real/diaBlog - because real estate needs to change

Press Release: Danilo Bogdanovic Recognized as Contributing Author to "Real Estate in 2008"

Ashburn, Virginia (Best Agent Business) December 18, 2007 –- Danilo Bogdanovic, a top Realtor® in Loudoun County, Virginia, Real Estate Technology Consultant and Real Estate Blogger, joined with other top real estate agents around the country to write Real Estate in 2008, Book of Top Ideas for the Challenging Market of 2008.

Real Estate in 2008 (http://www.realestatein2008.org) helps buyers, sellers, and agents succeed in, what's sure to be, a challenging 2008 market by providing hundreds of ideas from top agents around the country. Chapters include ideas on how to find motivated buyers, how to assist buyers in making informed decisions, how to help sellers understand current market conditions in order to price/position their homes properly to sell and creative ideas from around the country. These are ideas from top real estate agents who collaborated in an industry-wide effort which was launched during the National Association of Realtors® (NAR) conference in November 2007.

Danilo provides a number of ideas as to how buyers and investors can take the most advantage of market conditions and trends in 2008 and how sellers can prepare, price and position their homes to be sure they get sold in 2008.  “Danilo contributed some excellent ideas to the book and shared his knowledge with other top agents and consumers,” said Steve Kantor, President of Best Agent Business and author of Billion Dollar Agent – Lessons Learned. “Over 1,000 top agents around the country brainstormed and contributed ideas to write Real Estate in 2008 in record time. We wanted to help agents, buyers and sellers make the most of the 2008 real estate market.”

Danilo Bogdanovic has been a Realtor® with the CC Sells Team of Keller Williams Realty for 4 years and is on the Dulles Association of Realtors® Technology Committee as well as the Virginia Association of Realtors® Strategic Planning Committee. Danilo is also a Real Estate Technology Consultant and Real Estate Blogger (www.LoudounStats.com, www.LoudounForeclosures.com, www.realdiablog.com)

About Best Agent Business:

Best Agent Business provides part-time real estate assistants to real estate agents. (http://www.bestagentbusiness.com). The virtual real estate assistants work from home offices around the country helping top agents grow their business using their unique talents. Best Agent Business is also the author of Billion Dollar Agent – Lessons Learned (http://www.billiondollaragent.com).

Contacts:

Danilo Bogdanovic, Buyer and Relocation Specialist/Realtor® and Real Estate Technology Consultant
Keller Williams Realty/CC Sells Team
Ashburn, Virginia
Phone: 703.582.6900
Email: [email protected]
http://www.LoudounStats.com, http://www.LoudounForeclosures.com, http://www.realdiablog.com, http://www.clipreal.com

Steve Kantor, President
Best Agent Business
http://www.bestagentbusiness.com
[email protected]

Will The Down Real Estate Market Affect Consumer Holiday Spending?

We did a poll on our other blog, Loudoun Stats, asking whether the down real estate market would affect people's spending this holiday season (click here for the actual poll). Here are the results:

• 54 percent said that they definitely would not be spending as much as in previous years
• 27 percent said that they would be spending about the same as in previous years
• 19 percent said that they would be spending close to that in previous years, but not quite as much

The next question is why.

• Is it because their ARM adjusted and their payments are higher than before?
• Is it because people are upside down on their homes and have sell their home before the market values go back up so they need that money to bring to settlement?
• Is it because the fear, uncertainty and doubt of the market and overall economic conditions is causing people to hunker down and save as much money as possible?

Whatever the reason may be, this is not good news for retailers, Wall Street and overall economy. With the retail sector betting on strong holiday spending in order to meet Wall Street and investor expectations, this is not good news for anyone.

Frustrated With NAR? Come Voice Your Opinion

If you're one of the many consumers, real estate industry professionals or REALTORS frustrated with the NAR, you'll want to check out "NAR Wisdom - The RE.Net on the NAR", which was just launched last week. NAR Wisdom brings together bloggers and readers alike to discuss NAR because, as the blog explains, "they (NAR) seem almost completely out of touch with today's market, and the needs of real estate agents and real estate consumers alike."

The blog is open to comments and posts from anyone that is interested. For those who wish to contribute, but wish to remain anonymous, NAR Wisdom has you covered - you can do so using a pseudonym or "Anonymous".

Almost 80 Percent Of All Credit Reports Contain A Mistake. Are You Sure There's Not One In Yours?

As consumers, we are often reminded that we should get copies of our credit reports. However, actually getting a copy of them is similar to flossing - you know it's good for you yet, it's easy to put off. But a new study should shock you into sending away for those reports right away. The study found that almost 80 percent of credit reports contain mistakes.

Several studies over the past 15 years have documented mistakes in credit reports. However, this newest study, conducted by the National Association of State Public Interest Research Groups, is the most alarming yet.  It discovered that 79 percent of all credit reports contain some type of error. Additionally, 25 percent contain such serious errors that those individuals could be denied credit.

Here are some additional findings:

• 54 percent contained inaccurate personal information such as misspelled names, wrong Social Security numbers, inaccurate birth dates, inaccurate information about a spouse and out of date address. For example, one credit report listed a man's business partner as his spouse.
• 30 percent listed "closed" accounts as "open." For example, listing a student loan that was paid off years ago as still outstanding. Another report listed several credit cards, a mortgage and an auto loan all as open.
• 22 percent of reports had the same mortgage or loan listed twice. This mistake often occurs when loans are serviced or sold.
• 8 percent of reports simply didn't list major credit, loan, mortgage or other accounts that could be used to demonstrate the creditworthiness of a consumer.

These errors can create the appearance of a consumer having "too much" credit available, being over-extended, or not having been a responsible payer of his or her obligations.

The “big three” credit report bureaus – Equifax, Experian and TransUnion – have been in this business for years. So how can they possibly be making all of these mistakes?  Most mistakes can be pinned to your creditors and others providing info to the credit bureaus. As mentioned above, some mistakes happen when credit accounts change hands.  Some errors are intentional.  The report found that some banks admit to not furnishing bureaus with complete information on customers. 

Yet, other mistakes are simply human error. According to a credit bureau industry spokesman, some 30,000 data processors file 4.5 billion updates to credit reports each month. That's 150,000 updates per month per data processor, leaving considerable room for errors.

These errors on credit reports can cause consumers serious trouble. Many consumers probably don't realize just how serious the trouble can become.  These mistakes and errors can cause your FICO credit scores to be much lower than they otherwise would be, meaning hundreds of dollars more in expenses per month or not getting approved at all.

It's no secret that banks use your credit report and your FICO credit score to determine interest rates on loans. But now the use of FICO credit scores has spread to other industries even hiring practices.

For example, some insurance companies now examine credit reports to determine what rates you should pay on auto and homeowner's insurance. And there have been media reports about people not getting jobs after employers examined their credit reports. About 35 percent of companies report using credit reports in pre-employment screening. This number is larger - about 40 percent - among retailers.

Regardless of how "busy" you are, you should obtain a copy of your credit report from each credit bureau every year. And there's good news: a 2006 federal law requires credit bureaus to provide consumers with a free copy of their report on an annual basis. The law even establishes one central phone number you can call to request all three reports.

So now that you only have to sign up once to get your report every year and you can do so for free, you have no excuse. Don't you want to know whether you're one of the 80 percent with a (costly) mistake on your credit report so you can fix it? It could mean the difference between hundreds of dollars more per month in expenses or not being approved at all and possibly even getting a job or not.

Special thanks to Christopher Koegler of America Funding in Mclean, Virginia.

The Other Side Of Foreclosures

There has been and will continue to be a lot of talk about foreclosures effecting owners, banks and investors. But what has been barely talked about, if at all, is how foreclosures are effecting the tenants/renters in them. Perhaps it's because they don't pose a monetary risk to any of the parties involved. Maybe it's because they're seen as disposable. It could be because the laws don't really give them any rights in a foreclosure situation. Either way, the tenants including children (even pets) are directly effected when renting a property that is being or has been foreclosed on.

One such story came out in a local newspaper here in Loudoun County, Virginia, the Loudoun Times-Mirror. A registered nurse and single mother with lupus found out last month through a legal advertisement in a newspaper that a bank was foreclosing on the Leesburg, Virginia town home she has been renting since Christmas Day, forcing her and her 8 year old son Nicholas to move once again.

That's right - through a newspaper advertisement, not from the landlords.

On May 25, the foreclosed property was sold at auction and the new owner is probably going to raise the rent so they are forced to look elsewhere. Not to mention, her former landlords still owe her $4850 in rent, deposit money and the $500 she spent in landscaping.

In some places/states such as Washington, DC, tenants have an abundance of rights. But in others, such as Virginia, tenants (and buyers) have very little rights because Virginia is very "seller/owner" biased. Basically, the tenant's lease ended when the transfer of property occured forcing them to abide by the new owner's wishes (including rental amount or eviction) or to move out.

And according to Realtytrac.com, the number of foreclosures in Virginia during the first three months of 2007 rose 140 percent from the same period in 2006 making this situation more and more common as we move forward.

So let's not forget renters when it comes to the whole foreclosure situation. They may not directly effect the bottom line, but they can be directly effected by the process.

Survival Of The Fittest (Real Estate Agents) - A Good Thing For Consumers And The Real Estate Industry

During the real estate boom from 2002 to 2005, everybody thought that they could just get their real estate license and make a ton of money being a real estate agent. Man, were they wrong. It's not an easy job.  It's very time consuming (if you want to be successful and make it a career) and you have to know what you're doing (and you don't learn much from NAR or from a brokerage). It's much more than just getting past the minimal barrier of entry and wearing a pin.

With the recent downturn in the market making selling a home a much more difficult task, many of these new agents as well as some veteran agents are going back to a "real jobs" (funny how they don't call being a real estate agent a "real job" because they weren't successful at it). According to the NAR, membership grew for 9 years in a row from 716,078 in 1997 to 1.36 million in 2006.

But the NAR projects that membership will drop more than 4 percent this year to 1.3 million and another 10 percent in 2008 to 1.17 million. The California Association of Realtors, which had the biggest increase in membership will most likely also see the biggest drop in membership this year and next. Also, the increase in NAR membership outpaced the increase in number of households and the average Realtor participated in fewer transaction sides (buy side or sell side) in 2006 than in 2000.

Glenn Dorfman, chief operating officer for the Minnesota Association of Realtors trade group, told members that the industry was overcrowded.

"There are too many agents in the business chasing a declining number of deals which has two implications: compensation dilution for many real estate professionals; the public face of real estate professionals is not near the best it could be if brokers terminated non-productive agents now -- keeping them will have a negative impact on the dollar value the public will put on our services as homes sit on the market longer," he stated in a notice to members. When the number of agents chasing transactions outnumbers the available resources two things happen: the price of the service falls as people discount rates to get the business; the quality of the service delivered to the consumer is reduced."

"We're not telling you to quit the industry, but if you are thinking the market will spring back to the levels of the recent past, it probably won't anytime soon," and "perhaps it is time to take a minute, review your business plan and determine if real estate is where your talents are best served."

(The part about "compensation dilution" is sure to be argued by many consumers as a good thing and I agree with it due to the mere fact that the cost of marketing a home is decreasing due to advances in technology and the increased use of the internet marketing)

Some people said that more agents and brokers would create more competition, which is better for consumers. But many consumers would tell you that it created an influx of inexperienced and unknoweldgeable agents that caused more harm to them than the competition did good. The real estate agents and brokers that wil remain after this and next year will be the ones that are successful and have a client base and/or have excellent lead generation tools. To be successful, have a good client base and gain new business, you have to have a good track record and know what you're doing. This translates to better service and better representation for the consumer, as well as a smoother transaction between listing and selling agents and brokers. It also means that real estate agents may start getting their reputation back because with better and more professional service comes a higher level of custmoer satisfaction and hopefully, trust.

But does a fewer amount of real estate agents/less competition hurt consumers? I don't believe so because:

• if the most experienced, competent and productive agents remain, it will bring out the best in us and consumers will receive a higher level of service
• there is plenty of business to go around and makes us all sharper and work harder and smarter to remain successful
• consumers and agents are always happy and relieved to work with an agent that is good at what they do because there is a much better chance at having a head-ache free transaction

In the end, I believe that a shake-out of the non-productive real estate agents and brokers is better for the entire real estate industry, consumers and professionals alike.

Statistics About Home Buyers, Sellers, Blog Readers and Bloggers

For those of you who are more left-brained than right-brained, here are some statistics about home buyers, home sellers, bloggers and those who read blogs (right-brained translation at the end):

Sellers:

• 83% of sellers use a full-service brokerage, 9% limited services and 8% minimal service (put a listing on an MLS)
• 71% of sellers who used a full-service brokerage were very satisfied, 24% somewhat satisfied and 5% unsatisfied
• 76% of sellers who used a limited services brokerage were very or somewhat satisfied and 24% were dissatisfied

For Sale By Owner (FSBO):

• FSBO transactions comprised 12% of market share in 2006 (record low). The peak market share was 18% in 1997
• A higher share of FSBO properties (40%) were not placed on the open market and were "closely held" between two parties who knew each other in advance (family or acquaintances). This figure is up from 32% in 2004 and 39% in 2005

Buyers:

• 85% of home buyers used a real estate agent to search for a home and 80% used the Internet (up from 77% in 2005)
• 22% used the Internet to get neighborhood information
• When asked where they first learned about the home the purchased: 36% identified a real estate agent, 24% the Internet, 15% from yard signs, 8% from a friend, neighbor or relative, 8% home builder, 5 percent from print media, 3% directly from seller and 1% home book or magazine
• 81% of home buyers who used the Internet to search for a home purchased through a real estate agent
• 63% of non-Internet users were more likely to purchase directly from a builder
• 61% of buyers are married couples, a record 22% are single women, 9% single men, 7% unmarried couples and 1% other
• 75% purchased a single family home, 9% a townhouse or rowhouse, 11% a condo and 5% other
• 78% of homes purchased in 2006 were an existing home, 22% new
• Of first time home buyers who made a down payment, 22% received a gift from a friend of relative, usually their parents
• 45% of first time home buyers purchased with no money down
• Buyers told the NAR that the two features they look for in a real estate web site are photos and property information
• 77% found the property information useful and 47% found virtual tours to be useful
• 72% actually drove by or looked at a home they found online and 46% walked through the home

General:

• The number one way people found an agent was through word of mouth though 18% found an agent online
• In more Internet-savvy areas such as California, 92% of Internet buyers found their agent on a Web site and 63% found them through an Internet search engine
• Internet marketing ROI is doubling every two years
• Print media ROI has been decreasing steadily since 2002

Blog Readers and Bloggers:

• 76% of US internet users earning over $150,000 per year read blogs, up from 57% 2 years ago
• 24% of blog readers are bloggers themselves
• 25% of general internet users read blogs
• 9% of general internet users write blogs
• 68% of real estate agents said that a real estate blog was a main focus as a marketing tool in 2007

Translation/meaning of the stats above:

• Buyers - Save time, energy and money by using the latest resources available to you, especially the Internet
• Sellers - Use the Internet to gain the most exposure possible for your property; don't let Internet buyers searching for a home pass your home by; if using an agent, find one that truly understands and harnesses the power of the Internet as a marketing tool
• Agents - Focus on Internet marketing and a hyper-local real estate blog; cut marketing dollars from mass media and put it into Internet marketing and other tools with a higher ROI; work on Search Engine Optimization (SEO) for your site and/or blog; start taking more and higher quality pictures and virtual tours (as well as video tours) to post online; provide customer service/satisfaction better than just 71% or 76%; don't ever forget how important referrals are.

Sources: Luxury Institute Survey, Pew Institute and American Life Project, NAR Profile of Home Buyers and Sellers, RISMedia, MarketWatch

According To Zillow, Homeowners Have No Privacy

To further add to the Zillow controversy, I came across a post by Teresa Boardman on the St. Paul Real Estate Blog sharing an email conversation between a homeowner in California and David Gibbons from Zillow that will make many homeowners in America cringe. The home owner requested that their home be removed from Zillow.com and here is Zillow's response:

"We don't delete addresses from Zillow once we've collected the house's public record. Why? Well, you can think of Zillow as a national directory of homes -- we're committed to providing consumers with as complete a directory as possible. Thank you for claiming your house!"

Not only will your home's information become public on Zillow, but now your conversations and the comments of others may become public information as well. And there's nothing you can do about it.

Just think of the possibilities - Zillow is the new free Haines Directory; easier collection of data by mass marketers, local businesses, etc; more of your personal information on the web; comments left behind by angry neighbors, sellers, buyers, etc; and the list goes on...

Thank you Zillow for looking out for your own best interests rather than those of homeowners.

Ignorance Is Bliss - But NOT When It Comes To A Mortgage

In a recent post by Bankrate.com titled "Mortgage Ignorance Rampant", the results of a survey of 1,004 adults conducted by Gfk Roper showed that 34 percent of homeowners had no idea what type of mortgage they had. That statistic is startling, alarming and down right scary. No wonder subprime defaults and foreclosures are on the rise.

According to Ken Wade, CEO of NeighborWorksAmerica, it's "a symptom of the complexity of the mortgage market today". How about just being blunt and honest - it's a symptom of the lack of due diligence on the part of the consumer.

It's quite simple folks - don't buy a house unless you understand what you're getting yourself into especially when it comes to financing.

If you are making what is probably the biggest purchase of your lifetime, don't you owe it to yourself and your family to know what you're getting yourself and them into? Wouldn't it be prudent to stop and ask questions if you are unsure as to what you are agreeing to before you say "yes" to the loan or even while you're at the settlement table prior to signing the loan documents?

A line from a post on The XBroker says it best:

"There’s no other industry that makes you pay for what you don’t know quite like the mortgage business."

This is why if you don't feel comfortable, stop and address your concerns. And if you don't know or understand something, find out or ask until you do.

There are countless resources, most of them free, available to consumers on-line as well as in print form from various credit counseling organziations, government agencies, financial institutions, etc. To help you on your way, here are a few links:

• Understanding Mortgages
• Google Search - "credit counseling"
• Google Search - "mortgage counseling"
• Housing Counseling Agencies (by state)
• HUD Approved Lenders
• Consumer Information from HUD
• Guide To Financial Literacy
• Mortgage Terms Glossary
• Glossary Of General Real Estate Terms

Give yourself as much time as you need to research and don't ever be afraid to stop, think and ask. If you don't, the only one you can later blame is yourself.

What Mainstream Media Says About The Real Estate Market versus Reality

There are many that follow the real estate market through mainstream media and economist's reports and projections. What people don't realize is that most of these real estate market reports are using data that is 3 to 6 months old, if not older. And once they have a rough draft of the article or report, it has to pass through various editors and the placement of the article or report within the paper, magazine or television program has to be determined. The bureaucracy of these mainstream media organizations delays the release and further decreases the relevance ot the data.

What is happening in today's real estate market is best known through a current analysis (within the last week to 1 month) of the stats for the particular county, town and subdivision/community you are in. In Ashburn, Virginia, not a huge town by any means, the difference in the conditions of the real estate market can even be seen between two communities only a mile apart (Ashburn Village and Ashburn Farms). Furthermore, there is a large difference in market conditions for properties below $350K, between $350K and $700K and those $700K or more. The type of property and price point also greatly affect your approach to buying and selling.

Being "hyper-local" is the key to finding out the true real estate market conditions and how they affect you as a buyer, seller or investor.

You can determine market conditions and how they affect you through local real estate blogs or web sites that provide up to the moment data for your particular area or by speaking with a knowledgeable and experienced local real estate agent or local lender. The first is for those who wish to do the research themselves while the latter is for those who wish to have someone else do the research and share their expertise with them.

Here's an example of what can happen to you if you follow only what the mainstream media says:

I had a client who thought that the market was still strong in Loudoun County in the fall of 2005 because the mainstream media said so. They read reports on how it was still a "seller's market" and the the overall market was still "strong". Because of that, they wanted to list their home for more than what the last comparable one in their community sold for a few months before.

It was clearly explained to them that the market had turned as of the summer (2005) and that properties were now selling for less than what the exact same property sold for just one or two months ago. Nevertheless, they chose to ignore the advice and stick with media reports and list it at $975K.

To make a long story short...they ended up chasing the market down for months and months and instead of selling their property for around $925K, the market value in the fall of 2005, they sold it for less than $800K.

They lost over $125K plus the cost of paying the principal, interest, taxes, insurance and HOA dues for almost a year (almost $40K). That's a loss of over $165K.

That's one heck of a hard (and expensive) lesson about mainstream media versus reality to learn.