The example below is taken from the Las Vegas MLS Data. Both properties are taken from the same subdivision, same street, same floorplan, same sq ft, approximately 7 houses down the street from one another. Both properties are located in NW Las Vegas, SFR Detached. Both properties were originally listed within 45 days of each other. Each property is offering a co broke of 3% to the buyer broker bringing the buyer.

Liberty Realty Listing – Expired- Did not sell:

Data: Property is owner occupied, buyer agent must make appointment with seller to show, MLS listing notes warn dog present on property, property does not have an electronic lockbox, Listing agent has requested a specific title company be used in the private remarks, Listing contains no virtual tour and a few dark images.

Congress Realty Listing – Sold through our Flat Fee MLS Listing:

Data: Property is vacant, on electronic lockbox, buyer agent can show anytime at there leisure, no title company or other special request made by seller, 8 photos and a Virtual Tour appear on the listing.

So why did the Congress Realty property sell through the Flat Fee MLS Listing program and not the property through the traditional broker? Simple, our listing was easy to show, on lockbox, no requirements for the buyer’s agent, and the seller was able to pass the savings along to the buyer.

Liberty Realty – Asking Price $459,000 (expired 12/31/2008)

Congress Realty – Sold Price – $450,000 (sold 9/1/2007)

*both properties were originally listed within 45 days of each other*

That is a 9k difference, If we assume the other listing was to receive an offer at full price, (which it did not w/ over 6 months of market time) that is a 2% difference. By passing the 2% savings to the buyer, our seller was able to successfully sell the property and walk away with the likely same net as the “full service seller”. (Assuming the full service seller would have been able to sell the property at full price, which is extremely doubtful) Both buyer and seller benefited from the cost savings of the Flat Fee based listing in comparison to the traditional listing that did not sell.

In 2006-2007 we saw many conventional loan programs disappear, seemingly overnight.  The media talked about the credit crunch and many people did not have any idea if they could still qualify for a loan and if so, how much.  Savvy loan officers have taken the time to re-examine what is available to their borrowers, and have been looking at programs that were in many cases forgotten for several years.  CalHFA is one of those programs.

CalHFA loans are designed for California buyers that meet these criteria:

• You have not owned & occupied your home in the last 3 years.  (exception is for certain targeted areas)
• Household income is within an acceptable limit.  For instance, moderate income for Alameda County 1-2 persons is $95,532, while in Fresno County it is $61,750.
• Purchase home must be within an acceptable price limit.  Examples: Alameda non-targeted $585,699 (higher for targeted areas), Fresno $343,125.
• Must live in home until home is sold or loan is paid off.
• Meet lender loan requirements.
• Citizen of US or resident alien.

There are some other issues like limits of 5 acres, and more explanation of the terms at the CalHFA website.  You can also visit the website and find a list of approved CalHFA lenders.

For those who qualify, the CalHFA loan allows for up to 100 percent financing and 30 to 40 year terms at fixed, below market rates.  Downpayment and closing cost assistance is also available.

If your California property falls into the price range of the program, you might want to remind potential buyers to research the CalHFA program.

While the National Association of REALTORS® is strongly opposed to banks entering real estate, it has voted to provide $10MM in startup capital for an Internet-based NAR credit union.  One of its focus areas will be providing loans for its members which typically have commission-based incomes that some lenders shy away from.  While I personally don’t really care about banks entering real estate and don’t necessarily think that in the long term there will be a shortgage of lenders making loans to Realtors, I think the CU idea is probably a pretty smart move in leveraging NAR’s enormous membership base.  If relatively small businesses or organizations such as Bashas’ Grocery Stores (Bashas’ Associates FCU) or Alhambra School District (Alhambra CU) could get enough members to support a credit union, then I think the potential size of an NAR CU is staggering.  If even 10-20% of its 1M+ members open an account or take out a loan, it could become a behemoth extremely quickly and probably become a Top 50 credit union nationwide.  You may be familiar with some of the largest credit unions in America: San Diego County CU, Alaska USA FCU, Desert Schools FCU (Arizona), BECU (Washington), to name a few of the Top 50.  We will see what happens.  Internet-based banks have had mixed-success thus far, some like Bank of Internet are moderately successful while NetBank recently was shut down with ING assuming its accounts.  I have a feeling that NAR CU could fare better.

The January/February 2008 issue of The Residential Specialist, a magazine for Certified Residential Specialist® / REALTORS®, posed a question to a few of its members and each responded with an interesting answer.  The question was, “Given all the negative news surrounding the real estate and mortgage industries, what can I say to reassure my clients and prospects that it is a terrific time to buy a home?”  While we personally can’t tell the future and don’t like to speculate to clients on the direction of home prices, these responses are thoughtful and might be considered along with other data and opinions.

Nick Lika, CRS with RE/MAX Southeast stated:
FIRST of all, I tell my clients, mortgage rates are extremely low, so it’s almost risky to wait any longer.  Every half of a percentage point could cost you $50 to $80 a month extra for the next 30 years….

Frank Ledermann, CRS with Houlihan Lawrence Real Estate stated:
I ADVISE my qualified clients and prospects that these times present an extraordinary opportunity to be a buyer.  It follows the old Wall Street adage of “buying on the bad news.”….

John Stark, CRS with Iowa Realty stated:
FACTS.  OUR clients need local-level facts to counter the national news that simply does not apply to each and every market….

Based upon the volume of properties we have sold through our MLS program, I can assure you the program works. The # of properties Congress Realty has sold through our Flat Fee MLS program is astounding to many people. So why does it work? Specifically, why does it work in comparison to the competition, including other full service brokerages?

The answer is actually quite simple. Our clients who save money on the listing side through the Flat Fee based program have the ability to pass this savings onto the buyer, essentially lowering the cost of the home. In a buyer’s market, this can make all of the difference in the world. When the listing commission is eliminated, both buyer and seller can benefit.

Doesn’t paying a full service listing agent ensure better exposure for my property? No, it doesn’t. Certainly it is a possibility that the full service agent may run newspaper ads, etc… but at the end of the day, the MLS accounts for nearly 90% of all properties sold through exclusive listing agreements. (Regardless of service level) What does this mean to you the seller? It means they are selling properties in the exact same fashion we are, straight through the MLS system.

How does your Flat Fee MLS program differ from the competition?

We are the leader for a reason, plain and simple. We list and sell more properties than any other Flat Fee company in the country. There are a number of reasons, but to name a few:

• Buyer Agents know they are going to be paid the MLS stated commission when they bring a buyer to one of our listings.
• We offer Electronic Lockboxes for easy showing access.
• We live and know our markets that we cover. We don’t try and cover areas that we know little to nothing about.
• We are accessible. If another agent needs to speak to us, we speak to them. We do not blow them off. Our reputation in the industry is quite good amongst other agents, including all Realtor® Associations in which we belong to.
• Our systems work. IE our phone forwarding system, our Realtor.com enhancement packages, essentially, we offer the same services you would find from any local Full Service Agent, just at a fraction of the cost through our a la carte menu.

In the upcoming days we will begin to post multiple success stories and examples of properties that sold through our program, including properties which have been sold during the recent “buyer’s market”.

One positive byproduct of a decrease in home prices is more affordable housing.  Affordable housing is one of those buzzwords you hear a lot about from politicians and government officials.  Sometimes the plans work.  Unfortunately, many times the plans they implement cost a lot of money and may even exacerbate the problem or create new problems (such as depleting money that could have gone toward education).  Other times, the market corrects itself as prices decrease then later increase a more proportionate amount as incomes increase in the area.

In December 2005, for instance, Gov. Napolitano convened a task force that drafted a report titled, Arizona Incentives for Affordable Housing Task Force Final Report.  Several strategies were laid out such as:

• Standardizing methods involved with Low Income Housing Tax Credit units (to remove uncertainty for the developer)
• Expediting permitting for affordable housing
• Allowing proceeds of State Land Trust land to be invested in loans for affordable housing
• Tax abatements, waivers or reductions of property taxes for affordable units
• Using interest earned on earnest deposits or a portion of state transaction privledge tax monies.

The plan also asked for the cooperation of about 12 different government agencies, an extremely complicated logistical task.  In the end, the problem has basically corrected itself.  You can buy a wonderful home in Arizona at a reasonable price and there is an excellent rental stock available.  Home buyers purchasing a 5 bedroom newer home in the Town of Maricopa, AZ have purchase options on the MLS priced as low as $150,000.  With 30 year fixed rates at around 5.5%, affordable housing seems to be back, at least presently.

If you have ever purchased a new home from a builder, you have gone through the option period of selecting your upgrades with a “design consultant”. The first thing you need to understand is that this individual’s job is to sell you on certain features/upgrades. They are not there to help your return on investment in the short term or long run. They are there for a reason, employed by the builder to help the builder’s bottom line.

As a buyer, be realistic in your purchase. This is the single best piece of advice for any new home buyer. A few examples: (For ease of discussion purposes – The example only considers entry level tract homes)

• Granite slab kitchen counters are not needed in a brand new $120,000 home in Queen Creek, Arizona. You will rarely if ever return dollar for dollar on this investment at this price point.
• Lot upgrades – All lots are not equal in value. However, lot premiums in the starter home price points rarely yield large returns for buyers. Watch our for large corner lot upgrades.
• Flooring – Tile over Vinyl is a matter of preference and I can understand the desire to upgrade to tile, regardless of the property. However, watch out for ultra carpet/pad upgrades on entry level properties.

Don’t put yourself at a disadvantage by not opting for certain necessities. For example, while every room may not need a ceiling fan, phone jack, etc.. pre-wiring the rooms for this is not a bad idea. Panel doors throughout the home can be beneficial, including a slightly upgraded front door. Simply use common sense and think things through before taking advice from the “design consultant”. Remember, there are certain things you can do yourself through local contractors for cheaper than the builder will offer. (auto garage opener installation and blinds, to name a few)

Person-to-person lending sites like Prosper.com and Zopa.com allow borrowers to request funds from others via the Internet, typically for things like starting a business or refinancing high interest rate credit card debt.  Essentially they cut out the middlemen such as a bank, credit card company, or payday lender that would normally make these types of loans.  In many cases, the creditworthiness of the borrower is so low that banks wouldn’t offer the loan anyway.  While these sites have had tremendous buzz and free publicity via main stream news outlets like Money Magazine, NPR, Smart Money, USA Today, the Wall Street Journal and many others, the truth is that the sites are struggling with high default rates with many loans.

After making a few loans, I realized that historical rating agency default rates for credit cards ended up being way lower than what was actually happening on Prosper.  Even high FICO score, “A” and “AA” borrowers were defaulting far more frequently than was expected.  I received a message from a previous borrower who actually paid on time requesting additional funds for another loan.  I politely told her, “I’m done with Prosper, no thank you.”  She responded back about a day later with the following, “ Wow, it is surprising how many comments I have gotten with the same message. A lot of people are not happy with Prosper. I used this way of borrowing money because it worked for me the first time. I have review some of the borrowers loan profile and they seem like a scam. Its a shame cause then people with real needs get screwed.  thanks for your message and good luck.”

The main problem with Prosper is that the loans are not collateralized.  The borrower has no skin in the game and will not lose their property on automobile if they don’t make a payment.  If Prosper required some sort of collateral, I think you could have an eBay-like success story.  Costs and profit margins that lenders charge could be reduced or eliminated.  Lenders could lend more confidently knowing that they have a Plan B (foreclosure) if the borrower doesn’t pay.  As it stands, Prosper seems to be nothing more than a lender of last resort rather than a viable financing and investment alternative.

A press release from Holliday Fenoglio Fowler, LP (HFF), a real estate finance company, announced a $92.75 MM debt and equity placement for a new Avondale, Arizona 715-unit multi-family development.  About $74 MM of that was debt from a life insurance company and an institutional equity partner put up about $17 MM.  It appears the developer only had to put up about $1 to 2 MM.  The development is huge, located on 33.7 acres at the corner of Indian School & El Mirage Road.  There are a number of amenities like 2 clubhouses, 4 swimming pools, a theater, sauna, and fitness center.

We have been asked by many real estate investors what development opportunities are out there in various markets.  As in any business, you need to study the trends and see where the competition is the most fierce and where there might be opportunities.  In the multi-family space, we have seen that many of the major developers (e.g. Trammell Crow Residential, Gables, etc.) will not touch a project unless the size is extremely large.  They are not going to build a 100 unit garden apartment complex because their cost structure and their lender’s invested capital requirements are so large.  As this continues, there may be opportunities for smaller infill projects.  In Scottsdale, for instance, some feel that there is pent-up demand for urban style living, lofts and so forth.  However, the new, large projects coming on line such as X (Ten) Wine Lofts and Toll Brothers The Mark are incredibly expensive; their cost of land for the large, trophy parcels they are building on is enormous.  With the right land cost on a smaller parcel (no small feat) and the right skill set, there may be an opportunity for a smaller developer to build a handful of units.

The Alaska MLS has alerted its members to a scam being pulled in the area.  Please read the notice below:

Dear Valued AK MLS Customer,

Please be aware that there seems to be a scam on certain websites that you may be advertising properties on. We’re aware of a Dr. Anthony Townsend (assumed fake name) that is advertising homes for rent and using the addresses of actual homes for sale by our customers. He’s stating that he recently moved to Africa and wants to rent his home by the renter sending him a check and then he’ll send the keys! Sounds extremely fishy but it seems that people are falling victim to his story.

The email address being used is: anthonytownsend61@yahoo.com and the telephone number is: +234-806-054-7748.

There’s not much we can do with this other than to warn you of what’s going on.

Best Regards,

Bob Manwaring

Alaska Multiple Listing Service, Inc.