Lessons Learned

Posted by: Annalisa Burgos, 1/11/08

• If you're a buyer, don't wait. This is a great time to find bargains and build wealth for the long term.
• ARMs (adjustable rate mortgages) are not meant to get you a bigger, more expensive house. That's why homeowners who got in way over their heads are going to suffer this year.
• The bad real estate agents will be weeded out. The days of the part-time agent looking to make a quick buck are gone. Only the ones truly dedicated to customer service will survive the declining market.
• Borrowers, be honest on your loan applications and live within your means. You may find the house of your dreams, but if you're not financially ready to take it on, you shouldn't get the loan. If you do, you may regret it later.

These are just some of the real estate lessons to take into 2008.

Dishing out the blame for the subprime fiasco

Posted by: Leanne Potts, 1/10/08

Today the president of E-Loan, Mark Lefanowicz, said something I didn't think I'd ever hear a mortgage industry person say: "There were bad loan officers out there. We cannot dispute that."

He blamed the fact that most loan officers get paid based on how much money they lend. The bigger the loan, the bigger the loan officer's cut. Lefanowicz said we need to change the system.

No kidding.

The F Word

Posted by: Annalisa Burgos, 1/10/08

There's an F word in real estate that no one wants to hear -- foreclosure.

Two million Americans will lose their homes this year, housing experts say. And that creates a huge need for real estate agents able and willing to do short sales. Basically, a short sale is when your lender agrees to let your home be sold for less than the amount you owe on the mortgage. It's better than a foreclosure, which stays on your credit report for seven to 10 years.

The short sale business is by no means glamorous. Real estate agents typically work for less than the standard 6 percent commission and oftentimes have to deal with very difficult bank and lending officers.

Agents in this field have to be master negotiators. That's what experts like Rick Sharga, vice president of marketing for foreclosure listing site RealtyTrac, said in a packed session about working with foreclosures.

They also recommended these resources for agents looking to break into this specialty: Foreclosures for Dummies, National Association of Real Estate Brokers, REOMAC and industry magazines that cover the mortgage default servicing industry.

Lenders slam the mortgage door

Posted by: Leanne Potts, 1/10/08

The subprime credit crisis has made it tougher to get a mortgage. You knew that. The president of E-Loan says the lending guidelines are as tight as they've been in 25 years. "We're seeing people with (credit scores) of 618 get turned down," said Mark Lefanowicz today in a seminar on home financing. A year ago, people with credit scores as low as 515 were getting mortgages, he said.

To give you some context, credit scores range from 300 to 900. The average credit score nationwide is about 675. So people with slightly dinged credit aren't getting loans. It's a little like getting thrown out of school for making a C. You need to be at least a B-grade bill payer and debt manager to get a mortgage these days, especially if you're trying to buy a house on the coasts where housing prices are still in a freefall.

So how bad is the housing market going to be in 2008?

Posted by: Leanne Potts, 1/9/08, 5:15 p.m.

As bad as you can possibly imagine. So said 3 of the 4 panelists in a standing-room only session this afternoon titled "The Housing Debate: Bull vs. Bear."

The bulls didn't show up for this debate. No one said "Go! Buy!" Panelist Dottie Herman, president and CEO of New York real estate firm Prudential Douglas Elliman, tried to be reassuring about the collapsing housing market. She reminded the crowd we survived 19 percent mortgage rates in the 1980s and we'll survive the latest mess.

The bleakest forecast came from noted real estate pessimist and NYU professor of economics Nouriel Roubini. He said we're at the brink of the worst housing recession in U.S. history. "In 2006 I predicted the worst housing recession in 50 years. I was too optimistic."

Roubini said the darkest days are yet to come, that housing prices will remain in a free fall for two more years. Roubini predicted 10 million homeowners will find themselves upside down on their mortgages before it's over. The entire economy will feel the repercussions. "It's going to be traumatic. A lot of people are going to get hurt and a lot of people are going to lose jobs, including people in this room," he said. The crowd gasped.

Barry Ritholtz, CEO of NY-based research firm FusionIQ and a noted blogger, said the National Association of Realtors is prolonging the descent by painting an unrealistically rosy picture of the situation. He says it's time the Realtors got real. "They need to say, ?Hey listen, we're heading into the crapper. You wanna sell your house, you better start cutting prices.'"

Whew. Fasten your seatbelts, it's going to be a bumpy year.

Who are real estate agents blogging for?

Posted by: Annalisa Burgos, 1/9/08

Apparently, themselves.

Which doesn't help the average homeowner like me. And many of the people I've met here at Inman agree. Why aren't more bloggers writing for the consumer? (Frankly, I never understood why blogs are so popular. Even as I write this entry, I wonder who's really going to read it or care what I have to say.)

Especially in a market like this, where all I hear is "recession" and "free-falling home values," I'm looking for useful information and expert advice, not musings about the market or inside jokes about the industry. Don't try to sell me something. Tell me how to navigate this "crisis". Take the fear out of it. That's what's going to motivate me to read your blog.

The Internet has changed the playing field. If I don't find the information I need on your site, I'll look for it somewhere else. If you have good stuff, I'll come back. Heck, I may even subscribe and tell my friends.

Learn to love the web, real estate agents

Posted by: Leanne Potts, 1/9/08

So you're a real estate agent wondering how to survive the onslaught of the web. How are you going to keep the FSBOs from killing you?

The key to flourishing in the wired real estate world: Collaborate with your clients. So says Channing Dawson, one of the idea men who helped launch HGTV more than a decade ago. (In the interest of transparency, I'll point out Channing is one of ours. We're the child of HGTV.) "You can no longer guard information," he said during a seminar today at Inman. "You can't say `I've got all the listings.' Consumers have them, too."

Collaborating means understanding the housing market is a conversation, and that the latest generation of home buyers and sellers are looking for a dialogue, not a pat answer from an expert, Dawson said. Join the real estate conversation (and build a broad referral network) by using Web 2.0 tools like blogs, podcasts, even My Space, Dawson said.

Hmm. Aren't most My Space users, like, 17?

People old enough to qualify for a mortgage are getting on there in increasing numbers, too, says Dawson. Get networking, people.

He also says it's time for you to buy an HD camera and start putting videos on your site. His advice: Keep 'em at under 2 minutes.

That's a mighty fast home tour.

Welcome to Inman!

Posted by: Annalisa Burgos, 1/7/08

FrontDoor.com is making its first big public appearance at Inman's Real Estate Connect conference. There are rumors of a Times Square bulletin board -- how cool would that be! Team FrontDoor will be donning cool red, orange and yellow polar fleece vests (though it seems we don't need them since it's freakishly warm here), ready to mix and mingle with our industry peers and secretly (or not so secretly) scout our competition. We're breaking new ground as a media company in this space. While everyone is touting cool technology and tools (which FrontDoor has as well), I along with fellow content editor Leanne Potts will be touting original content, because no other listing site does it well. It'll be interesting to see how editorial people like me fit in this world of Realtors and marketing people. So far the response has been good. So stay tuned. Leanne and I will be blogging from the floor.