was true. Pat says that there were many people getting their license in California, Florida, and Nevada, but not in places like Michigan. The state you live in can greatly affect your perspective on real estate. In Michigan, real estate was in a down market while California and Florida were still booming.
Bruce asks if people are confused by the messages of profit being sent out by the media. When you listen to national news it seems like all markets are the same, and when Realtors work with buyers, the buyers expect this to be true. In 2006, the NAR released a lot of positive information, but many of its members were going through tough times. The NAR had to be very careful about which ads they used in different areas, because each market is different. They were once able to send the same general message to every market, but within the last few years they have had to do a better job of looking at each market individually in order to decide which ads were appropriate.
In 2009, there are multiple states going through a disastrous real estate market, and they are in a severe recession. Bruce asks if there is a tendency for new legislation to be made, in these kinds of economic scenarios, in order to fix the problem. Pat says that this does occur on a national basis. People once said, “If you can breathe, you can get a loan.” Right now, this is not the case. There are some good buyers who are having difficulty getting loans today.
Bruce asks if Pat was surprised when lenders decided that these new strict lending policies were okay. Pat claims that she was surprised by this. NAR partnered with The Center for Responsible Lending to do research on this subject and when they looked at the results of their research they realized that these lending policies were going to cause trouble. Pat testified before Congress in 2006 and 2007, claiming that these policies were going to cause trouble.
There are many groups within real estate who do not look at other real estate groups as partners. Bruce and Pat think that if these groups would work together that these groups could get much more done for the industry. The NAR meets with companies like Mortgage Bankers Association, Habitat for Humanity, Fannie Mae, Freddie Mac. Bruce asks Pat if investors like himself might have something to contribute to these meetings. The Rental Property Association and other major national associations do come together to contribute to these meetings.
NAR just celebrated its 100th birthday, it has 1.3 million members around the United States, it has a staff of lobbyists in Washington, D.C., and it also has relationships with 64 countries. These factors contribute to their ability to be heard in Congress. Bruce thinks that the input NAR gives in congress is vital, because he doubts that many of the Congress members have the time to read through the bills they sign. NAR’s lobbyists are very well respected and well rated. NAR also has a great grassroots groups. There are Realtors involved in politics and they have the ability to influence members in Congress.
Bruce asks what NAR’s lobbyists do on a regular basis. NAR’s lobbyist help educate Congress. They can take a 400 page document and give Congress members a general idea of what it means and what effect it will have on the U.S. They really help educate.
Hastily created legislation can have unintended consequences. Bruce asks how the Home Valuation Code of Conduct has affected the market. Pat does not think that this legislation has really impacted the market yet. What Realtors are discovering is that all appraisals must go through a new agency that has been formed and this agency is using appraisers who are more desperate. These appraisers are doing appraisals for areas that they are not familiar with, and they are doing these jobs for very low pay.
Pat understands that this agency was formed because people wanted impartial appraisals, but you cannot do an impartial appraisal when you do not know the market. Pat has had trouble completing transactions because these foreign appraisers would appraise her homes at low prices while the sale was being processed. Bruce runs into this kind of problem every time he tries to sell a house. The appraisers are falsely comparing the value of his well fixed homes to vacant REOs. Bruce and Pat think that it would be best if HVCC was annulled. NAR members are meeting with people in Washington and New York to get this legislation changed.
Bruce asks how important the first time home buyer tax credit has been for business. Pat thinks that this tax credit has been fabulous, and she wishes that this tax credit was given to all buyers. In Michigan, first time buyers who were not previously interested in buying real estate are now occupying homes because of this tax credit. A lot of inventory is getting taken off the inventory. Now that those homes are being sold, the sellers are going to able to move themselves up in the market place. Pat also thinks that it would be good if the dollar amount of the tax credit was increased. This tax credit is different from the subprime deals, because people have to qualify for this credit and they must have a down payment. They can now use the $8,000 dollar credit as part of their closing costs, but it is troublesome to go through that process, and Pat has not seen many people doing that.
FHA is becoming more influential in the financing market. Bruce asks Pat if there are any changes she would like to see in that program. NAR is currently working to push the FHA’s maximum price limit increased. For years, no one in California could get an FHA loan because California’s real estate was too expensive. Pat and Bruce are using FHA on almost all of their sales. Bruce dislikes the program that restricts investors from quickly fixing houses so that they can be quickly resold. This program does not allow sellers to use FHA loans for 90 days after the house has been bought. There is a loan for owner occupants right now called the 203K. The 203K helps people buy homes that need fixing. Bruce asks if Pat has seen many of these loans take place in her market. Pat says that she has not. Right now, lenders do not seem to be even suggesting it.
Bruce asks Pat if she is afraid that Congress might try to take tax dollars from interest reductions. Pat is opposed to changing mortgage interest deductions. Every time Congress creates legislation to create money for one thing, they end up taking money away from something else. She knows that the current administration is interested in doing this, but she thinks that it would be a mistake to do that. This market needs as much help as it can get, and doing this might have a devastating effect on markets that are improving.
In 2005-2006, Bruce had to change his hairstylist every few months because they would quit hairstyling and they would get into real estate. It seemed like everyone was getting a real estate license. Bruce asks Pat if this was true. Pat says that there were many people getting their license in California, Florida, and Nevada, but not in places like Michigan. The state you live in can greatly affect your perspective on real estate. In Michigan, real estate was in a down market while California and Florida were still booming.
4 Ways to Listen
- Click HERE on the player launch below to stream our shows as you surf the web.
- Visit our Radio Archives to download shows in mp3 format.
- TNG Real Estate Radio Show is now on iTunes! If you have iTunes installed click HERE or simply do a search for "The Norris Group" while in iTunes.
- If you use an RSS Reader: Click Here
*******************************************************************************************************
Bruce asks if people are confused by the messages of profit being sent out by the media. When you listen to national news it seems like all markets are the same, and when Realtors work with buyers, the buyers expect this to be true. In 2006, the NAR released a lot of positive information, but many of its members were going through tough times. The NAR had to be very careful about which ads they used in different areas, because each market is different. They were once able to send the same general message to every market, but within the last few years they have had to do a better job of looking at each market individually in order to decide which ads were appropriate.
In 2009, there are multiple states going through a disastrous real estate market, and they are in a severe recession. Bruce asks if there is a tendency for new legislation to be made, in these kinds of economic scenarios, in order to fix the problem. Pat says that this does occur on a national basis. People once said, “If you can breathe, you can get a loan.” Right now, this is not the case. There are some good buyers who are having difficulty getting loans today.
Bruce asks if Pat was surprised when lenders decided that these new strict lending policies were okay. Pat claims that she was surprised by this. NAR partnered with The Center for Responsible Lending to do research on this subject and when they looked at the results of their research they realized that these lending policies were going to cause trouble. Pat testified before Congress in 2006 and 2007, claiming that these policies were going to cause trouble.
There are many groups within real estate who do not look at other real estate groups as partners. Bruce and Pat think that if these groups would work together that these groups could get much more done for the industry. The NAR meets with companies like Mortgage Bankers Association, Habitat for Humanity, Fannie Mae, Freddie Mac. Bruce asks Pat if investors like himself might have something to contribute to these meetings. The Rental Property Association and other major national associations do come together to contribute to these meetings.
NAR just celebrated its 100th birthday, it has 1.3 million members around the United States, it has a staff of lobbyists in Washington, D.C., and it also has relationships with 64 countries. These factors contribute to their ability to be heard in Congress. Bruce thinks that the input NAR gives in congress is vital, because he doubts that many of the Congress members have the time to read through the bills they sign. NAR’s lobbyists are very well respected and well rated. NAR also has a great grassroots groups. There are Realtors involved in politics and they have the ability to influence members in Congress.
Bruce asks what NAR’s lobbyists do on a regular basis. NAR’s lobbyist help educate Congress. They can take a 400 page document and give Congress members a general idea of what it means and what effect it will have on the U.S. They really help educate.
Hastily created legislation can have unintended consequences. Bruce asks how the Home Valuation Code of Conduct has affected the market. Pat does not think that this legislation has really impacted the market yet. What Realtors are discovering is that all appraisals must go through a new agency that has been formed and this agency is using appraisers who are more desperate. These appraisers are doing appraisals for areas that they are not familiar with, and they are doing these jobs for very low pay.
Pat understands that this agency was formed because people wanted impartial appraisals, but you cannot do an impartial appraisal when you do not know the market. Pat has had trouble completing transactions because these foreign appraisers would appraise her homes at low prices while the sale was being processed. Bruce runs into this kind of problem every time he tries to sell a house. The appraisers are falsely comparing the value of his well fixed homes to vacant REOs. Bruce and Pat think that it would be best if HVCC was annulled. NAR members are meeting with people in Washington and New York to get this legislation changed.
Bruce asks how important the first time home buyer tax credit has been for business. Pat thinks that this tax credit has been fabulous, and she wishes that this tax credit was given to all buyers. In Michigan, first time buyers who were not previously interested in buying real estate are now occupying homes because of this tax credit. A lot of inventory is getting taken off the inventory. Now that those homes are being sold, the sellers are going to able to move themselves up in the market place. Pat also thinks that it would be good if the dollar amount of the tax credit was increased. This tax credit is different from the subprime deals, because people have to qualify for this credit and they must have a down payment. They can now use the $8,000 dollar credit as part of their closing costs, but it is troublesome to go through that process, and Pat has not seen many people doing that.
FHA is becoming more influential in the financing market. Bruce asks Pat if there are any changes she would like to see in that program. NAR is currently working to push the FHA’s maximum price limit increased. For years, no one in California could get an FHA loan because California’s real estate was too expensive. Pat and Bruce are using FHA on almost all of their sales. Bruce dislikes the program that restricts investors from quickly fixing houses so that they can be quickly resold. This program does not allow sellers to use FHA loans for 90 days after the house has been bought. There is a loan for owner occupants right now called the 203K. The 203K helps people buy homes that need fixing. Bruce asks if Pat has seen many of these loans take place in her market. Pat says that she has not. Right now, lenders do not seem to be even suggesting it.
Bruce asks Pat if she is afraid that Congress might try to take tax dollars from interest reductions. Pat is opposed to changing mortgage interest deductions. Every time Congress creates legislation to create money for one thing, they end up taking money away from something else. She knows that the current administration is interested in doing this, but she thinks that it would be a mistake to do that. This market needs as much help as it can get, and doing this might have a devastating effect on markets that are improving.
Bruce Norris is joined once again by Chief Economist for the California Association of Realtors, Leslie Appleton-Young.
Bruce begins by asking Leslie about the CAR payment protection program. Leslie says that C.A.R. has a housing affordability fund, which was developed around 2002. It is a fundraising arm, run by a group of members, which gets proposals from local associations for various projects. Since the downturn, the committee has decided to do something that has potential to impact the market by putting people into homes. The committee has developed a $1 million dollar program, which can be used to pay a premium on an insurance policy for a qualified first time home buyer who uses a California realtor.
The criteria for this program includes someone who has not owned a home in 3 years and you have to have been employed for a minimum of four months. The policy does not begin to pay on a job loss situation for six months, and then the policy will pay for $1,500 dollars of the mortgage payment for six months. If there are two buyers then the second buyer will get $750 dollar benefit. The application does not take place until the close of escrow. The buss has been tremendous. Leslie is hoping that this program will be able to help 3,000 home buyers.
Bruce asks Leslie if the funds given from this program need to be paid back and she says no. She says that it is an insurance policy that does not need to be paid back. She is hoping that this insurance policy will encourage 3,000 people will make the choice to buy their first home. Hopefully it gets people off the fence.
Bruce asks Leslie what encourages her most about the current California market. She has seen a tremendous amount of resiliency within the last year and a half. The damage that we have withstood since the beginning of the downturn can be compared to a forest fire; things get damaged, but in time you begin to see the green seedlings come up. Seeing 7,000 people attending the first time home buying fair was very gratifying to her. People are starting to look at homes as a place to live and a long term investment which is very important. The motivations and expectations are changing.
Bruce has studied migration for years, and he is sure that California is losing migration right now, but he believes that when California gains more job stability that we will receive more migration from all states, because we are a very desirable place to be, and our monthly payment will be lower in ratio of earnings here than in other places. Leslie says that it is difficult to predict what will happen to California because of all the socioeconomic and demographic changes going on in society. One of the things that will have to happen is making more livable cities. Technology allows you to live and work anywhere. It has been argued that the younger generation will be more mobile because they will have 8 jobs in their career, rather than just 1 or 2 like the boomers. Location isn’t as relevant because society is becoming so mobile.
Bruce believes that the retiring baby boomers will be attracted to California. They will have the choice to pay a $300 dollar gas bill, so that they do not freeze during the winter, or they can move to California where you can survive without a heater. Climate is huge.
The traditional buyer, which is the person that hires the Realtor that they knew or the person that drives by the for sale sign, has been replaced with the online buyer. Leslie says that 78 percent of home buyers use the internet during their selection process, and most of them say that they found their agent on the internet, but different surveys produce different results. The only explanation that she can come up with for the different results is that people are being exposed to more advertising and different types of advertising, which is why she tells her members that they cannot do only one kind of advertising. Only 20 percent of home buyers have claimed that they use print in their home search, and 75 percent of that 20 percent said that they looked at the weekend supplements for open houses.
Bruce believes that Realtors have to understand that customers are always looking for and up to something new. Leslie says that she knows a lot of Realtors who team up with people of different ages, so that they can appeal to a larger number of people.
Bruce says that there are two factors, shadow inventory and a large pile of notices of default that will affect trustee deeds and more REOs. He believes that inventory levels are giving us a false indicator, and that the REOs are going to greatly affect the market before the end of the summer. Leslie believes that we will see a second wave of foreclosures during the 4th quarter of this year. The notices of default are going to affect the market, there are Alt-A and option ARMs that are typically a five year fix, and there will be a continued loss of jobs. Lenders are saying the inventory is out there but clearly there is a bottleneck.
There are now three times as many foreclosed properties in comparison to normal listings compared to last cycle. That is the one ration that Bruce believes must rectify itself before a normal price environment can return. We have to get through the bulk REOs. The Norris Group used Krunching.com to track trust deeds back to the lender when they could not find the inventory reemerge as a grant deed or a listing, and they discovered that there were many cases like this.
Obama claimed that the government would give $75 billion dollars to loan modifications, and that not one dollar of it will go to investors. This worries Bruce because he fears that Obama may have been speaking about all investors, rather than just speculators.
Bruce believes that many of the problems in the 90’s were solved because of the 203K loan that investors could use, but this loan option has not reopened to investors yet. It allowed investors to buy a fixer upper and include their purchase price plus the repair cost in the loan. Bruce hopes that they will reactivate that loan for investors.
Bruce asked Leslie, “How do realtors view investors?” She replies investors are a very important part of the market. They are one of the forces behind the current market strength. One of the issues that she has heard is that first time buyers are having difficulty competing with investors. In defense of the REO agent, Bruce claimed that investors get offers when they protect the owner occupant from a failure. The inventory will not work for a conventional loan at this time.
Bruce asks Leslie how she feels about the cram downs. She says that CAR has been opposed to cram downs because cram downs increase the cost of financing for every one else. Bruce thinks that is a scary thing to start because it gives bonuses to people who declare bankruptcy. Usually that is something you do not want to do because it prevents you from getting a loan, but in this case it can help you.
Bruce asks Leslie what she believes will cause the market to become healthier. She believes that inventory and foreclosures are the most important factors. The future is unknown because it all depends on how quickly the economy reinvents itself.
Bruce asks Leslie if she thinks our current interest rates will remain low for a significant amount of time. Leslie believes that interest rates will increase significantly in a few years. The price and interest rate combination are an amazing bargain right now.
4 Ways to Listen
- Click HERE on the player launch below to stream our shows as you surf the web.
- Visit our Radio Archives to download shows in mp3 format.
- TNG Real Estate Radio Show is now on iTunes! If you have iTunes installed click HERE or simply do a search for "The Norris Group" while in iTunes.
- If you use an RSS Reader: Click Here
*******************************************************************************************************
Bruce begins by asking Leslie about the CAR payment protection program. Leslie says that C.A.R. has a housing affordability fund, which was developed around 2002. It is a fundraising arm, run by a group of members, which gets proposals from local associations for various projects. Since the downturn, the committee has decided to do something that has potential to impact the market by putting people into homes. The committee has developed a $1 million dollar program, which can be used to pay a premium on an insurance policy for a qualified first time home buyer who uses a California realtor.
The criteria for this program includes someone who has not owned a home in 3 years and you have to have been employed for a minimum of four months. The policy does not begin to pay on a job loss situation for six months, and then the policy will pay for $1,500 dollars of the mortgage payment for six months. If there are two buyers then the second buyer will get $750 dollar benefit. The application does not take place until the close of escrow. The buss has been tremendous. Leslie is hoping that this program will be able to help 3,000 home buyers.
Bruce asks Leslie if the funds given from this program need to be paid back and she says no. She says that it is an insurance policy that does not need to be paid back. She is hoping that this insurance policy will encourage 3,000 people will make the choice to buy their first home. Hopefully it gets people off the fence.
Bruce asks Leslie what encourages her most about the current California market. She has seen a tremendous amount of resiliency within the last year and a half. The damage that we have withstood since the beginning of the downturn can be compared to a forest fire; things get damaged, but in time you begin to see the green seedlings come up. Seeing 7,000 people attending the first time home buying fair was very gratifying to her. People are starting to look at homes as a place to live and a long term investment which is very important. The motivations and expectations are changing.
Bruce has studied migration for years, and he is sure that California is losing migration right now, but he believes that when California gains more job stability that we will receive more migration from all states, because we are a very desirable place to be, and our monthly payment will be lower in ratio of earnings here than in other places. Leslie says that it is difficult to predict what will happen to California because of all the socioeconomic and demographic changes going on in society. One of the things that will have to happen is making more livable cities. Technology allows you to live and work anywhere. It has been argued that the younger generation will be more mobile because they will have 8 jobs in their career, rather than just 1 or 2 like the boomers. Location isn’t as relevant because society is becoming so mobile.
Bruce believes that the retiring baby boomers will be attracted to California. They will have the choice to pay a $300 dollar gas bill, so that they do not freeze during the winter, or they can move to California where you can survive without a heater. Climate is huge.
The traditional buyer, which is the person that hires the Realtor that they knew or the person that drives by the for sale sign, has been replaced with the online buyer. Leslie says that 78 percent of home buyers use the internet during their selection process, and most of them say that they found their agent on the internet, but different surveys produce different results. The only explanation that she can come up with for the different results is that people are being exposed to more advertising and different types of advertising, which is why she tells her members that they cannot do only one kind of advertising. Only 20 percent of home buyers have claimed that they use print in their home search, and 75 percent of that 20 percent said that they looked at the weekend supplements for open houses.
Bruce believes that Realtors have to understand that customers are always looking for and up to something new. Leslie says that she knows a lot of Realtors who team up with people of different ages, so that they can appeal to a larger number of people.
Bruce says that there are two factors, shadow inventory and a large pile of notices of default that will affect trustee deeds and more REOs. He believes that inventory levels are giving us a false indicator, and that the REOs are going to greatly affect the market before the end of the summer. Leslie believes that we will see a second wave of foreclosures during the 4th quarter of this year. The notices of default are going to affect the market, there are Alt-A and option ARMs that are typically a five year fix, and there will be a continued loss of jobs. Lenders are saying the inventory is out there but clearly there is a bottleneck.
There are now three times as many foreclosed properties in comparison to normal listings compared to last cycle. That is the one ration that Bruce believes must rectify itself before a normal price environment can return. We have to get through the bulk REOs. The Norris Group used Krunching.com to track trust deeds back to the lender when they could not find the inventory reemerge as a grant deed or a listing, and they discovered that there were many cases like this.
Obama claimed that the government would give $75 billion dollars to loan modifications, and that not one dollar of it will go to investors. This worries Bruce because he fears that Obama may have been speaking about all investors, rather than just speculators.
Bruce believes that many of the problems in the 90’s were solved because of the 203K loan that investors could use, but this loan option has not reopened to investors yet. It allowed investors to buy a fixer upper and include their purchase price plus the repair cost in the loan. Bruce hopes that they will reactivate that loan for investors.
Bruce asked Leslie, “How do realtors view investors?” She replies investors are a very important part of the market. They are one of the forces behind the current market strength. One of the issues that she has heard is that first time buyers are having difficulty competing with investors. In defense of the REO agent, Bruce claimed that investors get offers when they protect the owner occupant from a failure. The inventory will not work for a conventional loan at this time.
Bruce asks Leslie how she feels about the cram downs. She says that CAR has been opposed to cram downs because cram downs increase the cost of financing for every one else. Bruce thinks that is a scary thing to start because it gives bonuses to people who declare bankruptcy. Usually that is something you do not want to do because it prevents you from getting a loan, but in this case it can help you.
Bruce asks Leslie what she believes will cause the market to become healthier. She believes that inventory and foreclosures are the most important factors. The future is unknown because it all depends on how quickly the economy reinvents itself.
Bruce asks Leslie if she thinks our current interest rates will remain low for a significant amount of time. Leslie believes that interest rates will increase significantly in a few years. The price and interest rate combination are an amazing bargain right now.
This week Bruce interviews Randy and Mike Grigg from Elite Auctions. Randy is the President of Elite Auctions for which Mike serves as Chief Auctioneer. Mike is also current president for the California Auctioneer Association.
Bruce begins by asking Randy how he got involved in real estate. In 1977, Randy had heard in seminars that real estate was the way to go, so he eased into it. He brought his first rental house in 1977, and after that he bought about 2 or 3 houses every year, for 20 years, and then stopped. Randy’s plan for real estate was to buy houses so that he could pay them off and enjoy the cash flow. This has worked well for Randy, and he currently has a few dozen houses that he is collecting cash from.
Bruce asks Randy when he started auctioning houses. Randy says that he started doing auctioning after he decided to stop doing real estate for a while. After getting involved, he decided that he did not like the selling process, because he had a few escrows that fell out. He drove past a house in his neighborhood one day, and he discovered that it was being auctioned. He decided to attend the auction in hopes that he might buy the property. He thought that he might be the only person at the auction, but he discovered that many people were interested in bidding at auctions. The house he wanted to buy went up to full market value, so he thought, “this might be a good way to sell.” This occurred in 2002.
Bruce asks Mike when he got involved in the auction business with his dad, and who the typical selling client was from 2002-06. He says that he got involved in 2002, and that he dealt with a lot of homeowners who were expecting to receive a high offer. In 2004-06 most sellers were astonished by the selling price of their homes. When Mike and Randy got involved in the business, they did it to help investors help sell 5 houses per day, but when other home owners discovered what Mike and Randy were doing many decided they wanted to auction their houses too.
Bruce asks Mike if he gets a lot of exposure from just holding an auction that is successful. Mike claims to receive a lot of attention from his auctions, because many times Mike will have 100 people show up for one house, and some of the participants have houses to sell as well.
Between 2004-06 the typical buyer was an own occupant. The typical buyer showing up now is often a long term investor, and first time home buyers are getting into the market now too. One of the recent changes that have been made to the $8,000 tax credit program is that first time buyers can use their 8,000 $dollar credit as a down payment up front.
The typical selling client that Randy works with right now is a rehabber, or a wholesaler, who understands that if they do not get their houses sold within two months then they will lose their opportunity to gain a profit. Prices went down a great deal.
Mike and Randy have an auction coming up on June 4, which will include houses that they have bought at REDC and Hudson Marshall. They have done minor fixes to them, and they are hoping to gain a profit. They have done 25 auctions within the last 8 months, and most of them are profitable.
Bruce asks Mike and Randy if they have ever had their competitors try to buy their houses, and then resell them for profit. They do not know if that has ever occurred, but they doubt that this has ever occurred, because they fix their houses more than other auction companies do.
Some auction companies host their events in a ballroom setting with a large amount of inventory, but Mike and Randy have taken a different route. Mike and Randy typically sell 3 or 4 houses per day, because they do their auctions at the property they are selling.
Mike and Randy’s advertising has done very well, but it has changed dramatically in the past seven years. They are doing much more internet advertising now. It is more expensive to send letters than to advertise on the internet. Mike believes that their may be a time when they no longer need print media. The newspaper does not work as well in bigger metropolitan areas.
Bruce asks Mike what source he receives his most qualified buyers from. Mike claims that the sign on the front of the property often attracts the most qualified buyers, because those buyers often own property on that same street. When you put the word auction on a sign, people pay much more attention.
Mike usually has two open houses during the week before the auction. Each open house is about 2 hours. The main reason why they have a limited time for viewing each house is to create sense of urgency. They are prepping their mind for the auction, because the house is going to be sold at a specific time and date. Bruce asks Mike if it is important that there are other people present when someone attends the open house. Mike thinks this is very important, because it gives them the idea that they are doing the right thing.
Bruce asks Mike what his main objective is when people call about an auction ad. Mike’s main objective for the initial conversation is to get them excited about the auction, and to get them to come to the open house, so that they can fall in love with the property. He also wants to assure potential buyers that buying from an auction is simpler than buying the normal way. The first call that Mike gets from a potential buyer is the most critical call, because it is easy to lose buyers when they first call for information. A first time participant may be looking for a reason not to attend the auction. Mike has hired a professional to handle most of his buyer calls.
Most people assume that an auction would be held on the weekend, but Mike and Randy are having their auction during the week. They hold auctions on everyday except for Sunday and Monday. They prefer not to hold auctions on Sundays because they do not want to get in the way of anyone’s religious traditions, and on Mondays people are busy preparing for the rest of the week. However, he has attended an auction on a Monday that was very successful. The time that they choose to hold their auctions does not seem to matter too much. There are times when more people will show up for a Wednesday auction than a Saturday auction.
Bruce asks Randy how many bidders are typically needed for a successful auction. Randy has had successful auctions with as little as 3 bidders. He often feels better when there are only about 5 to 10 people attending. There’s been up to 70. Bruce asks if there’s been any issues with appraisals. At one auction, the bank lowered the $10k. They stuck to their guns and the buyer ended making up the difference.
Bruce talks about The Norris Group’s current appraisal situation and how the verdict is still out.
Back to auctions, when Mike starts an auction he often begins by auctioning something small for charity. He does this because it helps new bidders to relax, and it encourages them to bid. It’s an ice breaker.
Bruce asks if people ever forget about the buyer’s premium. About half of the time, people forget about the buyer’s premium. This still occurs even though they disclose it in all the written terms, and it is disclosed before all the auctions they do. Even Mike has forgotten the buyer’s premium, because there are many times where people come to an auction not thinking about the buyer’s premium; they are thinking about winning the property they want to bid on.
Bruce asks if Mike can tell when buyers feel remorseful over their decision to buy. Mike can tell when people feel bad about their decision because they do not look excited. This is why Mike does his best to make people feel comfortable when they buy his properties. He does his best to answer his buyer’s questions.
Mike believes that receiving a healthy deposit for the closing of a property is of key importance. In this market, you cannot come out and tell people that they need $15,000 dollars for them to bid, because you will knock out all the first time home buyers. On a single family house in Bakersfield, Mike and Randy will often ask for a $5,000 dollar deposit, because it is enough to encourage people to close the deal. Mike and Randy close about 95 percent of their escrows during the first try.
Bruce asks Randy to describe the perfect seller to have as an auction client. Randy thinks that the perfect seller is someone who works with wholesale properties. Those kinds of people have reasonable price expectations, because they often buy at the right price to flip it, and they are willing to pay for the marketing cost with the expectation that Mike and Randy will make them a profit.
The number for Elite Auction is 661-325-6500, and their website is www.sellwithauction.com
Bruce begins by asking Randy how he got involved in real estate. In 1977, Randy had heard in seminars that real estate was the way to go, so he eased into it. He brought his first rental house in 1977, and after that he bought about 2 or 3 houses every year, for 20 years, and then stopped. Randy’s plan for real estate was to buy houses so that he could pay them off and enjoy the cash flow. This has worked well for Randy, and he currently has a few dozen houses that he is collecting cash from.
4 Ways to Listen
- Click HERE on the player launch below to stream our shows as you surf the web.
- Visit our Radio Archives to download shows in mp3 format.
- TNG Real Estate Radio Show is now on iTunes! If you have iTunes installed click HERE or simply do a search for "The Norris Group" while in iTunes.
- If you use an RSS Reader: Click Here
*******************************************************************************************************
Bruce asks Randy when he started auctioning houses. Randy says that he started doing auctioning after he decided to stop doing real estate for a while. After getting involved, he decided that he did not like the selling process, because he had a few escrows that fell out. He drove past a house in his neighborhood one day, and he discovered that it was being auctioned. He decided to attend the auction in hopes that he might buy the property. He thought that he might be the only person at the auction, but he discovered that many people were interested in bidding at auctions. The house he wanted to buy went up to full market value, so he thought, “this might be a good way to sell.” This occurred in 2002.
Bruce asks Mike when he got involved in the auction business with his dad, and who the typical selling client was from 2002-06. He says that he got involved in 2002, and that he dealt with a lot of homeowners who were expecting to receive a high offer. In 2004-06 most sellers were astonished by the selling price of their homes. When Mike and Randy got involved in the business, they did it to help investors help sell 5 houses per day, but when other home owners discovered what Mike and Randy were doing many decided they wanted to auction their houses too.
Bruce asks Mike if he gets a lot of exposure from just holding an auction that is successful. Mike claims to receive a lot of attention from his auctions, because many times Mike will have 100 people show up for one house, and some of the participants have houses to sell as well.
Between 2004-06 the typical buyer was an own occupant. The typical buyer showing up now is often a long term investor, and first time home buyers are getting into the market now too. One of the recent changes that have been made to the $8,000 tax credit program is that first time buyers can use their 8,000 $dollar credit as a down payment up front.
The typical selling client that Randy works with right now is a rehabber, or a wholesaler, who understands that if they do not get their houses sold within two months then they will lose their opportunity to gain a profit. Prices went down a great deal.
Mike and Randy have an auction coming up on June 4, which will include houses that they have bought at REDC and Hudson Marshall. They have done minor fixes to them, and they are hoping to gain a profit. They have done 25 auctions within the last 8 months, and most of them are profitable.
Bruce asks Mike and Randy if they have ever had their competitors try to buy their houses, and then resell them for profit. They do not know if that has ever occurred, but they doubt that this has ever occurred, because they fix their houses more than other auction companies do.
Some auction companies host their events in a ballroom setting with a large amount of inventory, but Mike and Randy have taken a different route. Mike and Randy typically sell 3 or 4 houses per day, because they do their auctions at the property they are selling.
Mike and Randy’s advertising has done very well, but it has changed dramatically in the past seven years. They are doing much more internet advertising now. It is more expensive to send letters than to advertise on the internet. Mike believes that their may be a time when they no longer need print media. The newspaper does not work as well in bigger metropolitan areas.
Bruce asks Mike what source he receives his most qualified buyers from. Mike claims that the sign on the front of the property often attracts the most qualified buyers, because those buyers often own property on that same street. When you put the word auction on a sign, people pay much more attention.
Mike usually has two open houses during the week before the auction. Each open house is about 2 hours. The main reason why they have a limited time for viewing each house is to create sense of urgency. They are prepping their mind for the auction, because the house is going to be sold at a specific time and date. Bruce asks Mike if it is important that there are other people present when someone attends the open house. Mike thinks this is very important, because it gives them the idea that they are doing the right thing.
Bruce asks Mike what his main objective is when people call about an auction ad. Mike’s main objective for the initial conversation is to get them excited about the auction, and to get them to come to the open house, so that they can fall in love with the property. He also wants to assure potential buyers that buying from an auction is simpler than buying the normal way. The first call that Mike gets from a potential buyer is the most critical call, because it is easy to lose buyers when they first call for information. A first time participant may be looking for a reason not to attend the auction. Mike has hired a professional to handle most of his buyer calls.
Most people assume that an auction would be held on the weekend, but Mike and Randy are having their auction during the week. They hold auctions on everyday except for Sunday and Monday. They prefer not to hold auctions on Sundays because they do not want to get in the way of anyone’s religious traditions, and on Mondays people are busy preparing for the rest of the week. However, he has attended an auction on a Monday that was very successful. The time that they choose to hold their auctions does not seem to matter too much. There are times when more people will show up for a Wednesday auction than a Saturday auction.
Bruce asks Randy how many bidders are typically needed for a successful auction. Randy has had successful auctions with as little as 3 bidders. He often feels better when there are only about 5 to 10 people attending. There’s been up to 70. Bruce asks if there’s been any issues with appraisals. At one auction, the bank lowered the $10k. They stuck to their guns and the buyer ended making up the difference.
Bruce talks about The Norris Group’s current appraisal situation and how the verdict is still out.
Back to auctions, when Mike starts an auction he often begins by auctioning something small for charity. He does this because it helps new bidders to relax, and it encourages them to bid. It’s an ice breaker.
Bruce asks if people ever forget about the buyer’s premium. About half of the time, people forget about the buyer’s premium. This still occurs even though they disclose it in all the written terms, and it is disclosed before all the auctions they do. Even Mike has forgotten the buyer’s premium, because there are many times where people come to an auction not thinking about the buyer’s premium; they are thinking about winning the property they want to bid on.
Bruce asks if Mike can tell when buyers feel remorseful over their decision to buy. Mike can tell when people feel bad about their decision because they do not look excited. This is why Mike does his best to make people feel comfortable when they buy his properties. He does his best to answer his buyer’s questions.
Mike believes that receiving a healthy deposit for the closing of a property is of key importance. In this market, you cannot come out and tell people that they need $15,000 dollars for them to bid, because you will knock out all the first time home buyers. On a single family house in Bakersfield, Mike and Randy will often ask for a $5,000 dollar deposit, because it is enough to encourage people to close the deal. Mike and Randy close about 95 percent of their escrows during the first try.
Bruce asks Randy to describe the perfect seller to have as an auction client. Randy thinks that the perfect seller is someone who works with wholesale properties. Those kinds of people have reasonable price expectations, because they often buy at the right price to flip it, and they are willing to pay for the marketing cost with the expectation that Mike and Randy will make them a profit.
The number for Elite Auction is 661-325-6500, and their website is www.sellwithauction.com
Bruce Norris is joined this week by David Rosnik, Economist at the Center for Economic and Policy Research.
Bruce talks about reading several years back that the Baby Boom generation was worth trillions and in great position to retire. David says the Baby Boomers have a fair amount of wealth and every generation typical has grown in wealth over the years. Baby Boomers, however, have been recently hit by the stock market and housing bubble that has caused some great losses.
In a recent report written by David and his team on this very issue, it says the Baby Boom situation looks much bleaker than 8 months ago. Bruce asks how they are coping with this fact. David says the Baby Boom generation has been witnessing the trend for two years. Last summer the savings rate started to increase and consumption has really slowed. The full effects of this contraction in spending and consumption has yet to fully hit the market. David says he’d like to see the government continue the money stimulus and look into subsidizing shorter work weeks, vacation, and sick leave.
Bruce asks if the wealth members of the Baby Boom generation would be harder hit by stock prices and the poorer be more affected by the real estate declines. David says the wealthiest are indeed more likely to own stock but are also more likely to be home owners. The bottom 1/5 of households could get completely wiped out with foreclosure.
Bruce asks David how he feels about recent solutions presented by the government such as the cramdown. David says he’s not so concerned but would like to see the homes go back to the bank and perhaps the individuals getting to stay in their homes and pay market rent. David says the bank doesn’t want to try to take it over and sell the property in this market. By keeping the homeowner in the home, it’s a win-win situation. Bruce brings up that the prices are very skewed in California. David says the bank just needs to decide how they want to take the loss. By not making this mandatory the banks would not participate as they are being a stubborn. Bruce asks how the lenders would react if this was made mandatory. How much would then be available for lending? David says there will always be solid prospects and that it wouldn’t really matter.
Bruce asks David about people stating their income and if they should be held responsible for that. David says that lenders were more responsible for that as he understands it. When real estate was headed up, it didn’t matter and no one cared. This is an example of an unsustainable home bubble that people refused to acknowledge.
David created a housing cost calculator which compares owning vs. renting the same home. Bruce asks if the price to own is much more than renting. David says historically it hasn’t been that different. David says when it went way out of whack that it was almost guaranteed that there would be loss.
Bruce asks if bubbles ultimately benefit people. David says bubbles that are uncontrolled is a problem. Bruce says many were refinancing and spending the money. There must have been a short-term streak of wealth. David says people thought they were very wealthy and savings rates went way down.
Bruce asks if there should be some acceptance of risk when any investment is made. David says experts gave people a lot of bad advice and since there was a lack of an alternative voice, it wasn’t very fair. People were told that real estate was the way to wealth. Bruce asks if people should absorb that risk or if there is a backstop to save them. David says Social Security and defined benefit plans act as that backstop. Personal savings is only one alternative. David explains the difference between defined benefit plans versus defined contribution plan. Bruce says that guarantees of payout were as good as investments made. David says the bubble market really hurt these potential retirement funds. When things get so out of line, people make bad planning decision.
Bruce asks if defined benefit plans for cities like Vallejo that just declared bankruptcy will ever see that money. David says in California he’s not sure who is getting what. Bruce says that defined benefit programs typically have a projected return rate and almost all have seen losses. David says that those promises will most likely not be able to be upheld because of the economy.
Bruce asks David is he is afraid for seniors as they retire. The Baby Boomers encompasses the 45-64 age range. The older baby boomers are about to retire so there’s a little more concern there. The younger Baby Boomers have a little more time to get back on track. Overall, they aren’t looking good so far. He says the lower 1/5 could be completely wiped out because of foreclosure.
Bruce asks if we should be worried about the Social Security Program since the baby Boomers will have less population paying for benefits as they retire. He says it’s nothing urgent but today the health care costs are getting worse and are more of an issue as Medicare and Medicaid need to be helped. David says socialized medicine might be a possibility since it’s worked in other countries. We have the best medicine but the worst delivery system.
In David’s report entitled “The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble,” David says the net worth of Baby Boomers that owned a home was less than those that were renters in 2009 which is surprising. David says wealth isn’t just in equity and the housing and stock bubble real caused a problem.
More on this report at the Center for Economic and Policy Research at cepr.net. Next week join us as we welcome back Tommy Williams, co-founder of Williams and Williams auction company.
Bruce talks about reading several years back that the Baby Boom generation was worth trillions and in great position to retire. David says the Baby Boomers have a fair amount of wealth and every generation typical has grown in wealth over the years. Baby Boomers, however, have been recently hit by the stock market and housing bubble that has caused some great losses.
4 Ways to Listen
- Click HERE on the player launch below to stream our shows as you surf the web.
- Visit our Radio Archives to download shows in mp3 format.
- TNG Real Estate Radio Show is now on iTunes! If you have iTunes installed click HERE or simply do a search for "The Norris Group" while in iTunes.
- If you use an RSS Reader: Click Here
*******************************************************************************************************
In a recent report written by David and his team on this very issue, it says the Baby Boom situation looks much bleaker than 8 months ago. Bruce asks how they are coping with this fact. David says the Baby Boom generation has been witnessing the trend for two years. Last summer the savings rate started to increase and consumption has really slowed. The full effects of this contraction in spending and consumption has yet to fully hit the market. David says he’d like to see the government continue the money stimulus and look into subsidizing shorter work weeks, vacation, and sick leave.
Bruce asks if the wealth members of the Baby Boom generation would be harder hit by stock prices and the poorer be more affected by the real estate declines. David says the wealthiest are indeed more likely to own stock but are also more likely to be home owners. The bottom 1/5 of households could get completely wiped out with foreclosure.
Bruce asks David how he feels about recent solutions presented by the government such as the cramdown. David says he’s not so concerned but would like to see the homes go back to the bank and perhaps the individuals getting to stay in their homes and pay market rent. David says the bank doesn’t want to try to take it over and sell the property in this market. By keeping the homeowner in the home, it’s a win-win situation. Bruce brings up that the prices are very skewed in California. David says the bank just needs to decide how they want to take the loss. By not making this mandatory the banks would not participate as they are being a stubborn. Bruce asks how the lenders would react if this was made mandatory. How much would then be available for lending? David says there will always be solid prospects and that it wouldn’t really matter.
Bruce asks David about people stating their income and if they should be held responsible for that. David says that lenders were more responsible for that as he understands it. When real estate was headed up, it didn’t matter and no one cared. This is an example of an unsustainable home bubble that people refused to acknowledge.
David created a housing cost calculator which compares owning vs. renting the same home. Bruce asks if the price to own is much more than renting. David says historically it hasn’t been that different. David says when it went way out of whack that it was almost guaranteed that there would be loss.
Bruce asks if bubbles ultimately benefit people. David says bubbles that are uncontrolled is a problem. Bruce says many were refinancing and spending the money. There must have been a short-term streak of wealth. David says people thought they were very wealthy and savings rates went way down.
Bruce asks if there should be some acceptance of risk when any investment is made. David says experts gave people a lot of bad advice and since there was a lack of an alternative voice, it wasn’t very fair. People were told that real estate was the way to wealth. Bruce asks if people should absorb that risk or if there is a backstop to save them. David says Social Security and defined benefit plans act as that backstop. Personal savings is only one alternative. David explains the difference between defined benefit plans versus defined contribution plan. Bruce says that guarantees of payout were as good as investments made. David says the bubble market really hurt these potential retirement funds. When things get so out of line, people make bad planning decision.
Bruce asks if defined benefit plans for cities like Vallejo that just declared bankruptcy will ever see that money. David says in California he’s not sure who is getting what. Bruce says that defined benefit programs typically have a projected return rate and almost all have seen losses. David says that those promises will most likely not be able to be upheld because of the economy.
Bruce asks David is he is afraid for seniors as they retire. The Baby Boomers encompasses the 45-64 age range. The older baby boomers are about to retire so there’s a little more concern there. The younger Baby Boomers have a little more time to get back on track. Overall, they aren’t looking good so far. He says the lower 1/5 could be completely wiped out because of foreclosure.
Bruce asks if we should be worried about the Social Security Program since the baby Boomers will have less population paying for benefits as they retire. He says it’s nothing urgent but today the health care costs are getting worse and are more of an issue as Medicare and Medicaid need to be helped. David says socialized medicine might be a possibility since it’s worked in other countries. We have the best medicine but the worst delivery system.
In David’s report entitled “The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble,” David says the net worth of Baby Boomers that owned a home was less than those that were renters in 2009 which is surprising. David says wealth isn’t just in equity and the housing and stock bubble real caused a problem.
More on this report at the Center for Economic and Policy Research at cepr.net. Next week join us as we welcome back Tommy Williams, co-founder of Williams and Williams auction company.
Bruce Norris is joined by expert real estate investor, property manager, and mentor, Tony Alvarez.
Bruce starts by asking if teaching will be a new venture for Tony. Tony talks about The Norris Group giving him his first speaking chance several years back and how doing so forced him to think about what he brought to the table as an individual. Tony had to figure out why he was different in the business. Tony talks about how building relationships is so important and how those relationships can build unbelievable business relationships and wealth.
Bruce asks why a Realtor is better off building a relationship with an investor. Tony says many of these REO houses are going into escrow multiple times. Tony has built his relationships by performing. He has never put in an offer to an REO agent he didn’t close if it was accepted. Agents begin to understand he stands for performance. That strong performance gives the agent ammunition for their asset manager and makes his offer stand above the rest.
Tony discusses coming out of bankruptcy and how he started investing in Palmdale. Tony talks about how he gets in the door with REO agents. These REO agents are busy and they can’t stand newbie investors and the amateur mistakes they make. REO agents eventually end up relying and trusting an investor only after they prove they are an asset.
Tony goes over an example of what he had to deal with when starting to work with REOs in the Antelope Valley in the 90s. Tony talks about approaching an REO agent and how he got the door open. One relationship made him millions and he returned the favor when the market changed.
Tony and Bruce discuss trying to make connections with people. Tony says he’s never met an REO agent that was from Mars. They’re people. There’s always a way.
Bruce talks about Tony and why he is so loved. Some people think Tony is the greatest negotiator but Bruce says why he’s so good is because it isn’t the intent. Bruce talks about love and what Tony brings to the table.
Investors have to not only know what is working to make deals in this California real estate market but they also must understand what they bring to the table as individuals. We as individuals must know what we’re good at and why each of us is different so we can use that in our daily lives to impact people around us. Tony put it best: The one who gives the most gets the most.
Tony Alvarez has been a successful Real Estate Investor and Certified General Appraiser in the Southern California area since 1981. Tony has bought, sold and rented hundreds of properties from vacant land to condos, single family residences, and apartments. More recently he is investing in commercial developments in Arizona, Nevada, and Southern California.
As an appraiser Tony worked as a staff appraiser for Great Western and Glendale Federal Bank and is approved by hundreds of Lenders, Insurances Companies as well as Government Agencies.
He has worked for Fanny Mae, Freddie Mac, FHA and the FDIC. He has an in depth knowledge of the inner workings of Lenders and their REO (foreclosure) departments. Tony’s knowledge of real estate, appraisal, finance, and investing is vast and varied. He brings a unique perspective to the real estate investment community.
Thanks Tony for joining is on the radio show. Best of luck with you training in Los Angeles this weekend. Next week, a very important interview with Joe Magdzriaz from the Appraiser Institute.
Bruce starts by asking if teaching will be a new venture for Tony. Tony talks about The Norris Group giving him his first speaking chance several years back and how doing so forced him to think about what he brought to the table as an individual. Tony had to figure out why he was different in the business. Tony talks about how building relationships is so important and how those relationships can build unbelievable business relationships and wealth.
4 Ways to Listen
- Click HERE on the player launch below to stream our shows as you surf the web.
- Visit our Radio Archives to download shows in mp3 format.
- TNG Real Estate Radio Show is now on iTunes! If you have iTunes installed click HERE or simply do a search for "The Norris Group" while in iTunes.
- If you use an RSS Reader: Click Here
*******************************************************************************************************
Bruce asks why a Realtor is better off building a relationship with an investor. Tony says many of these REO houses are going into escrow multiple times. Tony has built his relationships by performing. He has never put in an offer to an REO agent he didn’t close if it was accepted. Agents begin to understand he stands for performance. That strong performance gives the agent ammunition for their asset manager and makes his offer stand above the rest.
Tony discusses coming out of bankruptcy and how he started investing in Palmdale. Tony talks about how he gets in the door with REO agents. These REO agents are busy and they can’t stand newbie investors and the amateur mistakes they make. REO agents eventually end up relying and trusting an investor only after they prove they are an asset.
Tony goes over an example of what he had to deal with when starting to work with REOs in the Antelope Valley in the 90s. Tony talks about approaching an REO agent and how he got the door open. One relationship made him millions and he returned the favor when the market changed.
Tony and Bruce discuss trying to make connections with people. Tony says he’s never met an REO agent that was from Mars. They’re people. There’s always a way.
Bruce talks about Tony and why he is so loved. Some people think Tony is the greatest negotiator but Bruce says why he’s so good is because it isn’t the intent. Bruce talks about love and what Tony brings to the table.
Investors have to not only know what is working to make deals in this California real estate market but they also must understand what they bring to the table as individuals. We as individuals must know what we’re good at and why each of us is different so we can use that in our daily lives to impact people around us. Tony put it best: The one who gives the most gets the most.
Tony Alvarez has been a successful Real Estate Investor and Certified General Appraiser in the Southern California area since 1981. Tony has bought, sold and rented hundreds of properties from vacant land to condos, single family residences, and apartments. More recently he is investing in commercial developments in Arizona, Nevada, and Southern California.
As an appraiser Tony worked as a staff appraiser for Great Western and Glendale Federal Bank and is approved by hundreds of Lenders, Insurances Companies as well as Government Agencies.
He has worked for Fanny Mae, Freddie Mac, FHA and the FDIC. He has an in depth knowledge of the inner workings of Lenders and their REO (foreclosure) departments. Tony’s knowledge of real estate, appraisal, finance, and investing is vast and varied. He brings a unique perspective to the real estate investment community.
Thanks Tony for joining is on the radio show. Best of luck with you training in Los Angeles this weekend. Next week, a very important interview with Joe Magdzriaz from the Appraiser Institute.
Bruce Norris is joined this week upcoming 2011 President of the National Appraisal Institute, Joseph Magdziarz.
Bruce starts by asking what the MAI designation means. MAI used to stand of “Member of the Appraisal Institute” but now means a members holds the highest professional designation for appraisers. The SRA designation is for residential appraisals and once again gives you the highest designation for that profession. These designations are given by mandated educations and experience.
In 1989, the FIRREA Act was passed. The FIRREA Act was put in place to create barriers to entry for those seeking to become professional appraisers and also to standardize the appraisal process. While it didn’t clean up the appraisal institute completely, it did put in place important systems. In 2008, the Appraisal Foundation brought education and review to a new level. This is still a work in process.
Joseph says on-the-job training is probably the most important aspect of a trainee becoming competent in the world of appraisals. Bruce asks what the stimulus was behind the FIRREA Act. Joseph tells him that at the time there was huge losses going on and lenders were able to hire whoever they wanted and they sometimes had no experience. This lack of experience was seen as a huge part of the problem during the S&L crisis.
Bruce talks about the current markets and asks if appraisers are taking some of the heat for the foreclosure problems. Joseph mentions the Appraisal Institute just got back from a Washington D.C. meeting with Congress and other groups in related industries. The Congressional Research Services gave them a copy of a report that was done on all the causes of the current crises. Out of 26 key areas that are listed as the cause of the real estate and mortgage backed securities issues, the appraiser world is not listed. Joseph says it’s good but it doesn’t mean the organization is perfect yet.
Bruce asks if Joseph sees legislative changes coming regardless of who is at fault for the current real estate crisis. Joseph says the Appraisal Institute’s president, Jim Amorin, is testifying before the Congressional Housing and Finance Committee speaking on the Housing Valuation Code of Conduct.
Bruce says in California foreclosures are a huge percentage of the for sale inventory. Often the process starts with a BPO. He asks is appraisers are part of that process. With BPOs, Joseph says there is not accountability and the requirements are different. Joseph says there are different motivations and that appraisers are required to remain unbiased.
Bruce asks how Realtors and appraisers get along and if they typically agree on important issues. Joseph says the two groups differ greatly on the BPO issue and appraisers think Realtors and brokers should be held to the same standards when making real estate evaluations and appraisals. Many states have their own rules and regulations so the National Association of Realtors doesn’t have much control of this issue on a state level. There are 23 states that currently prohibit BPOs for lending purposes. Fannie Mae and Freddie Mac were unaware of this and called their management companies immediately and halted the practice in those states.
Bruce says a few years ago he was at a Five Star Conference and a lender was on the stage when a broker asked why she had never gotten a listing from the numerous BPO submittals she had put forward. The lender admitted to giving the listing to the highest BPO they received. Joseph says that doesn’t surprise him.
Bruce asks how much of a problem coercion is for appraisers. Joseph says it’s been a real problem lately and especially in states like California. There was recently a lawsuit about an appraiser getting blacklisted because he didn’t give a lender a certain price. The Home Valuation Code of Conduct should address this as a new hotline will be created so appraisals can report this when issues like coercion arise. Joseph says there could be a penalty if an appraiser was caught adjusting numbers or was influenced. The other side is not currently help accountable and that should change.
Bruce says he had read that appraisers may soon have to be bonded and asks how that would change the appraiser business. Joseph says it would be devastating to the business. This would raise an appraiser’s overhead $16,000 and that would be passed on to the customers. The lenders should be the one with the bond since they approve the loan.
Bruce talks about the cramdown in which a current appraisal is necessary. Joseph says it’s excellent for appraisers but it hasn’t passed it yet. Too many people did home valuation models and BPOs and not professionals appraisals. It would have helped. There is a downside to cramdowns so he’s waiting to see what happens.
Bruce asks about valuations models. Joseph says sometimes they are very good and sometimes they are really bad. Areas like San Diego where there are a huge amount of dissimilar properties in a neighborhood make these models less effective. AVM is a type of regression analysis reliant on historical data so it’s not always current. Sometimes these models aren’t updated for sometimes months. Bruce asks if this is the issue with review appraisers. Joseph says this is more of an opinion and not a real estimate. AVM stands for automation evaluation model.
Fannie and Freddie say they test and update their systems often but to not give details. Every time new data gets in the model changes. But once a downward trend starts, it will predict lower and lower numbers much like it did when the market was booming. It works best when markets are flatter.
Bruce asks Joseph what changes he would like to say in the business. Joseph would like to see more education and higher standard of competence for all appraisers.
Listen in next week as the interview continues. To read more on the Appraisal Institute, see appraisalinstitute.org.
Joseph C. Magdziarz, MAI, SRA is the 2009 vice president of the Appraisal Institute. He will become the president elect in 2010 and president of the Appraisal Institute in 2011.
Magdziarz has been an active member of the Appraisal Institute for 38 years. He has served in a variety of capacities at all levels of the organization.
At the regional level, Magdziarz has served two terms as Regional Vice Chair and two terms as Region III Chair. He has also been a regional representative for many years. On the national level, Magdziarz served two terms on the Appraisal Institute’s National Board of Directors. He has served as Chair of the Education Committee for five years and has also chaired the National Audit Committee, Instructor and Faculty Committees, and Education and Publications Committees. In addition, he has served on a number of project teams. Presently, he is serving on the ADAPT (MAI demonstration report alternative) project team and the International Education and Designation project team. Magdziarz has been President of Appraisal Research, Inc. in Rockford, Illinois for 38 years. He resides in Rockford, Illinois with his wife Sandra of 41 years and his bulldog Bella.
Magdziarz is an approved Appraisal Institute instructor for 26 courses in the Appraisal Institute’s QE, AE, CE, and USPAP curriculums. He has also had international assignments in Naples, Italy; Istanbul, Turkey; Seoul, South Korea; and Beijing, Tianjin, and Shanghai, China.
Bruce starts by asking what the MAI designation means. MAI used to stand of “Member of the Appraisal Institute” but now means a members holds the highest professional designation for appraisers. The SRA designation is for residential appraisals and once again gives you the highest designation for that profession. These designations are given by mandated educations and experience.
4 Ways to Listen
- Click HERE on the player launch below to stream our shows as you surf the web.
- Visit our Radio Archives to download shows in mp3 format.
- TNG Real Estate Radio Show is now on iTunes! If you have iTunes installed click HERE or simply do a search for "The Norris Group" while in iTunes.
- If you use an RSS Reader: Click Here
*******************************************************************************************************
In 1989, the FIRREA Act was passed. The FIRREA Act was put in place to create barriers to entry for those seeking to become professional appraisers and also to standardize the appraisal process. While it didn’t clean up the appraisal institute completely, it did put in place important systems. In 2008, the Appraisal Foundation brought education and review to a new level. This is still a work in process.
Joseph says on-the-job training is probably the most important aspect of a trainee becoming competent in the world of appraisals. Bruce asks what the stimulus was behind the FIRREA Act. Joseph tells him that at the time there was huge losses going on and lenders were able to hire whoever they wanted and they sometimes had no experience. This lack of experience was seen as a huge part of the problem during the S&L crisis.
Bruce talks about the current markets and asks if appraisers are taking some of the heat for the foreclosure problems. Joseph mentions the Appraisal Institute just got back from a Washington D.C. meeting with Congress and other groups in related industries. The Congressional Research Services gave them a copy of a report that was done on all the causes of the current crises. Out of 26 key areas that are listed as the cause of the real estate and mortgage backed securities issues, the appraiser world is not listed. Joseph says it’s good but it doesn’t mean the organization is perfect yet.
Bruce asks if Joseph sees legislative changes coming regardless of who is at fault for the current real estate crisis. Joseph says the Appraisal Institute’s president, Jim Amorin, is testifying before the Congressional Housing and Finance Committee speaking on the Housing Valuation Code of Conduct.
Bruce says in California foreclosures are a huge percentage of the for sale inventory. Often the process starts with a BPO. He asks is appraisers are part of that process. With BPOs, Joseph says there is not accountability and the requirements are different. Joseph says there are different motivations and that appraisers are required to remain unbiased.
Bruce asks how Realtors and appraisers get along and if they typically agree on important issues. Joseph says the two groups differ greatly on the BPO issue and appraisers think Realtors and brokers should be held to the same standards when making real estate evaluations and appraisals. Many states have their own rules and regulations so the National Association of Realtors doesn’t have much control of this issue on a state level. There are 23 states that currently prohibit BPOs for lending purposes. Fannie Mae and Freddie Mac were unaware of this and called their management companies immediately and halted the practice in those states.
Bruce says a few years ago he was at a Five Star Conference and a lender was on the stage when a broker asked why she had never gotten a listing from the numerous BPO submittals she had put forward. The lender admitted to giving the listing to the highest BPO they received. Joseph says that doesn’t surprise him.
Bruce asks how much of a problem coercion is for appraisers. Joseph says it’s been a real problem lately and especially in states like California. There was recently a lawsuit about an appraiser getting blacklisted because he didn’t give a lender a certain price. The Home Valuation Code of Conduct should address this as a new hotline will be created so appraisals can report this when issues like coercion arise. Joseph says there could be a penalty if an appraiser was caught adjusting numbers or was influenced. The other side is not currently help accountable and that should change.
Bruce says he had read that appraisers may soon have to be bonded and asks how that would change the appraiser business. Joseph says it would be devastating to the business. This would raise an appraiser’s overhead $16,000 and that would be passed on to the customers. The lenders should be the one with the bond since they approve the loan.
Bruce talks about the cramdown in which a current appraisal is necessary. Joseph says it’s excellent for appraisers but it hasn’t passed it yet. Too many people did home valuation models and BPOs and not professionals appraisals. It would have helped. There is a downside to cramdowns so he’s waiting to see what happens.
Bruce asks about valuations models. Joseph says sometimes they are very good and sometimes they are really bad. Areas like San Diego where there are a huge amount of dissimilar properties in a neighborhood make these models less effective. AVM is a type of regression analysis reliant on historical data so it’s not always current. Sometimes these models aren’t updated for sometimes months. Bruce asks if this is the issue with review appraisers. Joseph says this is more of an opinion and not a real estimate. AVM stands for automation evaluation model.
Fannie and Freddie say they test and update their systems often but to not give details. Every time new data gets in the model changes. But once a downward trend starts, it will predict lower and lower numbers much like it did when the market was booming. It works best when markets are flatter.
Bruce asks Joseph what changes he would like to say in the business. Joseph would like to see more education and higher standard of competence for all appraisers.
Listen in next week as the interview continues. To read more on the Appraisal Institute, see appraisalinstitute.org.
Joseph C. Magdziarz, MAI, SRA is the 2009 vice president of the Appraisal Institute. He will become the president elect in 2010 and president of the Appraisal Institute in 2011.
Magdziarz has been an active member of the Appraisal Institute for 38 years. He has served in a variety of capacities at all levels of the organization.
At the regional level, Magdziarz has served two terms as Regional Vice Chair and two terms as Region III Chair. He has also been a regional representative for many years. On the national level, Magdziarz served two terms on the Appraisal Institute’s National Board of Directors. He has served as Chair of the Education Committee for five years and has also chaired the National Audit Committee, Instructor and Faculty Committees, and Education and Publications Committees. In addition, he has served on a number of project teams. Presently, he is serving on the ADAPT (MAI demonstration report alternative) project team and the International Education and Designation project team. Magdziarz has been President of Appraisal Research, Inc. in Rockford, Illinois for 38 years. He resides in Rockford, Illinois with his wife Sandra of 41 years and his bulldog Bella.
Magdziarz is an approved Appraisal Institute instructor for 26 courses in the Appraisal Institute’s QE, AE, CE, and USPAP curriculums. He has also had international assignments in Naples, Italy; Istanbul, Turkey; Seoul, South Korea; and Beijing, Tianjin, and Shanghai, China.
Bruce Norris is joined by expert real estate investor and mentor, Tony Alvarez.
Tony got started in 1980 watching the infomercials on the television. He bought all the courses. It quickly led him to appraising. All the courses he had bought didn’t get him to the numbers he needed. The appraisals license really helped him take off. Tony was born in Cuba and his first exposure to real estate at a young age was very positive.
In the 1980s the interest rate was high. Tony started buying little single family home sin Burbank. He expanded in “The Flats” and kept his job as an appraiser. He started working with two gentlemen from New Zealand. These guys opened his eyes to a new world of investing. Tony learned quickly that his preconceived notion on real estate investing had held him back from what was really possible in the business.
Tony goes into detail about what many new investors say and how they fear getting in the market. Tony discusses the specific questions he asks new investors because he finds they typically make the same mistakes and they just don’t know where to start. They haven’t really thought about the details of where they want to invest and say that they just want a deal.
Bruce talks about how many investors are trying to either make up for lost time and/or trying to make up for losses which is not good. Hearing the desperation makes him nervous as many of these investors get led astray. Tony feels the same way. He himself struggled with this issue early in his career.
Tony talks a little about his “Third Element” concept. He goes into fear and how it really controls people and what they do and don’t do. He talks about fear and how it really gets in the way of real accomplishment. More people need to analyze how they make decisions and stop operating under fear.
Tony talks about people making mistakes because they are unwilling to learn from people already in the business and do not invest in education. He talks about his philosophy on education which is very much like Mike Cantu. Tony went to Mike Cantu’s training although he’s been a land lord for years. All it takes is one simple idea that can revolutionize how you do business. Tony talks about how much money he would have saved if he had been more careful with education in the beginning.
Bruce and Tony discuss how this business has changed his life and how he’s set up his properties to pay for his base lifestyle. It’s afforded him to do some interesting things.
It was a little long of an introduction but more is coming next week.
Tony Alvarez has been a successful Real Estate Investor and Certified General Appraiser in the Southern California area since 1981. Tony has bought, sold and rented hundreds of properties from vacant land to condos, single family residences, and apartments. More recently he is investing in commercial developments in Arizona, Nevada, and Southern California.
As an appraiser Tony worked as a staff appraiser for Great Western and Glendale Federal Bank and is approved by hundreds of Lenders, Insurances Companies as well as Government Agencies.
He has worked for Fanny Mae, Freddie Mac, FHA and the FDIC. He has an in depth knowledge of the inner workings of Lenders and their REO (foreclosure) departments. Tony’s knowledge of real estate, appraisal, finance, and investing is vast and varied. He brings a unique perspective to the real estate investment community.
Tony got started in 1980 watching the infomercials on the television. He bought all the courses. It quickly led him to appraising. All the courses he had bought didn’t get him to the numbers he needed. The appraisals license really helped him take off. Tony was born in Cuba and his first exposure to real estate at a young age was very positive.
In the 1980s the interest rate was high. Tony started buying little single family home sin Burbank. He expanded in “The Flats” and kept his job as an appraiser. He started working with two gentlemen from New Zealand. These guys opened his eyes to a new world of investing. Tony learned quickly that his preconceived notion on real estate investing had held him back from what was really possible in the business.
4 Ways to Listen
- Click HERE on the player launch below to stream our shows as you surf the web.
- Visit our Radio Archives to download shows in mp3 format.
- TNG Real Estate Radio Show is now on iTunes! If you have iTunes installed click HERE or simply do a search for "The Norris Group" while in iTunes.
- If you use an RSS Reader: Click Here
*******************************************************************************************************
Tony goes into detail about what many new investors say and how they fear getting in the market. Tony discusses the specific questions he asks new investors because he finds they typically make the same mistakes and they just don’t know where to start. They haven’t really thought about the details of where they want to invest and say that they just want a deal.
Bruce talks about how many investors are trying to either make up for lost time and/or trying to make up for losses which is not good. Hearing the desperation makes him nervous as many of these investors get led astray. Tony feels the same way. He himself struggled with this issue early in his career.
Tony talks a little about his “Third Element” concept. He goes into fear and how it really controls people and what they do and don’t do. He talks about fear and how it really gets in the way of real accomplishment. More people need to analyze how they make decisions and stop operating under fear.
Tony talks about people making mistakes because they are unwilling to learn from people already in the business and do not invest in education. He talks about his philosophy on education which is very much like Mike Cantu. Tony went to Mike Cantu’s training although he’s been a land lord for years. All it takes is one simple idea that can revolutionize how you do business. Tony talks about how much money he would have saved if he had been more careful with education in the beginning.
Bruce and Tony discuss how this business has changed his life and how he’s set up his properties to pay for his base lifestyle. It’s afforded him to do some interesting things.
It was a little long of an introduction but more is coming next week.
Tony Alvarez has been a successful Real Estate Investor and Certified General Appraiser in the Southern California area since 1981. Tony has bought, sold and rented hundreds of properties from vacant land to condos, single family residences, and apartments. More recently he is investing in commercial developments in Arizona, Nevada, and Southern California.
As an appraiser Tony worked as a staff appraiser for Great Western and Glendale Federal Bank and is approved by hundreds of Lenders, Insurances Companies as well as Government Agencies.
He has worked for Fanny Mae, Freddie Mac, FHA and the FDIC. He has an in depth knowledge of the inner workings of Lenders and their REO (foreclosure) departments. Tony’s knowledge of real estate, appraisal, finance, and investing is vast and varied. He brings a unique perspective to the real estate investment community.
| Website: | http://www.thenorrisgroup.com |
| Phone: | 951-780-5856 |
| Fax: | 951-780-9827 |
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