Maryland and Virginia Real Estate and Homes Blog

MY BUSINESS MODEL IS BUILT ON TRUST.

MIKE IN TUSCON inspires me to write about TRUST. 

Trust is the basis for my business.  In any given year, year after year, I refer about 1,000 home buyers a year to agents in my market area.  I am always, always seeking experienced real estate brokers and agents I can trust to:

• (1) do a good job for the buyers and sellers I refer, and
• (2) pay me the agreed referral fee. 

The number 1 criteria for including an agent or broker in my referral network is TRUST.

WHY REFER?  Referrals have been a recognized and respected component of real estate brokerage for as long as there have been real estate brokers.  We are not and can never be all things to all people.  In fact, the REALTORS^® Code of Ethics specifically advises:

• REALTORS^® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/95) (Emphasis added)

REFERRALS ARE AN INTEGRAL PART OF MANY BROKERAGE MODELS.  Many large real estate companies have entire divisions devoted to referrals:  incoming referrals, outgoing referrals, buyer referrals and seller referrals.  These “RELO” divisions generate an income stream that can be an important percentage of the company’s overall profits.  I was inspired by my very first real estate broker who generated about 50% of her annual income from outgoing referrals.  Since she was a productive listing broker, she communicated with many home owners who were selling through the company’s relocation services.  This smart broker also offered her experience and services to assist her seller clients in finding a good agent to help them find a home in their new location. 

IDENTIFYING REFERRAL CANDIDATES

Field of competence.  I routinely receive contacts through my web sites from consumers seeking brokerage services that are: outside my “field of competence”, which in my case would be commercial, land, multiple-family real estate. 

Outside your market area.  I also routinely receive contacts through my web sites from consumers seeking brokerage services that are outside my market area.  Due to a comprehensive Internet presence, consumers from across the country contact me for information about or help with purchasing or selling real estate.  My #1 resource for locating and referring consumers for real estate services outside my market area is ActiveRain. 

Do you have more business than you can handle?  Since about 1995, my answer to this question has been an unqualified YES.  I advertise real estate brokerage services on the Internet and do, indeed, generate more business than I can handle.  In past years, I have employed real estate agents to share in the benefits of this flow of business.  When I referred buyers to agents in my company, all settlement checks were processed by my office and my broker split was retained as a bookkeeping transfer.  However, for referrals to agents/brokers not in my brokerage, I rely on the referral agents to make sure that my referral fee is paid fully and timely.  This is where trust becomes important. 

WHY DO SOME AGENTS NOT PAY?  Beats me!  Many agents or brokers appear to believe that trust means that they pay if and when they get caught.  However, when I find an agent or broker whom I can trust, I not only refer good business to them, I work hard to generate good business for them.  I have the on-line platform and the ability to focus advertising in specific market areas and fields of expertise.  Since my focus has been buyer brokerage since 1994, I generate more buyer referrals than seller referrals.  So, I rely on the wonderful agents and brokers in my network to help these buyers succeed in finding a home. 

Experience is a great teacher.  Over the years, I’ve had to track sales and confront agents who didn’t process my referral fee when they sold my referrals.  It’s not fun.  The agents become very defensive and, of course, I’ve lost a referral resource.  Sometimes, the agents process payment to me on several sales and then fail to do so.  Sometimes they fail to pay the referral fee from the very first referral.  One of the reasons I prefer to refer to brokers is because I know that they have a policy of paying referrals.  Some brokers are clearly better than others.  One local broker has made me chase and wait for referral fees to a point where I believe it’s a company policy to delay payment of referral fees.  I found out that one broker in Florida doesn’t pay referral fees to out of state brokers.  Fat chance of collecting a fee from him if I referred to one of his agents.  Fee are broker to broker.  While agents can assist the payment, they don’t write the checks. 

MY REFERRAL NETWORK includes:

• Brokers who were once agents in my company,
• Brokers and agents I’ve known over the years as experienced practitioners who communicate timely with telephone and e-mail,
• Agents and brokers I’ve met through years of participation on on-line networks, most recently ActiveRain, and
• Partnerships with brokers outside my market area to generate business for their company. 

Why Bryant Tutas, Broker Bryant, Tutas Towne Realty?

About a year ago, I contacted Bryant Tutas about referring home buyers (or sellers).  My thought was, with prices of homes falling so dramatically, that retirees in the Maryland and Northern Virginia area would respond to the web site and contact me and I, in turn, would refer the consumers to Bryant. 

The idea was for me to create a few web pages for his market area, Central Florida and refer any contacts from the web site to him for a referral fee.  We agreed and a week or so later (we speak Google), the web site was prominent in Google SERP for important keywords.  This web site was a cooperative effort.  Since Florida is outside my area of expertise, content and expertise was provided by the Florida Real Estate Broker.  My contribution was technical and creative.  Yes, I created a Florida Map. 

 Click to enlarge. 

Over the next year, these web pages generated a few referrals, but nothing substantial.  Of course, real estate sales in Florida were not setting any records either.  However, we did generate a wonderful buyer couple recently who purchased a home that closed  just a couple of weeks ago. 

WHY BROKER BRYANT?  All of the above comes down to one word - TRUST.  

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, E-mail.

                              * * * *  WARNING, HARD CORE REAL ESTATE TALK  * * * *

PENDING HOME SALES UP STRONGLY says NAR

NAR Chief Economist Lawrence Yun says that home buyers are responding to more affordability. 

NONSENSE!

I disagree with Mr. Yun.  I believe that the 8.8 percent rise in pending home sales for August simply reflects the rush of home buyers, agents and lenders to beat the clock ticking down on the Charitable Gift Programs which provided down payment assistance to home buyers. 

NUMBERS DON’T LIE.  Many builders attributed up to 25% of their home sales to the down payment assistance programs, Nehemiah and Ameridream.  The deadline was September 30, 2008.  None of the efforts to persuade Congress and HUD to keep their hands off the programs were successful. 

LOAN OFFICERS KNOW.  ActiveRain member Jeff Belonger put his money and time where his mouth is and traveled to Washington DC to petition Congress to preserve these valuable programs.  Jeff was relentless in educating ActiveRain members about the pending demise of these valuable programs.  However, the Down Payment Assistance programs are gone, at least those the relied on a contribution from the seller, and that, in my opinion is the cause of the uptick in pending home sales for August. 

OUR MARKET IS PRIMARILY FIRST TIME HOME BUYERS.  Far too of what in past years would have been “move up buyers” are not in the market because they can’t sell their existing home.  So, the First Time Home Buyers has become more important to the market.  I spend a lot of time looking for help for First Time Home Buyers. 

Prices are down in my area, one of the markets identified by Mr. Yun, but speaking from experience, of the many prospective home buyers with whom I speak daily, the loss of the Down Payment Assistance programs ending September 30, 2008 is the cause of the rise in pending home sales in August 2008.  I would estimate that 90% of the contacts I receive from prospective home buyers in moderate price ranges, under $350,000, their #1 need is down payment.  This is the biggest barrier to home ownership in my market.  The VA borrower has an advantage over FHA or Conventional home buyers these days.  The VA buyer can still buy with no down payment.  However, FHA and conventional borrowers have to meet some cash minimum to buy.  I have identified one program in Maryland that requires $1,000 of the purchase price from the buyer.  If the meet income and credit score requirements, we can help.  In VA, there is a program that limits the buyer’s cash needs to about 15 of the purchase price. 

We’ll see.  Prices are still down so we should see another rise for September, which I’m sure we will.  After all, the Down Payment Assistance programs didn’t die until September 30, 2008.  Let’s see how October, November turns out. 

With mortgage loans harder and harder to qualify for by moderate income families, the new FHA minimum down payment of 3.5% simply added another burden to an already stretched family budget.  Higher credit scores and higher down payments needed??  How can that help?? 

Of course, I hope Mr. Yun is right. 

Courtesy, Lenn Harley, Broker, Homefinders.com.  800-711-7988, E-Mail Homefinders. 

YOU GOTTA LOVE THE WALL STREET BAIL OUT, er um, BANK BAIL OUT.

Ain’t it wonderful to be so big that the government wants to make sure you’re confident?

The government is injecting $250,000,000,000 into the largest, most successful, richest, major BANKS in the country. 

Why?

Because they, the banks, are not lending to each other. 

Why? 

Because they are not confident.

Why? 

Because they don’t trust the balance sheets of their competitors.

Why?

Because too many of them have gone under overnight when off balance sheet hedges, swaps, investments, etc., have caused them to fail.

Why? 

Because they didn’t want the Fed, FDIC, SEC, etc. to know how much they are really worth.

Why? 

Because there was a huge amount of manipulation and illegality and unregulated activity involved.

Why?

Because they made big bucks on unregulated transactions.

So, in order to give these huge entities, major banks, confidence, the Fed will inject between $25,000,000,000 and $2,000,000,000into them.   The bigger thay are, the more of our money they will get. 

Ain’t confidence wonderful?

PENDING HOME SALES UP STRONGLY says NAR

NAR Chief Economist Lawrence Yun says that home buyers are responding to more affordability. 

NONSENSE!

I disagree with Mr. Yun.  I believe that the 8.8 percent rise in pending home sales for August simply reflects the rush of home buyers, agents and lenders to beat the clock ticking down on the Charitable Gift Programs which provided down payment assistance to home buyers. 

NUMBERS DON’T LIE.  Many builders attributed up to 25% of their home sales to the down payment assistance programs, Nehemiah and Ameridream.  The deadline was September 30, 2008.  None of the efforts to persuade Congress and HUD to keep their hands off the programs were successful. 

LOAN OFFICERS KNOW.  ActiveRain member Jeff Belonger put his money and time where his mouth is and travel led to Washington DC to petition Congress to preserve these valuable programs.  Jeff was relentlessin educating ActiveRain members about the pending demise of these valuable programs.  However, the Down Payment Assistance programs are gone, at least those the relied on a contribution from the seller, and that, in my opinion is the cause of the uptick in pending home sales for August. 

Prices are down in my area, one of the markets identified by Mr. Yun, but speaking from experience, of the many prospective home buyers with whom I speak daily, the loss of the Down Payment Assistance programs ending September 30, 2008 is the cause of the rise in pending home sales in August 2008.  I would estimate that 90% of the contacts I receive from prospective home buyers in moderate price ranges, under $350,000, their #1 need is down payment.  This is the biggest barrier to home ownership in my market.  The VA borrower has an advantage over FHA or Conventional home buyers these days.  The VA buyer can still buy with no down payment.  However, FHA and conventional borrowers have to meet some cash minimum to buy.  I have identified one program in Maryland that requires $1,000 of the purchase price from the buyer.  If the meet income and credit score requirements, we can help.  In VA, there is a program that limits the buyer’s cash needs to about 15 of the purchase price. 

We’ll see.  Prices are still down so we should see another rise for September, which I’m sure we will.  After all, the Down Payment Assistance programs didn’t die until September 30, 2008.  Let’s see how October, November turns out. 

With mortgage loans harder and harder to qualify for by moderate income families, the new FHA minimum down payment of 3.5% simply added another burden to an already stretched family budget.  Higher credit scores and higher down payments needed??  How can that help?? 

Of course, I hope Mr. Yun is right. 

Courtesy, Lenn Harley, Broker, Homefinders.com.  800-711-7988, E-Mail Homefinders. 

\

THE HOUSING MARKET IS HAVING THE SALE OF THE CENTURY.  HOME PRICES IN NORTHERN VIRGINIA ARE THE LOWEST SINCE ABOUT 2003.  Buyers waiting for the market to reach the “bottom”, need to go shopping. 

FORECLOSURES ARE SELLING.  Short Sales are moving.  Home owners who must sell because of job transfers, family growth, good deal on new construction or other reasons have dropped prices dramatically and in many cases, will help buyers with closing costs.   

NORTHERN VIRGINIA REAL ESTATE IS ON SALE

FHA Financing is available for financing for all of the average price ranges above. 

VA financing is available for all of the above price ranges with NO DOWN PAYMENT and the seller can pay all of the buyer’s closing (negotiable).   Many homes are affordable for VA buyers reassigned to Northern Virginia through BRAC transfers.