Real Estate Fraud and the Broken Moral Compass

Posted on February 24, 2012 by

I have been selling real estate for 22 years.  When I was younger I worked for a family owned developer selling tract homes.  It was a coveted job and one that required the highest ethical standards.  It was hammered into us that the developer was an easy target so we had to protect the Company by always being above board.  We weren’t allowed to refer business to Landscapers, painters, mortgage people – no one.  Even the suggestion of a kickback could lead to immediate termination.  No amount of short term gain was worth losing your job or worse, your license to sell real estate.  I had a young family and was vigilant and steadfast in my determination to hold my ethics above any possible reproach.  It may sound old fashioned or even “high and mighty,” and while I do consider my honor paramount to my persona, it was equally about self preservation: I feared nothing more than losing my license.  To lose my license was to render me unemployed.  I’d have to get a job selling cars or appliances because I would no longer be able to sell homes.

Fast forward to the wild west of today’s resale market – the fraud and unethical behavior of some Realtors is enough to make one’s stomach turn.  Understand, I am not condemning all Realtors.  The National Association of Realtors has very clear ethical guidelines which every Realtor must adhere to.  But during these tough times there are some people who simply “bend the rules.”  Maybe bending here and there isn’t criminal, but if you bend anything far enough you break it.  That’s what’s happening and it’s disappointing, disheartening and it seems there is no one to stop it.

So what exactly am I talking about?  Short sales mostly and here are examples of what’s happening:

A seller is losing his or her home.  They opt to do a short sale, but they aren’t going to walk away from all their investment with nothing so what do they do?  Sometimes, they make an agreement with the buyer through their agents to sell their personal property (furniture, pool tables etc.) for a ridiculous sum of money.  The buyer agrees and the seller gets some money.  Clever, right?  Perhaps, but it’s also lender fraud.  The lenders require an affidavit that states the seller is getting nothing.  It also means that agents cannot rebate any commission to the seller, yet this happens even though it is also fraud.  How about this – a seller short sells and then is allowed by the buyer to remain in possession as a tenant.  Seems like a win-win, but everyone is required by the lender to sign a document stating that the seller will not remain in possession.  The Realtor is obligated to report it, but they don’t – leading once again to lender fraud.  Or this scenario:  the Realtor is approached by a distressed seller about selling short.  The Realtor knows that the property is really nice and has a buyer, but only if the buyer can “get a steal.”  So, the agent sells the home for a ridiculously low price to the buyer, but the home hasn’t been listed on the open market which the bank usually requires.  To get around this, the agent lists the property at the stupid price, generates a ton of interest, receives several offer yet already has a signed offer at the stupid price by their own buyer.  Since the agent works for the seller (and in this case the buyer too) and not the bank by fiduciary statute, the bank never knows about the multiple offers because the agent is not obligated to tell the bank about them.  When the appraiser for the bank comes out, the agent does everything in their power to guide the appraiser to the agreed upon stupid price.  So long as the value comes in within 5-10% of the sales price, the bank will usually go along with the sale even if that sales price is stupid low.  The agent gets both sides, the bank and the neighborhood (because of the effect of the now ridiculously low comp) gets screwed.

One of my “favorites” is this one:  the agent gets a “shill” offer – an offer from someone they know, typically a really low all-cash offer.  This allows the agent to start the short sale process with the bank, eventually getting an approved short sale.  When the “shill buyer” inevitably cancels, the agent re-lists the home for something close to whatever the bank approved, now usually well below market.  Again, this seems like a win-win: the real buyer gets a shortened process and a crazy-sick price, the agent gets a quicker sale and the seller gets out without being foreclosed on.  It might sound good, but it’s unethical and more importantly illegal because it’s lender fraud.

Here’s a question: how many offers can a seller sign for one property?  Answer:  one.  So how can a home be listed as active in the Multiple Listing Service when there is either a real buyer or a “shill buyer” with a seller-signed contract in hand?  It shouldn’t be, yet it’s happening all the time.  The agents will say that due to the nature of short sales, buyers often cancel during the process so they need to keep marketing the property for their sellers.  Yet MLS rules clearly state that if a home has an accepted offer, it must have a changed status and can no longer be listed as “active.”  While not lender fraud, it is clearly against the National Association’s code of ethics.  The vilest breach of ethics however, is the collusion that exists with some investors and some Realtors who have formed multiple LLC’s to acquire distressed properties.  They’ll buy a property, sometimes even their own, at steep discounts using many of the afore mentioned tricks and then resell it or even sell it back to themselves (at the crazy low short sale price).  This is called “flopping” and has been targeted by the Justice Department and local law enforcement yet it still goes on every day.

The most troubling thing that I have to deal with, given this mine field of an ethical landscape is the acute frustration and disappointment the buying public has as a result of all these shenanigans taking place.  It’s not like the real estate profession is held in the highest esteem by most people to begin with.  Somewhere just above a used car salesman but below the appliance salesman.  It’s the old “a few bad bananas spoil the whole bunch” kind of thing.  Sadly, honest Realtors like me and many of my brethren, get stepped on by the public because of this.  We are often not respected so people blow off appointments and waste our time house hunting only to circumvent us by going to the seller’s agent directly after we’ve introduced them to the property and so on.

W.C. Fields used to say, “There’s a sucker born every day.”  We saw this with unscrupulous mortgage lenders taking advantage of under educated borrowers during the “hey day” of easy lending.  We see agents and investors persuading unwitting buyers to sell their homes under market, and we see the elderly particularly vulnerable to being taken advantage of.  Is it a sign of the times?  Perhaps.  In a tough economy people get desperate and do questionable things to survive, so is that it?  I really don’t think so.  Rather I think it’s just too darn easy to take advantage of the system and the temptation to do so just too great for many to handle; that combined with the seldom prosecuted crimes of lender fraud.  In the end, it’s hard to keep your head above water when you’re swimming with alligators.  Maybe doing the right thing is just a thing of the past, heck Wall Street has gotten away with murder for years and corporate America does the same by avoiding taxes and circumventing environmental regulations.  Clearly real estate agents are far from the only bad guys out there, it’s just that it’s so darned disheartening to have to deal with this day in and day out and to have to explain to some really nice would be buyer, why they didn’t get this great deal or that amazing dream home.

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The Guiding Light, All My Children and What We Know About Housing In 2012… So Far

Posted on February 17, 2012 by

Growing up, my mom was a stay-at-home mom.  Each day while doing the laundry, cleaning, and preparing the evening’s dinner she would watch soap operas on the television.  It really didn’t matter which show was on; the premise was always more or less the same:  a long lost brother returns; Erica Kane has a vindictive affair and someone cheats death through the miracle of Daytime TV medicine, often coming back after several seasons of absence.  So too is our housing market making its miraculous return, having been written off as dead and taken off life-support, as millions of viewers watched, helpless to change it yet hoping for a happy ending.
To read the morning paper is to get a confusing picture of the California real estate market: prices down; sales up; distressed properties make up 50% of the marketplace… Sounds pretty bad right?  But is it really?  As a reminder, real estate is local so if you live in communities like the Inland Empire, Stockton, Patterson, Modesto, you may think me way off base because these markets are down as much as 60%+ and recovery may be a generation or two away.  But I don’t work in those areas or even follow them except at a cursory glance.  However, I do sell in Ventura and Los Angeles Counties and have many friends and family in the San Francisco Bay Area, and keep an eye on Santa Barbara and San Diego because I like to visit those places, and these markets are nothing like the media suggests.  There is little doubt in my mind that our market is healing, but like any serious injury, the healing process has taken a long time, but like they’ve said on General Hospital many a time, “Doctor, the patient’s alive!”
So what’s really happening?  Luke married Laura.  They need a house.  They find a house; they buy it and move in.  First time buyers are alive and well.  They’re finding that renting is more expensive than owning for the first time in a long time.  Investors are buying too.  They’re buying homes at the foreclosure auction for cash.  This brings down the average and median price.  But then they are often rehabbing those properties and “flipping” them, which brings up the price.  Jumbo financing is harder to obtain, making higher priced homes harder to qualify for so fewer sell and again the numbers show a decline.  It is true that people who need to sell, but can’t find a buyer, will be forced to lower their price.  But the same is true when a buyer finds a home that has more than one suitor – something we are seeing more and more of as the inventory numbers decliner.  When this happens the price is actually going up or at least is firmer.  Sales are up.  This is a number we can hang our hat on.  Month over month, year over year, the number of sales is just that – a quantifiable figure that can be compared to previous periods of time.  Prices reflect many elements, like size condition, location, views etc. but sales are much simpler and reliable.  So not all numbers are the same, and in fact some numbers even lie.
If the market is really getting better, then why are home prices down?  To answer you have to consider which “home price” is being referred to as being “down”.  Median home price is generally the number used most often.  Median is the number at which half the homes sell below and half above.  For example, if 100 homes sold last month and 60 of them are at or below $500,000, and 40 are above, the median is going to be below $500,000 because more than half of the sales are below that number.  Yet does that mean your $750,000 home has dropped?  Not necessarily.  All it means is that there are more lower priced homes are selling than higher; the median is like the middle point.  “Isn’t that the same as the average”?  No.  The average can be pulled up or down by as few as one property.  Consider what happened to the average sales price in Bel Air when Candi Spelling sold her 56,000 square foot mansion for $85M. If 9 other homes sold for $5M in Bel Air that month, the average home sold would be $65M, while the median was $5M.  Both median and average are important value indicators but are easily manipulated.  I mean, did anyone who owns a home in Bel Air think their $5M home was worth $65M because of the Spelling sale?
Totally confused?  It’s OK; the whole median/average numbers thing is confusing.  But know this: sales are up and really that’s the key to any housing recovery; because as the sales increase, so do prices.  More sales equal higher prices – it’s the whole supply-demand thing.  If there were an infinite supply of homes it wouldn’t matter, but as no two homes are the same, the supply is not infinite.  And as the distressed inventory declines as it is currently in many of the markets across the country, the supply will become constrained under the demand that accompanies an improving economy.
So like Dorothy Michaels (played by Dustin Hoffman, playing an actor playing a woman) says in the show with-in-a show – soap opera themed movie, Tootsie: “… She was deeply, deeply, deeply, deeply, deeply, deeply loved by her brother.  It was this brother who, on the day of her death, swore to the good Lord above that he would follow in her footsteps, and, and, and, and, and, and, and, and, and, and, and, just, just, just, just, just, just, just, just, just, just owe it all up to her. But on her terms. As a woman. And just as proud to be a woman as she ever was. For I am not Emily Kimberly, the daughter of Dwayne and Alma Kimberly. No, I’m not. (now in a man’s voice) I’m Edward Kimberly, the recluse brother of my sister Anthea. Edward Kimberly, who has finally vindicated his sister’s good name. I am Edward Kimberly. Edward Kimberly. And I’m not mentally ill, but proud, and lucky, and strong enough to be the woman that was the best part of my manhood. The best part of myself.”
Confused?  Don’t feel bad, it’s been a rough several years, but we’re finally coming out of it… just take my word for it.

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I’m Mad As Hell And I’m Just Not Going To Take It Anymore

Posted on February 10, 2012 by

Peter Finch in Network, remember?

Well I’m glad that’s over.  What?  Didn’t you hear?  The banks are settling the foreclosure debacle for $25 billion… that’s billion with a ‘B.’  I guess that means it’s all behind us now.  The banks are going to pay for all those bad loans they made… the banks are going to pay; huh… by the way, just who are “the banks”?

Perhaps I’m being a bit facetious.  My wife might say even a little obnoxious, but let me explain…

This whole foreclosure settlement thing?  I just don’t get it.  The States and Federal Government have settled a potential civil lawsuit in which the banks are purportedly guilty of using shoddy foreclosure practices to take peoples’ homes that were delinquent on their mortgages.  The wronged parties here are the – who? Oh yeah, the delinquent homeowners who weren’t able to do what, modify their mortgage?  Fight back the lender?  Prolong the time they are allowed to stay in their home without paying?  Oh right, they were misled by the loan reps back in 2005-6 and got in over their heads blah, blah, blah… No one wants to see people lose their homes, but how is a $25B settlement going to do anything to do about that?  Here’s what I think: nobody’s going get that money, but somehow I suspect we’re all going to have to pay for it.

So what happens when The Banks have to shell out $25B?  Where does that money come from?  Perhaps it comes out of their reserves.  But wait, if it comes out of their reserves, they’ll have to replenish those reserves right?  So, they’ll need to charge higher rates to lend to homeowners and small businesses, while paying savers ever lower rates.  After all isn’t that how the banking industry makes their money – the spread between borrowing costs and lending income?  They will also have to lend less as they replenish their reserves, remember that whole “Stress Test” thing?  All this just makes it even harder to get a loan.  Oh great, that will mean even fewer transactions for guys like me.  So who benefits from this settlement?  You got me… the guy who lost his home maybe?  Or how about the one who lied on his loan app about his income maybe?

Look, I know it probably sounds callous, but enough is enough.  After all, who do you think is going to pay for the $25B anyway if not you and me?  The banks, right?  OK, who is that?  The stock holders?  The CEOs?  The whole thing is so Kafka-esque.  I’m feeling a bit like a cockroach on trial.  And who is distressed, how do we even define that?  I’m distressed because declining values have cut my commissions, and there are fewer transactions.  Heck after 5 years of recession, we’re all distressed.  Seen the cost of college lately?  I have 2 kids in college and tuition is going up and up; oil is $100 a barrel and oil companies’ profits are soaring!  In fact the oil companies made more exporting refined diesel than keeping it here, thus driving up the costs of all the goods I buy.  But of course we didn’t feel that because Corporate America cut wages and busted Unions, so the average American worker makes less, in order to keep the price of those goods down.  So terrific, the goods cost less at the store but we make less so we are all more distressed, and worse still, can’t qualify for a new mortgage, even if we still have good credit.  So how’s the $25B settlement going to help?

Presently, I am helping 3 clients try to modify their loans.  There’s no money in it for me of course, it’s all pro bono – I’ll get the short sale listing if I am unsuccessful I suppose.  Will the some of the $25B settlement go to these folks?  I hope so, but I doubt it – they haven’t been foreclosed on wrongly.  Sure, they are all either out of work, been out of work, or taken jobs at a far lower pay scale than they were earning 6 years ago when the bought or refinanced their homes to begin with, but they still have their homes, so I doubt they qualify for any part of the settlement.  Should the bank modify their loans?  Yes, but not because they ought to, but rather because it makes good business sense.

At this point you may think me bitter, and I suppose that’s a fair observation, but I’m really not.  Rather, I’m just disappointed in the “let’s sue the banks” thing.  Banks like any corporation need to make money, so the issue shouldn’t be how much we get them to pay out, but rather what can we do to give them incentive to help people in distress?  No jail time would be a good start.  Maybe the Government will figure out a way to take the money each bank is required to contribute to the settlement, make them apply it to the troubled borrowers who still have homes.  I read that’s what it’s supposed to be used for; that the money will be used to help to get the banks to write off some of the debt that’s keeping a foot on the throat of underwater homeowners… we’ll see…  Personally, I feel the U.S. Attorney General should be focusing not on settlement, but rather on the criminal angle and put some of these high level corporate folks away for a while, like they recently did with Wall Street insider traders.  The rewards of profitability are just that, profits, the penalty for cheating can’t be simply payouts, that’s too easy, rather prison time, because that’s what corporate America really fears not paying a penalty.

So, $25B… did you want that in a check?  Hold on, I’ll get my checkbook.

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The Short Sale Effect vs. The Short Sale Dilemma

Posted on February 3, 2012 by

Selling short sale properties is a reality most Realtors have come to accept.  This past week I received an offer on a short sale listing, where my seller had already tried to modify their loan but had been declined.  In pricing this home in December, I looked at the comps and the active listing inventory to come up with a price that was “in the market”.  The idea being that to successfully and quickly not only sell a short sale but close a short sale, I had to offer the bank a reasonable price.  After a month of no offers, we reduced 5% and got a low, all cash investor offer.  At the time, we discussed it and I told my client that I felt the offer was too low and that I didn’t think the bank would accept it, so we trudged on.  Two weeks later and still no new offers, we reduced another 5%.  At last we received another offer, only this one was lower than the all cash investor’s offer.  When I explained to the other agent that this was the case, her response was, “Why not take it and let the bank decide what they are willing to sell the home for, they’re going to decide anyway…”  To this I said, “Uh, sorry, no” and we countered a little below our asking price.  The buyer came back with another counter not far from ours and we took it.   When I take this offer to the bank I will explain what transpired and I believe, this will help us to get any foreclosure sale date postponed and accelerate the often long process of getting short sale approval.

Contrast my story with this:  A home that last sold for $1.4M in 2005 comes on the market yesterday at $599,000, even though its Fair Market Value (FMV) is probably $800-900,000.  Why?  In this example, the seller at the listing agent’s suggestion, prices “the home to sell” right away.  Many times a home like this even comes on the market as “sold before processing” where the listing agent  also acts as the selling agent, though they’ll use someone from their office to “write” the offer since lenders won’t allow a two sided sale commission in most short sales.  This kind of scenario can easily cross the line of lender fraud, especially at the ridiculous listing price.  Fraud aside, with this kind of pricing approach, there will be no haggling and perhaps even multiple offers.  Unfortunately one of three things is going to happen.  First is that the process gets dragged out forever because of the absurdity of the asking price and the seller actually gets foreclosed on.  Second, the bank comes back with a counter offer much higher than the asking/selling price after having done an appraisal, where they learned what the true value of the real estate is, and that causes the buyer to quit because they either feel duped or can’t go to the new, higher price.  Third, the bank, who must depend on third-parties like the appraiser and listing agent, having no idea what the home is really worth, ultimately accepts the stupid-low price offer.  In this last scenario, the Realtor gets paid; the seller, who’s lost everything, walks away and the buyer gets a steal.  You can see the appeal to many people of this approach.  Bully for the buyer who got the steal of a lifetime I suppose, but here’s the thing, someone has to pay for this “deal”, but whom?

The obvious is the bank, their investors and their share holders who bear the burden of greater losses; write downs etc.; and then there is the amorphous “tax payer” who’s been footing a lot of the bill of the housing crisis.  But there’s another victim here that’s real, one that we should care about and that’s the neighbors.  Because this last scenario is so common, neighborhood values across America are still crumbling, and it’s neither right nor necessary.  I call this the “Short Sale Effect” and it’s happening time and time again.

Upon first glance one might conclude that the listing agent should bear some responsibility since they are the one counseling the seller on where to price the short sale.  But the agent really only has an obligation to their seller as their representative, and to a lesser degree the buyer.  They certainly do not have any obligation to the lender nor do they to “the neighborhood”.  Clearly the banks need to do a better job of assessing value, but with so many distressed properties working their way through the system, homes fall through the cracks all the time.  As a Realtor, I am member of the National Association of Realtors and I am bound by a code of ethics, but that code doesn’t preclude me from selling a home at whatever my client is will to accept and a buyer is willing to pay, because in fact, that’s the job.  But should it end there?  I don’t believe so.  In fact, I believe we as Realtors have a responsibility to the communities we serve.  Sure, we’re in business to make money by selling houses, but I believe we should always try to get the best price for the market we’re in.  I tell my clients, that I will, “Get them the highest possible price, in the shortest amount of time, with the least amount of hassle”, yet to accomplish this I cannot “Give their house away” because that isn’t serving the seller’s best interest.  However, this is the “Short Sale Dilemma”. Because your seller gets nothing in a short sale, they have no vested interest in the selling price and in many cases, have very hard feelings towards their bank, so the idea of doing anything to help their lender, would likely elicit disdain.  So how then, are we as Realtors supposed to walk this tight rope?

If you reexamine the way I handled my short sale, you’ll find my answer: Try to get the best price you can and you’ll do right by your client; be fair to the bank and you’ll help the neighborhood and community you serve.  By approaching the business of short sales in this way, you might also get some new business out of it but if nothing else, find it a little easier to sleep at night.

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Pending Home Sales And The Lessons of Rocky And Bullwinkle

Posted on January 25, 2012 by

The Pending home sales for December came out today and rosy is almost all you can say about them – not that you’ll find that in the headlines which read, “Pending Home Sales Down For December”, none the less, the numbers were staggeringly strong.

While true, sales were off 3.5% nationally month over month, and this is the lead sentence of every news report, what is equally true is that December’s Seasonally Adjusted (SA) number is the 2nd highest in 4 years.  Let me repeat that so it really sinks in, December pending home sales were the second highest in 4 years.  November was the highest (except for the tax credit months).  Said Chief NAR economist  Lawrence Yun, “Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period,”

A mortgage broker I work with asked me, “How is it that a couple months ago everything was garbage and now suddenly, everything is great?”  The answer, I explained, was that things have been improving for months, but you had to be willing to accept it, which most folks were not prepared to do.  (I blogged about accepting change last week if you’re interested…).

Now I wouldn’t be honest if I failed to mention the Non Seasonally Adjusted (NSA) numbers were somewhat alarming.  If you’ve read my previous blogs on the Pending Home Sales, I tend to discount the SA numbers and focus more on the NSA but December’s NSA numbers were poor, down 21% nationally and 35% in the west.   This is something that could just be an anomaly or a regular and predictable trend.  I’ve requested annual percentage numbers from NAR to compare the multiyear trend for December.  I’ll report back if it proves to be interesting.  But since I don’t have those numbers handy, and this is my blog after all, this month I’m going to ignore the NSA and instead just focus on the positive, and act a little like Bullwinkle the talking moose. ..  If you were American born, anytime after 1960, you probably remember the Rocky and Bullwinkle cartoon show.   In it, there was always a little comedy bit snippet where Bullwinkle, would say, to Rocky, the talking squirrel, “Hey Rocky, watch me pull a rabbit out of my hat”.  Rocky would say, “Not again…” and Bullwinkle would invariably pull out a ferocious lion or some such animal, and retort, “Looks like I grabbed the wrong hat” or “Time t get a new hat”, and that’s how I’m handling the NSA numbers this month, maybe it’s time to get a new hat.

There is another lesson to be learned from Rocky and Bullwinkle that I’d like to leave you with.  At the end of every episode, there would be a big lightning storm that would destroy everything.  The music was loud and violent.  The show’s music would shift to a gentle piano and we would then see an empty field where, from the storm, a smiling sun would appear; sunflowers would begin rapidly popping out of the ground, ending with Rocky and Bullwinkle popping out too.  So like the zany cartoon characters, we are experiencing the same.  The numbers are great.  Sales of existing homes are stabilizing and things are getting better.  We are out of the storm and sunflowers are popping up everywhere and it feels pretty darn good.

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How Will We Be Remembered?

Posted on January 24, 2012 by

So what’s a Realtor writing about ho,w we should be remembered?  Hey, everyone’s got an opinion right?  But seriously, I was watching ESPN tonight as players and people from State College were remembering Joe Paterno.  To put this in some context, like most anyone who is a college football fan, we either have memories of JoePa; memories of his players or all of the above.  Yet here is a man that did nothing to stop a sexual predator who raped young boys in the Penn State Football shower.  It raises the question, how do we behave and how do we judge how, as a people, we behave?

OK, so that’s pretty heavy stuff that has nothing to do with real estate, yet let me relate my last week…

Picture a home that is fantastic yet has come on the market as a short sale, totally under priced.  I’m talking stupid priced.  This home sold for $1.75 new, before upgrades, of which there were countless, and landscaping which was perfect.  Views, open space, the works… you get the idea.  And it came on the market at $875,000!  So naturally it goes multiple offer right?  Of course… Now picture me; a Realtor fighting to make a living every day.  I know the value of this property.  The goal I tell my clients is not to get it at the price offered but rather to get your offer accepted so you are in first position with the lender to reply to their counter offer.  It’s at least $200K below market so you just want to get in the game so to speak.  I have 3 clients in the market for this home – only one can get it.  There are also another 5 buyers who want it also.  Ugh.  The first buyer I have writes at my recommended sight unseen, all cash at full price.  The third writes higher; still well below market but 10% above the asking.  The middle buyer is a friend; a former neighbor and someone I know wants this home in the worst way.  Yet the other offers are for all cash and he can’t do that, but his best friend can.   He tells me, “I’ll write the higher offer with financing and my buddy will write another offer at a lower price all cash and “sell to me later.”  “Why not just write a strong offer with both you on the title?” I say.  “I’ll write it and we’ll come in strong”.  He says his buddy who is a broker says that he has to write with the listing agent if he is to get the deal.  “Uh, what”? I say?  “You are going to cut me out of the deal so you can try a plan that you think will result in you getting the house?”  “It’s the only way” he says.

So how do we judge this behavior?  Is it right for the buyer to work around the agent for his best interest?  Should the agent step side so the friend gets the home?  How close is the friend?  Isn’t it a business transaction?  What is ethically, morally right?  What should the parties do?

I led with the Joe Paterno story which is a story about a hallowed man in Happy Valley, who showed terrible, terrible judgment after years of exemplary service.  Do we assess his story without his moral and ethical lapse or do we condemn him for it?  Should the friend/client who does wrong by his friend/agent be judged as a bad guy or a person just doing what’s right for his family?

I relayed this story to another very successful local Realtor.  He said, we are supposed to care about our clients but they don’t have to care about us.

Unless you’ve been paid on commission only, it’s probably impossible to fathom what it means to both make a sale and lose one.  I remember once, after working a client for hours while selling new homes, I finally got the check.  I ran into the sales office, dropped to one knee, fist and elbow pulled down and shouted, “Yes”!  Someone from corporate who happened to be at my sales office at the time, just looked at me like I had lost my mind.  She was on salary; I was not, and she couldn’t grasp the magnitude of what had transpired.

The sales racket is not what it used to be.  Sure, there are still plenty  con men and women who will lie, swindle and cheat a rube whenever given the opportunity.  But there are more people like me: Hard working sales people, looking out for their client’s best interest and by and large doing a good job.  For Paterno, I believe he showed such poor judgment he will fall amongst the Al Campanis’ and Helen thomas’ of the world; perhaps not quite the Pope Pius XII of the world who, during the Nazi regime, turned a blind eye to the Jews and their plight, but none the less, Paterno will be viewed with a record tainted beyond repair.  Perhaps you will consider these stories as unrelated.  Perhaps you will side with the buyer who only wanted a home for his family.  But to a salesperson who lives and dies by his client’s loyalty and behavior, the line between ethical and cruel; decent and indecent are very clear.  Something to think about next time you deal with a salesperson.  Do as to others, as you’d have them do unto you… words and concepts we really should take under advisement, don’t you think?

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Change Is Gonna Come

Posted on January 19, 2012 by

This week we celebrated Dr. Martin Luther King and with his memory as a backdrop I’m reminded of what in 1963 recording artist Sam Cooke wrote in response to the rising tide of a nation tired of racial inequality, “It’s been a long, long time coming, but I know… change is gonna come.”  His words rang true then, as they do now, change is coming; it’s happening; it’s happening in a hurry; the ships leaving port and you better have your ticket before it passes you by like a Sandy Koufax fastball. What’s happening you ask? The economy is rebounding and building undeniable momentum. I know you doomsayers are rolling your eyes right now, but change is hard to accept but sometimes we just have to accept the inevitable and go with it.  When real estate market first began its long slide in 2007 I was at a “Power Group” roundtable of top Realtors in our community.  And although I have been selling real estate since 1990, there were plenty of agents far more experienced than I.  Many were talking about how our business was going to change; how we needed to do short sales and become foreclosure experts; begin contacting the various banks and develop relationships with them so we would be positioned for the upcoming tsunami of foreclosures coming our way.  I left that group depressed, shaken but none the less defiant.  I was not going to change my business to that of foreclosures and short sales I swore, because frankly, I didn’t want to.  I wanted to sell regular homes, to regular people. Helping buyers buy the right house, the first time, and sellers to get the highest possible price, in the shortest amount of time, with the least amount of hassle.  Determined to be the lone tree leaning into the wind, I dug my heels in.  The depression I felt was not that the good times were over as much as there were so many people telling me I had the change my business from what I so enjoyed to something I had no desire to do. Marathoners will tell you there’s a point in any race that you mentally hit the wall.  Where the challenge to continue is overwhelming and the will to finish is the only thing that keeps you going.  After nearly 22 years of selling real estate, 2011 was the wall for me and I found myself in a battle to survive.  I leaned on my savings to stay afloat; my health suffered under the stress of the difficult real estate market and economy to the point where my blood pressure soared and April found me in the hospital with a coronary blood clot at age 49.  When asked about how I was doing and the state of the market, I would say honestly, “I’m doing better than most,” which while true, wasn’t saying much.  I would often say, “We’re all in the same boat: pitching out water as fast as we can to stay afloat” and everyone to a person agreed.  But, there was no way to quit; no place to go and no place to hide.  The market had taken down many a good Realtor and taken many a great Realtor to the edge of an economic abyss.  It was no longer about survival of the fittest it was just about survival, one day at a time.  Like the runner, just one step in front of the other.  I just had to keep on going.  Yet despite the challenges thrown at me, 2011 ended pretty strongly for housing sales across the nation and in particular California.  I posted relatively solid numbers by most measure.  As it turned out, I actually enjoyed handling short sales, successfully negotiating them in record time.   I sold my listings at higher prices than any other Realtor in my “farm” and started 2012 brimming with optimism.  But it wasn’t easy to keep my head up, because change is hard.  I’d had to adapt really push against a lot of adversity.  Sales master extraordinaire Zig Ziglar says “People don’t change their mind; rather they make new decisions based on new information”.  I’m here to say, there’s new information and it’s good, really good.

On Thursday and then again on Friday of this past week, RealtyTrac, the online California foreclosure tracking service proclaimed the following: “Foreclosure filings hit a 49 month low”.  They went on to say, “December Default notices (NOD, LIS) decreased 19 percent from the previous month and were down 23 percent from December 2010; Scheduled foreclosure auctions (NTS, NFS) decreased 12 percent from the previous month and were down 24 percent from December 2010; and bank repossessions (REO) increased 10 percent from the previous month but were still down 12 percent from December 2010.”  In other words the shadow inventory pipeline has been dwindling, is dwindling and will continue to dwindle.  That begs the question: if the distressed property pipeline isn’t being refilled, how much longer can the market be called a distressed market?  The data on the economy shows by every measure that the recovery is picking up steam and like a snow ball rolling down a hill, is getting bigger and badder than ever.  Consider this: unemployment numbers have been steadily improving.  Yesterday it was reported that manufacturing is on a tear; auto sales, durable goods, retail sales – they all continue to post stronger numbers, homes sales are up and even home developers are more optimistic than they’ve been in years and are ramping up housing starts.  Sure there are still storm clouds but believe me, this recession is over and we are accelerating towards better times ahead. Yes change is hard and for all the doomsayers who’ve been predicting our country’s demise, the train is leaving the station so you better get on board now or you’ll be left behind.  David Lebental, owner of PNL Benefits, a small business insurance brokerage in Torrance, Ca regularly reminds me that, “life is not a sprint but rather a marathon”.  I began by quoting Sam Cooke where he sings, “Change is gonna come”, but I left off this part, “oh yes it is”.  And as tough as this concept is for everyone on the housing sidelines to accept and resist it as you may, any champion marathoner will tell you, once you push through the pain, it really gets easier, and with any change, at some point you capitulate and accept it.  But to make it easier for you, try applying Zig Ziglar’s thoughts on change – you’re not changing your mind, you’re just going to make a new decision based on new information.  See you in escrow.

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