There is not a REALTOR® in the country who has not lost a deal in the current market. But, that’s not much consolation when you lose a sale two days before closing.
After more than five months on the market, and only a total of 10 or so showings, we received a reasonable “cash” offer, subject only to inspections. After a normal inspection process, the list of repairs was presented. Of course, the buyers wanted everything fixed, at a cost of $6,000, while the sellers thought they had already given enough. The sellers said they would pay half. The buyers said they would agree to $5,000.
What happened is classic. The buyers felt they were entitled to everything they asked for, especially given the market we are in. The sellers felt they already had offered the property for way less than its “real” value. No matter how much I talked with my client, and the other REALTOR® with hers, we could not change their feelings.
The deal died for want of $2,000 because the sellers dug in their heels and the buyers became agitated.
So, despite my hard work and best effort, I am not going to receive any money for this transaction. I asked myself what are the life lessons here? What can I “earn” out of this mess?
Here’s what I have come up with:
1) No matter how good I may think I am as a REALTOR®, I can’t control my clients’ decisions. I gave them all of the knowledge and experience I had, and they still would not listen.
2) I know I will sell another house, sometime, some day, even in this market, because I have worked all my life to do the best job for my clients. They know it, and that will be the foundation for my future success.
3) If I am going to regain energy to continue to work in this market, I have to stay positive. I am going to try to see the glass as half full this time, rather than the reverse.
4) Most importantly, even though I am pretty frustrated about this market – or, perhaps, this lack of a market – I love my work, and I still have a glass to hold that water.
For me, that’s the payoff on this deal. Ok, so it’s not as lucrative as going to the bank, but it is rewarding in its own way. – Steve Brown, 2009 NAR VP & Liaison to Committees
On Tuesday, January 20th, I had a seat for one of those great moments in our collective history: the inauguration of Barack Obama as president of the United States. It was electric, empowering, and exhilarating. It was a moment of contrasts and celebration.
The day before the inauguration we went to the Smithsonian Museum to see the new exhibit on Abraham Lincoln. In school we learned about his life through facts and speeches, but here we met the person, who was committed to bringing freedom to every American. Later, we encountered one of the many setbacks on the road to freedom, as we walked past Woolworth’s “whites only” coffee counter, where four African-American students protested for six months before being served. At this cheap, common counter, history was written.
This was all a preface to January 20th and the fulfillment of the dream of equality for all Americans. Tuesday was a watershed event in American history, a day when we all were Americans, brothers, sisters, mother, and fathers. Nothing will dim that dream, not even this current economic recession.
Realtors®, like our nation, have grown, and are helping to bring people of all backgrounds and social standings into our industry and our association. We, along with five premier real estate associations, sponsor the HOPE Awards, which recognizes efforts to increase minority homeownership. We also are reaching out to every community through housing opportunity programs to help bring the benefits of homeownership to more Americans.
Homeownership is truly one of those “old values” that President Obama spoke about that will help us spring anew.
On Tuesday evening, the Realtors® who had represented the organization gathered for dinner. Charles McMillan, our president, asked each person to share his or her experience of the day. It was personal and moving. In a city of talking heads, we along with our new president had become speaking hearts. It was a great day to be an American and a Realtor®. — Ron Phipps, 2009 NAR First Vice President
Last Tuesday, I joined my fellow NAR officers for the inaugural festivities in Washington, D.C. Two things struck me about the event:
One — The diversity of those in attendance, especially the young people.
Two — How well everyone got along. Even when we were standing in long lines out in the cold, people were so helpful and respectful of one another.
The messages that our 44th President, Barack Obama, conveyed in his remarks were very relevant to REALTORS®: We are in this together. We have challenges. It’s not business as usual. We have to work together better than we have in the past.
The seriousness and focus that President Obama demonstrated reminded me very much of the things we talked about in our association last year. It also reminded me that we need to continue our push to get young members to engage in the association. They are the future.
Last year, I asked Mark Foreman, 2006 President of the Connecticut Association of REALTORS®, to serve as VP & Liaison to Committees. Although Mark did not have previous experience at the national leadership level, he is very smart (a graduate of Yale University) and turned out to be one of the best leaders in the association. His success is a lesson on the value in giving a smart, young member the chance to serve in a new position.
I was truly amazed by everything I experienced on Inauguration Day, and I returned to California inspired to work hard and do more for our members and our nation. I hope each and every member will join me in following President Obama’s call for us to serve — by serving our communities and our association. We are in this “All Together.” — Dick Gaylord, 2009 Immediate Past President
In our personal lives, we all have our own political beliefs. However, when it comes to promoting housing and our industry, as REALTORS, we must check our political affiliation at the association door. Real estate is not a partisan issue. It affects all of us. Therefore, we need to work with lawmakers from both parties.
So no matter how you voted in the last election, now is the time for us all to put partisanship aside and put housing at the top of the new administration’s priorities.
Our NAR President, Charles McMillan, has spent most of his days since the new Congress was seated on January 5th, promoting our housing stimulus plan in Congress and with the new Administration. The great part is that they are listening and incorporating most, if not all, of our ideas. This was particularly true with the release of the 2nd half of the TARP funds.
Prior to leaving office, the Bush Administration worked closely with the Obama Administration to make sure that those additional funds will be focused on what TARP was originally intended to do in the first place — ending the credit crisis, stemming foreclosures and stabilizing the housing market.
We are excited about the renewed efforts to unclog the financial system and get credit flowing once again for homebuyers.
Our economy’s recovery depends on a revival of the housing market. We can’t have one without the other. It is a new day for America, under a new administration. Let’s all work together to make that day a bright one for housing. – Vicki Cox Golder, 2009 NAR President-Elect.
In Congress’ expressed guidelines for the second half of the TARP Funds, which the Administration requested, they specifically included commercial concerns with this provision:
“Commercial Real Estate Loans and MBS – Clarifies Treasury’s authority to provide support for commercial real estate loans and mortgage-backed securities”.
NAR has pressed hard for legislation that speaks specifically to this issue.
Through a day-long work group held in Washington, D.C., a policy to help the commercial markets was put in place. We should all thank the 25 Members, including our Institutes, Societies, and Councils that spent a day and a night working on a plan that has been used by Rep. Frank in this effort.
A specific policy that outlines our support for direct Fed/Treasury action in the form of expansion of the newly announced Term Asset Backed Securities Loan Facilities (TALF) Program just earned Leadership Team approval today. It includes the purchase of commercial mortgage-backed securities and conventional commercial real estate loans….to the extent that Congressman Frank’s bill would clarify the authority of Treasury to provide support for commercial real estate, this would prompt Treasury to act quickly to act on this mandate, either directly through the TARP program, or by expanding the authority of the TALF program to include commercial mortgage backed securities (CMBS). It appears that Mr. Frank’s bill is generic enough to leave it up to Treasury to figure which vehicle to use.
Time is of the essence in terms of providing stability and liquidity to the commercial real estate credit markets. It is imperative that the Treasury act quickly to exercise its authority to expand the TALF to include commercial mortgages.
Many members and most of the public don’t realize that the entire commercial real estate industry is being impacted by the credit market dysfunction. If something isn’t done soon many commercial loans that are coming due (and are in need of re-financing) will default with staggering numbers, dwarfing the residential loan foreclosure numbers. Not only is there a huge problem with the debt coming due in the next two years and the inability to refinance existing loans (no CMBS market), but there is also grave concern that performing loans could be considered in default because of problems in determining fair market value for commercial properties that, to date, are performing properties with performing loans.
This is a huge initiative for our commercial members and clientele. NAR understands how important the commercial sector is to our entire economy. This is a great example of our Association’s efforts. – Jim Helsel, 2009 NAR Treasurer
Below is a response I shared with Jim Duncan, who recently raised some questions about NAR’s participation in the Tournament of Roses Parade. I wanted to share with those members who read the Voices blog and may have similar questions…
Dear Jim,
As the NAR Treasurer, I am asked from time to time about the costs of a program, service, or project and the decision support information that goes with it. Recently, a few blog posts (yours being one of them) asked about the idea (and the efficacy) for the Rose Parade float so I thought I’d respond to you directly. Attached is a summary of the decision analysis as well as a cost breakdown, which again, is normally discussed just with internal governing bodies at NAR (Leadership Team, Executive Committee, Finance Committee, Board of Directors). I waited to get the Neilsen figures to respond to your inquiry.
I can tell you the feedback we’ve gotten so far is the vast majority of the membership is extremely proud of this event (albeit a one-time thing). I’ve been a member of NAR for 25+ years and I understand that some may not agree with this allocation of resources. All I can say is we can agree to disagree, but I very much respect your voice and opinion. This is going to be a tough year for all of us (I’m a commercial guy in Harrisburg, PA and we’re really hurtin’) and we’re trying to listen to all those voices — be they yea or nea.
Decision and Cost Analysis
Download file
It’s not adding up for me. NAR President Charles McMillan met with Fannie Mae officials last Tuesday to discuss Fannie’s recent increase in mortgage fees.
Tom Lund, Fannie Mae executive vice president for single family housing, said fees increased for two main reasons: 1. Freddie adopted higher fees last fall so Fannie raised fees to stay competitive. 2. There has been recent undercharging despite weaker loan-to-value indexes and credit scores. Higher fees help account for that as well as for greater risk for some loan categories.
Tom said Fannie continues to put $40-50 billion every month into the mortgage market.
So then why do I know so many would-be borrowers with excellent credit who can’t get a loan? Banks, where’s the money going?
I fear it’s just sitting in the system caught in this new culture of overly strict underwriting standards and bank employees too overwhelmed with the amount of work sitting on their desks to approve a loan for a good borrower. It doesn’t do any good if Fannie Mae creates liquidity and it doesn’t get to good borrowers.
Fannie pledged to Charles that officials would update NAR before making a major change that would affect borrowers.
I’m happy about that, but I question raising fees in this climate and I will continue to inquire of lenders, “Where’s the money?”
The House will consider a bill on Thursday introduced by Congressman Barney Frank that would amend the TARP legislation created in October. NAR has been pushing for this for months, and we’re thrilled Congress has listened. TARP desperately needs a face-lift so it can finally do what it was intended to do: help out homeowners in foreclosure and create incentives to bring buyers back into the market.
I hope this plan can move forward speedily, that money can flow more easily in the mortgage market, and I can stop wondering of banks, “Where’s the money?” Gary Thomas, VP & Liaison to Government Affairs
Back in college, the first thing I learned in Econ 101 is that economies are built on confidence. Like many, I am hopeful that those who lead us on the federal level will really come through in the days ahead. They can both stimulate our economy as well as help us all feel better about the economy. Unfortunately, what I have come to realize in the past year is that those who govern us do not always understand the industries they seek to help, the markets they hope to improve, or the businesses they are trying to assist. Our representatives, from the president to the Congress, need to hear from us if they are going to govern effectively and improve our economy and our country.
Yet, in the midst of our biggest economic challenge in the past 80 years less than 10% of our Realtor® members in 2008 have contacted their representatives to inform, discuss, and promote legislation that would stimulate and change the market for the benefit of everyone.
Is this lack of participation the fault of NAR?
Perhaps. Just as NAR emphasizes adherence to the Code of Ethics, maybe we should be equally emphasizing continual involvement in our political process. Clearly, our high school civics classes did not instill the importance of participating in the governmental process, or more of us would be…
None of us can walk away from our responsibility as citizens. I have learned over the past year that even though I am one voice, I can make a difference. I have seen the “light bulb” go on when my Congressman finally got why a $7,500 tax credit—which really isn’t a credit but rather a zero-interest loan—is not a sufficient stimulus for someone to buy a home in today’s market. I can only imagine the light bulbs that might go on if all one million Realtors® communicated with Washington!
Real estate influences nearly 20 percent of our GNP. No industry is better prepared to present to government officials effective programs that will stimulate this sector of our national economy than us.
Come on, Realtors®! Let us help lead the way out of this economic mess and into a future that gives every American hope. Commit to getting involved. We’ll be sending out a new Call For Action next week. Either check the Realtor® Action Center or be ready to respond when it arrives in your email inbox.
It is, after all, a part of your business, not to mention part of being a good citizen. – Steve Brown, 2009 VP & Liaison to Committees
I just wanted to take a moment to thank all of the Realtors® who responded to our Call for Action related to our Four-Point Plan to Stimulate the Housing Market. When all was said and done, we sent more than 330,000 letters to Congress. That’s our second-best response rate ever!!
A New Year means a new Congress, a new Administration, and new priorities. It’s important that we push even harder in the weeks ahead – on ALL fronts.
As I noted in my latest President’s Podcast, I am in Washington, D.C., this week to meet with the new members of Congress and regulators to continue to advocate for a housing-focused stimulus bill. I will keep you posted on our progress here on the blog and in future podcasts.
In the meantime, I invite all Realtors® to visit the “new” Realtor® Action Center for important updates from NAR and get ready to send more letters to Congress when they introduce a stimulus bill. With your help, we can show Washington that all NAR members are truly “United Toward Tomorrow.”
Again, thanks to all, and keep up the great work! — Charles McMillan, 2009 NAR President
Five PM Eastern Standard Time, January 1, 2009: Here in Rhode Island we are watching the tail of another major snow storm. We usually get a few inches.
There must be six or seven inches on the ground. The snow is really welcome tonight as 2008 has been a very challenging year. It hides the coldness of winter with an indiscriminate, universal blanket. It is a fitting end for a trying year. It is time to say goodbye to 2008.
So what are we looking forward to in 2009? I predict there will be the good, the not so bad, and the ugly.
For the good, we have a new leadership team taking over in Washington led by President Barack Obama. We have a new commitment by the government to address the national economy and specifically housing. As an association, we are continuing to make major investments through our Second Century Initiatives. Among them is the Realtors® Federal Credit Union which has been chartered and which will be open and serving members by mid-2009.
And also due to NAR’s strong lobbying efforts, mortgage interest rates, “for credit worthy customers,” are at 50-year historical lows. Because of this, home sales should rebound to a respectable 5.2 million in 2009, which is above the 20-year historical average.
For the not so bad, we made it through 2008. In addition, several markets continue to show strength in the number of sales.
Prices are down, which increases affordability. The number of short sales and foreclosures has drawn bargain shoppers and investors into the market. Moreover, they are making purchases. This should continue in 2009.
Now, for the ugly, we have increasing unemployment, more foreclosures, and greater difficulty obtaining mortgage financing. It is important to understand that all of these problems are related. Most buyers do not have 20 percent or 720+ credit scores. Thus many credit-worthy people cannot obtain financing, which means, they do not buy houses. If they could, there would be fewer foreclosures. Finally, as the housing industry contracts, more people become unemployed.
As an association, your leadership is committed to doing everything we can to stabilize housing prices, free up mortgage money, and help minimize foreclosures. This will help unemployment.
John F Kennedy said, “Ask not what your country can do for you; ask what you can do for your country.” This question applies to today, maybe even more urgently. We need to do our part for our country. As Realtors® our part is housing. We need to get the financial system working and unclogged so buyers can get back into the market. We all have a role to play, so your first step can be making the New Year’s Resolution: I will respond to each and every Realtor® Call-For-Action.
United together, we can make this country a better place. Celebrate 2009. — Ron Phipps, NAR 2009 First Vice President
