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The Norris Group Real Estate News Roundup 6/10/10

Thursday, June 10th, 2010

Today’s News Synopsis:

According to the NAHB, both demand and production of apartments increased from Q1 2009. Freddie Mac reports rates on 30-year fixed mortgages fell to 4.72 percent this week. RealtyTrac claims U.S. foreclosure activity decreased by 3 percent in May. Household net worth rose by 2.1 percent in the first quarter.

In The News:

NAHB - “Multifamily Builders Less Pessimistic” (6-10-10)

“The multifamily market showed signs of moving back toward stability in the first quarter of 2010, according to the latest NAHB’s Multifamily Market Index (MMI).  The current production index for market-rent apartments jumped to 30.6, 14 points higher than a year earlier, while future demand expectations for Class A apartments rose to 49.6 from 34 and for Class B to 53.1 from 43.9.  For lower-rent units and for-sale condominiums, the current production indexes rose to 38.2 and 25.0, respectively, more than 10 points higher than in the first quarter of 2009.”

Freddie Mac – “Freddie Mac: Mortgage rates hit low for year” (6-10-10)

“Rates on 30-year fixed mortgages fell this week to the lowest level of the year and were barely shy of the all-time low. Mortgage finance company Freddie Mac says the average rate sank to 4.72 percent, down from 4.79 percent last week. It was just above the record of 4.71 set last December.”

Wall Street Journal – “KB Home Buys in Inland Empire” (6-10-10)

“Builder KB Home snapped up 664 partially finished lots in California’s Inland Empire, a sign that one of the nation’s biggest boom-to-bust markets is coming back to life.”

Los Angeles Times – “Foreclosure filings decline 3% in May” (6-10-10)

“Foreclosure activity in the U.S. continued to level off in May with the number of homes caught up in some stage of the process falling 3% from April, a real estate firm said. A total of 322,920 properties received some kind of foreclosure filing last month — either default notices, scheduled auctions or bank repossessions — a 3% drop from April and an increase of less than 1% from May 2009, according to RealtyTrac in Irvine.”

San Francisco Chronicle – “Americans’ wealth rises for 4th straight quarter” (6-10-10)

“The Federal Reserve reported Thursday that household net worth rose by 2.1 percent in the first three months of this year to $54.6 trillion. It marked the fourth consecutive quarter that Americans’ wealth grew.”

Housing Wire – “RealtyTrac: Most Foreclosure Properties Not Underwater” (6-10-10)

“Of all of the foreclosures in the RealtyTrac online database, less than 50% have mortgages worth less than what is owed, said Rick Sharga, senior vice president at RealtyTrac, during a session at REO Expo, which concludes in Dallas Wednesday.”

Housing Wire – “Congress to Consider FHA Reform, Mortgage Insurance Hike” (6-10-10)

“House Resolution (HR) 5072, the FHA Reform Act of 2010, was reported to the House of Representatives Tuesday and could begin facing votes as early as this week. The FHA reform bill would raise the annual mortgage insurance premium to 1.55% from 0.55%.”

Bloomberg - “Subprime Delinquencies Show Clear ‘Positive Shift,’ RBS Says” (6-10-10)

“The proportion of U.S. homeowners turning delinquent on mortgages backing the securities that roiled the global financial system has tumbled in the past three months, even after accounting for a typical seasonal improvement, according to RBS Securities Inc. Of borrowers with subprime loans in 2007-issued bonds who had never missed payments, an average of 2.6 percent fell behind each month, a drop from 3.7 percent in February, representing a 15 percent decline after seasonal adjustments, according to RBS analysts.”

Bloomberg - “Banks Face Short-Sale Fraud as Home ‘Flopping’ Rises” (6-10-10)

“Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed –known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit. The Federal Bureau of Investigation, the California Department of Real Estate and mortgage finance company Freddie Mac have warned that such schemes may be spreading after a plunge in values left homeowners owing more than their properties are worth. The scams threaten to deepen losses for lenders that are increasingly agreeing to short sales as an alternative to more costly foreclosures.”

Looking Back:

One year ago, 2,771 new homes and condominiums were sold within one month in the subdivisions tracked by Costa Mesa-based HWMI. The MBA reported that mortgage application volume decreased by 7.2 percent in one week. Steven Kandarian said commercial mortgage defaults will rise in 2011 to 2012.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 6/8/10

Tuesday, June 8th, 2010

Today’s News Synopsis:

A survey from the NFCC shows that only 23 percent of Americans consider strategic default to be acceptable when underwater on a mortgage. Starting today, Real Estate Disposition is auctioning more than 350 bank-owned foreclosures in California. According to IAS, national home prices were up 0.9% in April from March. An executive from RealtyTrac believes U.S. foreclosure activity will not stabilize until late 2011.

In The News:

Inman - “Builders’ incentives to buyers under scrutiny” (6-8-10)

“Federal regulators are once again scrutinizing incentives tied to the use of homebuilders’ affiliated mortgage and title companies, looking for evidence that they cost consumers more than they’re worth, help inflate appraisals, and lower underwriting standards. The Department of Housing and Urban Development (HUD) in 2008 proposed a ban on such incentives, but backed down last year after homebuilders sued over the proposed rule change”

Housing Wire – “Strike Strategic Default: Survey Finds Mortgage Payments Remain Borrower Priority” (6-8-10)

“Less than one-quarter, or 23%, of consumers recently polled indicated that opting for foreclosure is justifiable when a borrower is underwater, owing more on a home than its worth, according to the National Foundation for Credit Counseling (NFCC). This idea of strategic default, when a borrower with the ability to pay chooses not to remain current on payments, was unacceptable to another 15% of survey respondents who said no circumstances justify walking away from the financial obligation.”

Housing Wire – “CoreLogic Adds Foreclosure Data to Distressed Property-Listing Web Site” (6-8-10)

“Data analytics provider CoreLogic (CLGX: 19.68 -1.01%), recently spun off by First American Financial (FAF: 13.51 -0.44%), will provide foreclosure data and property information to the Yahoo! Real Estate foreclosure service, the company said. The partnership adds listings of various stages of foreclosure and real-estate-owned (REO) properties to Yahoo! Real Estate’s online database of distressed properties including foreclosure and pre-foreclosure listings.”

Housing Wire - “REDC to Auction 350 Bank-Owned Foreclosures” (6-8-10)

“Beginning today, Real Estate Disposition (REDC) is auctioning more than 350 bank-owned foreclosures in Northern and Southern California, including 76 properties. Through June 12, REDC will auction more than 70 Northern California properties, including 34 occupied homes. An online-only auction, the offering ends at noon Central.”

Housing Wire – “Despite Narrow Monthly Gain, House Prices Fall 2.8% from 2009: IAS” (6-8-10)

“National house prices were up 0.9% in April from March, narrowed from the previous monthly gain of 1.1%, according to the latest data from Integrated Asset Services (IAS). The IAS house price index remains 2.8% below levels seen in the same time last year — widened from the 1.9% yearly depreciation in March. Additionally, the index is down 23.9% from its July 2007 peak.”

Bloomberg - “Four Seasons Sees Rates Returning to Peak Levels in Some Areas” (6-8-10)

“Four Seasons Hotels Inc. expects nightly rates at some of its properties will climb to the peak levels of 2008 by the end of this year as demand for luxury accommodation picks up, President Kathleen Taylor said.”

Orange County Register – “Foreclosures to be high for 18 more months” (6-8-10)

“Foreclosure activity in America won’t stabilize until late 2011, an executive for Irvine-based Realty Trac told a group of real estate writers. And with only three out of eight bank-owned homes on the market, and two-thirds of those under-valued homes yet to hit, the U.S. housing market still faces years of low prices.”

Orange County Register - “Where housing zip lives: Aliso to Yorba” (6-8-10)

“Newport Beach communities had the most housing ZIP in the first quarter. Santa Ana neighborhoods the least homebuying momentum. Our Zippy rankings weigh pricing and sales momentum — plus foreclosure frequency — as measured by DataQuick stats.”

Orange County Register – “3 charged in foreclosure ‘rescue’ case” (6-8-10)

“Gregory Flores, who managed All Fund Mortgage branches in Anaheim Hills and Murietta, was arrested in Roswell, N.M. last week. Also facing wire fraud charges charges in the case are Sheri Gale, who was a loan officer for All Fund, and Amy Hall, a former loan processor for the company. They have not been arrested but are expected to turn themselves in shortly, Assistant U.S. Attorney Sean Lokey says.”

Realty Times – “Mortgage Rates Touched New Low Friday” (6-8-10)

“The decline in mortgage rates stemmed from a big increase in mortgage-backed securities prices Friday. MBS prices, which drive mortgage rates in the opposite direction, gained +21/32 (FNMA 30-yr 4.5 at 102.23) on less than spectacular jobs numbers and more European debt concerns, this time in Hungary. Typically when we see significant declines in stocks as we have lately, mortgage rates improve.”

Wall Street Journal – “Baker: Turn Fannie, Freddie Into Government-Owned Corporations” (6-8-10)

“Want an easy, simple solution to Fannie Mae and Freddie Mac? Take the mortgage-finance giants, which have been effectively nationalized, and turn them into government-owned corporations, says Dean Baker, the co-director of the Center for Economic and Policy Research, a liberal think tank. In an op-ed in USA Today, Mr. Baker makes the case that nationalizing Fannie and Freddie isn’t as radical as it sounds. For one, both companies are effectively owned and operated by the government today.”

Looking Back:

One year ago, an AP test showed that recession “stress” decreased 5 percent from March to April. Robert Shiller estimated that home prices would likely continue to decline for years to come. JP Morgan estimated that U.S. home foreclosures would probably total 6.4 million by mid-2011.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 12/01/09

Tuesday, December 1st, 2009

Today’s News Synopsis:

The NAR reports that pending home sales increased during October by 3.7 percent. The California Board of Equalization claims that most homeowners will see a decline in property tax after a deflation of 0.237 percent.  According to Real Estate Econometrics LLC, the commercial mortgage default rate on loans held by U.S. banks increased to 3.4 percent in the third quarter.

In The News:

NAR - “Nine Consecutive Gains for Pending Home Sales” (12-1-09)

“The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.”

Sacramento Bee – “Most California property tax bills will fall slightly in 2010″ (12-1-09)

“The Board of Equalization said Monday that most California homeowners will see a slight decline in property tax bills, based on the board’s preliminary estimates of deflation at 0.237 percent.”

Housing Wire – “$1trn in Commercial Real Estate Equity Lost, Say Analysts” (12-1-09)

“Property values are down 40% and about $1trn commercial real estate (CRE) equity was lost since the sector peaked in 2007, according to research by Keefe, Bruyette & Woods.”

Housing Wire – “Lend America Out of Business” (12-1-09)

“The FHA’s action prevents Lend America and Ideal from originating and underwriting FHA-insured mortgages or participating in FHA’s single-family insurance program. FHA also charged $512,500 in civil money penalties in the wake of a civil lawsuit that HousingWire previously reported reveals a pattern of mortgage fraud spanning more than 20 years across a number of mortgage firms.”

Housing Wire – “Short Sale Incentives Coming in 2010, Treasury Says” (12-1-09)

“HAFA allows the borrower to receive pre-approved short sale terms before the property is listed and frees them from future liability for the debt. Also, servicers utilizing the program are prohibited from requiring a reduction in the real estate commission agreed to in the listing agreement. The borrower also receives a $1,500 incentive for relocation after the transaction. The servicer receives a $1,000 incentive to cover administration and processing costs, and investors will be paid a maximum of $1,000 for allowing up to $3,000 in short-sale proceeds to be paid out to subordinate lien holders. In total, each transaction under HAFA will cost the Treasury up to $3,500 of incentive payments.”

Housing Wire – “RealtyBid.com Discounts Fees in December” (12-1-09)

“RealtyBid.com, online home auction company, discounted its standard listing fee from $150 to $25 through the end of December. Real estate agents looking to market property listings through an online auction can take advantage of the offer. If the property sells, RealtyBid.com will cut its sales fee, or the buyer’s fee, from 1% to a flat fee of $500.”

Bloomberg - “Commercial Mortgage Defaults at U.S. Banks Reach 3.4%” (12-1-09)

“The commercial mortgage default rate on loans held by U.S. banks more than doubled to 3.4 percent in the third quarter as vacancies rose and rents declined, Real Estate Econometrics LLC said.”

Bloomberg - “Construction Spending in U.S. Unchanged After Falling in Sept.” (12-1-09)

“Construction spending in the U.S. was unchanged in October after declining five straight months as rising office and retail vacancies deterred the building of commercial projects. Spending in September, previously reported as an increase, fell 1.6 percent, according to Commerce Department data released today in Washington. Construction spending declined on office buildings and commercial projects, while homebuilding increased.”

Looking Back:

One year ago, the government announced its plans to spend $800 billion dollars on mortgage-backed securities and consumer-debt securities.  Treasury yields dropped to record lows. Bernanke announced that the federal reserve was considering lowering interest rates.

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The Norris Group Real Estate News Roundup 11/11/09

Wednesday, November 11th, 2009

Today’s News Synopsis:

The CBIA report shows that September sales for new-home communities have decreased by 11 percent from 2008. Foreclosure activity increased by 5 percent from August to September. According to Trulia, nearly 26 percent of homes were decreased in price from the previous month, and the total value of those price reductions is $28.1 billion.

In The News:

CBIA - “California New-Home Sales Down Again in September, CBIA Announces” (11-11-09)

“The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New-Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more were 11 percent below September 2008, an improvement from the 13 percent year-over-year decline last month and the much higher declines in previous months. During September, 2,310 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 2,580 in September 2008. Sales of single-family homes were down by 17 percent, while sales of townhomes and ‘plexes’ – duplexes, triplexes, etc. – were down 11 percent and sales of condominiums were 12 percent higher than a year ago.”

Orange County Register – “Foreclosure notices hit record 8,800″ (11-11-09)

“September’s total was up 5% from August and 90% from a year ago. The chart (click for larger image) shows outstanding auction notices going back to January 2007. Auction notices, also known as notices of trustee’s sale, are a warning that a property will be offered for sale, usually at a local courthouse.”

Los Angeles Times – “Existing-home prices slide in most metropolitan areas” (11-11-09)

“The U.S. median sale price for an existing single-family home was $177,900, an 11.2% drop from the same period a year earlier, according to the National Assn. of Realtors in Washington. Distressed sales continued to weigh on prices despite a popular tax credit fueling the volume of deals. Still, the median was higher than in the second quarter of this year, when it was $174,200.”

Housing Wire – “CMBS TALF May Bring New Issue in November: Sources” (11-11-09)

“Industry reports indicate a number of firms are gearing up to sell the first round of debt under the Fed’s CMBS TALF program for new issuance. The firms include Developers Diversified Realty Corp. (DDR: 9.02 +5.99%), which in October said it obtained new first mortgage financing of $400m from Goldman Sachs Commercial Mortgage Capital, an affiliate of Goldman Sachs & Co.”

Housing Wire – “Loss Severity May Reverse Recent Stability: Amherst” (11-11-09)

“the firm sees ‘temporary’ stabilization of house prices, as 7.5m units or 13.5% of US homeowners are in non-payment status. Amherst previously explained its reasoning for calculating 7m of those are ‘destined’ to liquidate, which hangs a shadow of distressed inventory over the positive signs seen in the US housing market.”

Housing Wire – “Refinancing Interest Boosts MBA’s Weekly Mortgage Apps” (11-11-09)

“MBA’s refinance index increased 14.5% from the previous week. The association’s purchase index decreased 1.8%. Refinance applications took a 66.1% share of all applications, up from 62.3% in the previous week. The adjustable-rate mortgage (ARM) share of all applications decreased to 6.1% from 6.9%.”

Bloomberg - “U.S. Home Sellers Slash Prices by $28.1 Billion, Trulia Says” (11-11-09)

“The average discount was 10 percent, little changed from a month earlier, the San Francisco-based real estate data provider said today. Almost 26 percent of homes for sale were reduced at least once. Luxury properties — those costing $2 million or more — accounted for 25 percent of the dollar value of reductions and less than 2 percent of listings, Trulia said. ”

Inman - “Realogy in the black for Q3″ (11-11-09)

“Real estate franchisor and brokerage Realogy Corp. said it turned a $58 million profit in the third quarter, thanks in part to a debt restructuring that allowed the company to claim a $75 million gain and stay in compliance with agreements governing nearly $3 billion in loans.”

Inman - “GMAC Real Estate unites with Real Living” (11-11-09)

“A major real estate brokerage company merger gives GMAC Real Estate a new name while expanding the Real Living real estate brand and growing the U.S. operations of Canada-based Brookfield Residential Property Services. The merger of GMAC Real Estate and Real Living, which will operate under the Real Living name and under parent company Brookfield, represents the second sizable U.S. expansion of Brookfield operations in the past two years.”

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136-TNG Radio – Tommy Williams 8-22-09

Friday, August 21st, 2009

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Tommy Williams

2008 President of The National Auctioneers Association

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This week Bruce is joined by Tommy Williams. Tommy is certified by the Auctioneers Institute. He is the founding partner of Williams and Williams Auction Company. He served as president between 1986 and 2000, and he became board chairman in 2001. He has conducted over 10,000 auctions all over the world. Tommy is also part of our I Survived Real Estate 2009 expert panel.

Tommy Williams has done auctions in multiple countries such as Puerto Rico, Canada, and his company is working with companies in South Africa. Bruce thinks that bank owned properties are probably very prevalent in other countries as well so their auction business has probably picked up. What has occurred in the United States has occurred all over the world. Tommy thinks that it is amazing that a country so far removed from the United States, like South Africa, has gone through the same economic swing. The entire world is experiencing the real estate bubble bust.

The United States auctioning business has gotten better. The number of auctions have increased, and auction popularity has increased for many years as well. However, the auctions are not making as much money because the real estate market prices are not doing well.

In 2003-2008, the business for residential real estate went from $11.5 billion to $17 billion. The volume has gone up, but the pricing has gone down very far, so auctioneers have to sell larger numbers of units to achieve the same profit. In many areas of the United States, home prices are down 75 percent from their peak. Bruce recently bought two properties, from a lender, for 15 percent of the owed amount. This is not an unusual occurrence. In many of these cases, the original buyer had a very bad loan. Fraud is involved in many of these cases. A property that may have never been worth 10,000 to begin with may have been given a mortgage of 100,000.

It was common in the lower end of Moreno Valley to have a neighborhood in which each property was selling for $300,000, but now the price for those homes is generally around 100,000. The buyer and lending mindset was very different in 2005.

Bruce asks if the auction business has shifted to making the multi-property owner to be its main customer rather than the individual property owner. Tommy says that he hopes this is not true. He believes that if you want to build a successful auction company then you need to deal specifically with normal “end-user” buyer and seller. The focus of an auction company should always be to deal with private owners/investors. There are very few companies that deal with REOs, and that is not a long range way to build a business.

Deutsche Bank recently said that by 2010 or 2011, 50 percent of the owners in the United States will be upside down. That would have a profound effect on the amount of inventory that would be able to sign up for a one house auction. The most important thing about a house that is upside down is that the seller needs to sell their house. Either they cannot afford their house any more, or they have had a change in lifestyle such as a job transfer or a divorce. People need to sell their properties at the time they become a liability. If they go through a long foreclosure process then their property will deteriorate, and their neighborhood may deteriorate, and they will end up selling a property for less than they could have.

A Campbell Report that came out in which 1,000 agents responded to a questionnaire. These agents claimed that the biggest problem they were dealing with was a lender’s slow response to a short sale offer. It takes months. The auction business could help the lender decide what the value of a property is. Auctions can identity, with nearly absolute certainty, what the market place thinks a property is worth. If multiple people bid on a property, and the highest bid is $100,000 dollars, then you have discovered what the market value for that property is. It is frustrating to see lenders take such a long route to discovering the truth about the value of their property, and take a huge price hit in the process. Lenders have dealt with the problem of over valued homes in the worst way possible. Tommy had a neighbor who went through a divorce and had other life changes. This neighbor bought his property for about $650,000, and he started going delinquent on his payments. Tommy told him his house would sell for about $450 to $500,000 at that time. This neighbor believed Tommy to be correct, but his lender would not negotiate with him, so he went through the foreclosure process, and he eventually walked away from it. This home recently closed for about $370,000 and Tommy could have sold it for much more. Tommy has been trying to tell this story to congressmen and senators, so that these problems may be fixed in the future, but they will not listen.

This is one of the reasons why I Survived Real Estate 2009 is so important to Bruce. Every industry affects other industries. Fortunately for Tommy Williams, he has not had trouble with appraisers arguing with the price that homes have sold for at his auctions, because the value is proven by the market place. One of his colleagues sold their home, and their lender told them that they would not lend money on a home bought at an auction. The National Auctioneers Association immediately contacted them and asked them to explain this policy, but they would not. This problem did not occur with a small lending company.

The word “auction” has a bad meaning in the United States. Here, it means that you have a desperate seller. In 2004 to 2006, Bruce was receiving multiple offers on each of his “for sale” properties. If Bruce had thought to offer those homes in an auction, which would put each of those buyers in direct competition with each other, his selling prices would have definitely been higher. When the market is really over heated, that is when you want to have an auction for sure. Under desperate times, such as right now, the reason why you have an auction is because buyers will not show up if you use any other method.

On September 11, the builders will be attending the real estate event. Bruce thinks it would be a perfect partnership if builders started selling with auctioneers. Tommy has had this opportunity on two different occasions. At the time, everybody thought this was crazy, but the auctions were very successful. If Tommy was in the building business, he would launch his selling process with an auction. Bruce is planning on getting involved in building soon, and he plans on using auctions for selling his houses.

When you participate in the boom market, it is easy to sell, so you do not think about auctioning your home. Also, auctions are typically seen as an option that is only used in a tough market. The auction is viewed different ways in different countries. In New Zealand, auctions are one of the first options used for selling homes. Views towards auctions also vary in different states. States like Tennessee, Ohio, and Missouri have a much more positive view towards auctions than states like California.

Tommy has found it difficult to buy bulk properties within the last six months. There are opportunities out there, but good businessmen would not go after those opportunities.

We look forward to seeing Tommy Williams September 11th at I Survived Real Estate 2009.

Tommy served as President of the National Auctioneers Association in 2008 and is current Chairman of the Board. Tommy also graciously took part in I Survived Real Estate 2008 last year and will also appear on the I Survived Real Estate 2009 panel.

Thomas L. Williams is a graduate of Penn State University (B.S. Animal Science) and the Certified Auctioneers Institute (CAI). Representing the third generation of Williams family auctioneers dating back to the mid-1800s, Williams is also a graduate of the historic Reppert School of Auctioneering. He has over 40 years experience in real estate auctions, land development and real estate investment. He currently serves as President of the National Auctioneers Association.

A founding partner of Williams & Williams, Williams served as president from 1986-2000, and became board chairman in 2001. He also co-founded and served as managing partner of Lowderman & Williams Auctioneers from 1965-85. He has conducted over 10,000 auctions in all 48 of the contiguous United States and Canada, and is an advisor to auctions conducted throughout Western Europe, South Africa, Australia and New Zealand.

An avid cattleman, Williams also owned and operated Bradmar Angus Farms from 1965-85, after which he continued to serve as a herd and genetics consultant for many of the nation’s premier Angus cattle breeders.

Williams is a licensed auctioneer and real estate broker in over 20 states, and an active member of the National Association of Realtors.

 

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126-TNG Radio – Shelley Kaye 6-13-09

Friday, June 12th, 2009

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Shelley Kaye

2009 President, REOMac

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This week Bruce is joined once again by Shelley Kaye, the president of REOMAC. She also works with InSource Financial Services where she handles bulk sale purchases.

Bruce first asks Shelley if lenders generally fix the properties when they sell them. Shelley says that it depends on the market and the lender but usually fixes her properties. She does not want to bring the prices of a neighborhood down; she wants to enhance a neighborhood. She knows a large number of other agents who work with lenders to fix properties and they make a lot of profit that way. When you support the value of a neighborhood, you also enable some people to get a refi instead of losing a property. Everybody wins when people fix properties.

Bruce asks Shelley how REO agents feel about auction companies. For the most part, the auction companies and agents are working in a partnership, and in many cases, the agents are still earning a commission. In the past, if a property went to an auctioneer then an agent would not be paid. The agents do open houses for auction companies, and they bring in buyers. In the 1990s, the agents didn’t make a commission so this time is much better. The auction company couldn’t function as successfully if it weren’t for the agents who are also bringing the buyers.

Bruce asks Shelley how REO agents feel about investors. Most good REO agents have a pool of investors that they work with. The problem that agents have is determining who is an investor and who is not. Real investors are easier to work with because they understand the market place, and they are not unrealistic about property values. Agents like working with investors because they know what they want and they understand how lenders do business. Most investors will close quickly. One of the dilemmas that agents have with wannabe investors is that they do not check up on their properties, they do not understand what it takes to buy an REO from a lender, and they do not understand what they are planning to do with a property. Investors must need to know what they are doing and they must do their homework.

In today’s market, an investor needs to be able to look at a property and quickly determine the repair cost and the appraisal to be competitive, because many properties have multiple offers. They must understand so many facets of the business from how much prices are declining to how much the house will rent for.

Bruce asks Shelley if she thinks that short sales will be more attractive to the lenders now than they were in the past. Shelley thinks that they will be more attracted to short sales, because there is a lot of cost in processing a foreclosure. The biggest problem she sees with this is that loss mitigators are not experienced enough to understand what is occurring in the market place. Time is their biggest enemy.

Bruce asks if loss mitgators, asset managers, and ever really talk before something goes to trustee sale. When Shelley worked at Option 1, she would talk to the loss mitigation department. They had formulas to determine how much they would lose in specific deals. Unfortunately, many of the people who work with loss mitigation do not understand the market.

Bruce says The Norris Group has noticed a big change in opening bids at the trustee sales. They are making more sense. Bruce asks if people often communicate with REO agents, prior to trustee sales, to determine accurate prices before the trustee sale. Shelley says that lenders are always getting a broker price opinion. The biggest problem is that they do not get to see the property, so sometimes people give high bids. Lenders always consult with agents and get a BPO (broker price opinion) of some sort.

Lenders pay around $45 to $50 for a drive by broker price opinion and $75 to $100 for an interior BPO. When agents do drive by BPOs they are determining the price by just looking at the outside of the house, so they do not know what damage there might be inside. Bruce says the paperwork is very much similar to that of an appraiser’s.

Bruce asks Shelley if she has people in her company that are being affected by the new appraisal rules and the Home Valuation Code of Conduct. Shelley says that she does not know if agents are being severely affected by this new rule, but she does know that the closings are taking longer. They are also getting paid half as much for the appraisals when dealing with the new management companies. Shelley is glad that steps are being taken to prevent fraud but she thinks that these new rules are hurting appraisers. It’s important to have arms lengths transactions but the Realtors can sometimes point out subtleties in the market that appraisers wouldn’t get to on their own. Agents can actually help arrive at the proper price. Bruce feels that same about the appraisal issues and how they are affecting investors in the market. Bruce feels that these new rules are unfair because they assume that people who make deals quickly are looking for trouble. In reality, over 90 percent of the people who do their business quickly are doing so simply because they are trying to be efficient and helpful. Shelley agrees with Bruce’s feelings on this.

Bruce saw a chart that showed that 35 percent of Option ARM borrowers are behind in payments, 72 percent of Option ARM owners owe more than their house is worth, and California has 58 percent of all those loans. Shelley says it is astonishing and there are also statistics say that those in loan modification plans often go back into default. Our government really hasn’t considered the whole picture. Bruce feels that there are many homeowners that are making their payment because that’s what they signed up for. But it will be important for prices to be supported within a reasonable amount of time and we won’t be saving everyone. We have had a 70 percent home ownership percentage, but historically that percentage has been around 62 percent. Bruce thinks that the home ownership percentage will go down to 62 percent which will leave a lot of vacant homes. Shelley thinks that we need to turn these empty homes into affordable rental units. If investors are buying these properties then they need to be careful not to raise rent. Bruce says that the market usually controls rental prices. If there are enough rentals then the price will come down, and that is occurring in some areas in California.

Bruce asks Shelley what she thinks about shadow inventory. Shelley says that there is a lot of unlisted inventory out there. A lot of lenders have been told by their management that the burst of the bubble is coming within the next 60 days. She doesn’t know if they have been holding that much of the inventory or if the moratorium has caused the problem. The next 60 days she says she is hearing it’s going to explode.

Bruce says in San Bernardino County, there were 40,000 trustee sales in 2008, and there were about 22,000 sales. Bruce asks if other states are looking at California’s situation and wondering why Californians are so worried. Shelley says that there are some states that have been hit less than others, but for the most part, everyone is feeling the same pain. Bruce asks if California is going to experience more trouble within the next 18 months, and if higher priced inventory will be affected. Shelley says that is true and that some of the higher priced inventory is going into the foreclosure market, and more prime inventory is going into default.

Bruce says he hears advertisements for attorneys every day for loan fraud and workouts. Bruce asks Shelley if lenders are having trouble with people looking for loopholes. She does not know if there are many attorneys looking for loopholes, but there are attorneys looking to stop specific attorneys from doing this.

Bruce asks Shelley if she was president for a year, what national policies she would implement to help housing recover. She would focus on creating jobs so that people can pay for their homes. She thinks that principalities and municipalities need to cooperate with buyers and lenders. Programs need to be set up so that people can work on properties and fix them up. More 40 year mortgages need to be put in place, so that payments become more affordable. She would also want less moratoriums being placed on the market so that the problems can fix themselves. Some people should have never been in homeownership to begin with. More incentives need to given to lenders who work with home owners.

Bruce asks Shelley if it might be good to create a short term policy that would forgive foreclosures faster than before since this scenario got so out of hand. Shelley thinks that would be a good idea because people are losing their good credit. The government should really talk to the industry that’s at work so they understand what’s happening the in marketplace. For more information visit www.reomac.com.

Shelley Kaye recently joined InSource Financial Services, LLC as a Portfolio Acquisitions Specialist, handling bulk sale purchases of REO properties. Prior to joining InSource she was a Servicing Oversight Specialist with ECC Capital and for 11 years a Senior Asset Manager for First Option Asset Management Services, managing a team of associates as well as a multi-state REO portfolio. Before working at FOAMS, she spent seven years at First Central Bank where she was the assistant to the VP of the Servicing Department. She has been a licensed Realtor for over 20 years and sold properties in Southern California prior to entering the mortgage banking field.

Shelley has served on the REOMAC® Board for the past 8 years and participates as a speaker on a variety of panels for many industry events. She has held the offices of Sponsor Chair, Treasurer, Secretary, and Vice President , prior to becoming REOMAC President in 2008.

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124-TNG Radio – Elite Auctions 5-30-09

Friday, May 29th, 2009

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Elite Auctions

Randy Grigg and Mike Grigg

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This week, Bruce is joined again by Randy and Mike Grigg who head Elite Auctions. Randy Grigg is President of Elite Auctions and Mike Grigg is the Chief Auctioneer.

Last week, Bruce, Randy, and Mike discussed a Riverside auction in which a man bought a home out of the MLS. Because of the price deterioration in the market, Bruce said that the man should flip the property via auction. In the end, the buyer earned a large profit after the property sold. Bruce asks about the costs to market.

Randy and Mike Grigg discuss marketing and advertising and what the auction company does to attract attention. They are also able to show all their results to their clients, so that they know where their money is being spent. Bruce asks Mike and Randy how many people showed up to a particular open house they had. They had approximately 60 to 80 people come in to view their property. They typically have a successful auction when there are that many people attending their open house.

Whenever someone attends one of their auctions, they always ask the attendees how they heard about their auction. Only about 30 percent of their attendees go to the open house. In this case, the winning bidder did not go to the open house. The winning bidder owned rental properties in that same area, and he was attracted to the property from a post card advertisement. Altogether, 38 bidders showed up at the auction, and they all had $5,000 dollar cashiers checks. The home being sold needed paint, carpet, and the kitchen was in bad shape. Just down the street from their auction, REDC was selling similar inventory for $98,000. The final sale price for this house was $147,400. The investor bought the home for $75,000. What a fantastic deal. They closed the property in 12 days.

Bruce goes on to discuss what people consider to be a “deal”. Bruce believes that if that buyer owned homes in that same neighborhood then he might have paid more for every house that he owns than that particular one. People are used to thinking that real estate is so cheap, that they have forgotten that real estate used to be 2 or 3 times the current price. Sarah, Bruce’s daughter, bought a house very recently. From Bruce’s perspective, her deal was the interest rate she received. The market was at 5%. The man who bought this property knew the area he was buying in, so the purchase worked well for him.

Auctioning properties is challenging right now, because buyers are very cautious. In a market where prices are escalating quickly, the auctioneer will be ahead of the prices in the MLS. The consumers prove how much the auctioned property is worth when there is competition. Bruce believes that his properties in Rosamond would have sold better if they had been auctioned. Bruce is surprised builders don’t use this method instead.

Bruce asks what Mike’s duties are as the president of the California Auction Association. Mike’s main duty is following California government legislation in regards to real estate auctions. He also assists other auctioneers by showing them what they need to do to be a legitimate auctioneer. Mike arranges conferences where speakers come and talk about their specialties. The main goal is to better California’s auctioneers, so that they can offer better service to their clients.

Bruce asks Mike if there are California rules that trump national rules and vice versa. Mike says that auctioning rules vary greatly state to state, and that California is actually very lenient. Mike would like to see more legislation to stop people from holding deposits for lengthy amounts of time after the bid is rejected from the lender. Bidding on behalf of auctioneers is also something that needs to be addressed by legislation. Instead of an auctioneer having to be licensed like a realtor, there should be a separate real estate auction test. It’s very different.

Bruce asks Mike what C.A.R. thinks of real estate auctioning. Mike does not think that C.A.R. views auctions as a bad thing. There are some Realtors that view auctions as a threat to their business, but it is not . Mike and Randy pay Realtors if they bring in buyers and sellers.

Approximately 10 percent of the time a Realtor represents a client for his auctions. Occasionally, Realtors get confused by the process because they are not used to that method, but Mike does not feel that this has affected his ability to close a deal.

In the United States people have viewed auctioning as a necessary evil. Bruce asks Mike if he thinks that auctioning will have a strong foot hold in the real estate business in the future. Mike thinks that auctioning will become more important for real estate sales in the future. California seems to be far behind the rest of the United States in regards to understanding the value in auction sales.

Bruce believes that the key going forward is to have repetitive clients. If investors get the idea that they can efficiently sell houses in auctions then it would be constantly viewed by retail people as a respectable selling method. Mike believes that as the real estate market returns many of the big auction houses will go back to land auctions, but Mike and Randy’s business will stay as a local California business.

Bruce asks Randy what kind of perception change has taken place in the auction industry. Randy thinks that much of the public still view auctions as a fire sale, but many investors believe that it is an effective way to sale inventory. It depends on who you talk to.

Bruce discusses how variable the results can be when selling properties through auctions. The right person for the sale may or may not be attending. Often the problem with auction sales lies within the seller’s expectations. When people own properties, which they have assigned a feeling of value to, it can distort one’s perception of whether or not a property is being sold at the right price. Randy believes that houses sold through auctions are priced properly about 80 to 90 percent of the time.

Bruce asks Mike how different it is to auction real estate in comparison to other auctions. In real estate you do not get paid immediately. You have to go through escrow, and you have to understand how to deal with Realtors. An antique seller is not going to understand real estate, just as a real estate auctioneer will not understand antiques. In the rest of the auctioneer industry, you usually get paid immediately after the sale. Online auctions are also much different than the on site real estate auctions that Mike and Randy handle.

The number for Elite Auction is 661-325-6500, and their website is www.sellwithauction.com

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123-TNG Radio – Elite Auctions 5-23-09

Friday, May 22nd, 2009

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Elite Auctions

Randy Grigg and Mike Grigg

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This week Bruce interviews Randy and Mike Grigg from Elite Auctions. Randy is the President of Elite Auctions for which Mike serves as Chief Auctioneer. Mike is also current president for the California Auctioneer Association.

Bruce begins by asking Randy how he got involved in real estate. In 1977, Randy had heard in seminars that real estate was the way to go, so he eased into it. He brought his first rental house in 1977, and after that he bought about 2 or 3 houses every year, for 20 years, and then stopped. Randy’s plan for real estate was to buy houses so that he could pay them off and enjoy the cash flow. This has worked well for Randy, and he currently has a few dozen houses that he is collecting cash from.

Bruce asks Randy when he started auctioning houses. Randy says that he started doing auctioning after he decided to stop doing real estate for a while. After getting involved, he decided that he did not like the selling process, because he had a few escrows that fell out. He drove past a house in his neighborhood one day, and he discovered that it was being auctioned. He decided to attend the auction in hopes that he might buy the property. He thought that he might be the only person at the auction, but he discovered that many people were interested in bidding at auctions. The house he wanted to buy went up to full market value, so he thought, “this might be a good way to sell.” This occurred in 2002.

Bruce asks Mike when he got involved in the auction business with his dad, and who the typical selling client was from 2002-06. He says that he got involved in 2002, and that he dealt with a lot of homeowners who were expecting to receive a high offer. In 2004-06 most sellers were astonished by the selling price of their homes. When Mike and Randy got involved in the business, they did it to help investors help sell 5 houses per day, but when other home owners discovered what Mike and Randy were doing many decided they wanted to auction their houses too.

Bruce asks Mike if he gets a lot of exposure from just holding an auction that is successful. Mike claims to receive a lot of attention from his auctions, because many times Mike will have 100 people show up for one house, and some of the participants have houses to sell as well.

Between 2004-06 the typical buyer was an own occupant. The typical buyer showing up now is often a long term investor, and first time home buyers are getting into the market now too. One of the recent changes that have been made to the $8,000 tax credit program is that first time buyers can use their 8,000 $dollar credit as a down payment up front.

The typical selling client that Randy works with right now is a rehabber, or a wholesaler, who understands that if they do not get their houses sold within two months then they will lose their opportunity to gain a profit. Prices went down a great deal.

Mike and Randy have an auction coming up on June 4, which will include houses that they have bought at REDC and Hudson Marshall. They have done minor fixes to them, and they are hoping to gain a profit. They have done 25 auctions within the last 8 months, and most of them are profitable.

Bruce asks Mike and Randy if they have ever had their competitors try to buy their houses, and then resell them for profit. They do not know if that has ever occurred, but they doubt that this has ever occurred, because they fix their houses more than other auction companies do.

Some auction companies host their events in a ballroom setting with a large amount of inventory, but Mike and Randy have taken a different route. Mike and Randy typically sell 3 or 4 houses per day, because they do their auctions at the property they are selling.

Mike and Randy’s advertising has done very well, but it has changed dramatically in the past seven years. They are doing much more internet advertising now. It is more expensive to send letters than to advertise on the internet. Mike believes that their may be a time when they no longer need print media. The newspaper does not work as well in bigger metropolitan areas.

Bruce asks Mike what source he receives his most qualified buyers from. Mike claims that the sign on the front of the property often attracts the most qualified buyers, because those buyers often own property on that same street. When you put the word auction on a sign, people pay much more attention.

Mike usually has two open houses during the week before the auction. Each open house is about 2 hours. The main reason why they have a limited time for viewing each house is to create sense of urgency. They are prepping their mind for the auction, because the house is going to be sold at a specific time and date. Bruce asks Mike if it is important that there are other people present when someone attends the open house. Mike thinks this is very important, because it gives them the idea that they are doing the right thing.

Bruce asks Mike what his main objective is when people call about an auction ad. Mike’s main objective for the initial conversation is to get them excited about the auction, and to get them to come to the open house, so that they can fall in love with the property. He also wants to assure potential buyers that buying from an auction is simpler than buying the normal way. The first call that Mike gets from a potential buyer is the most critical call, because it is easy to lose buyers when they first call for information. A first time participant may be looking for a reason not to attend the auction. Mike has hired a professional to handle most of his buyer calls.

Most people assume that an auction would be held on the weekend, but Mike and Randy are having their auction during the week. They hold auctions on everyday except for Sunday and Monday. They prefer not to hold auctions on Sundays because they do not want to get in the way of anyone’s religious traditions, and on Mondays people are busy preparing for the rest of the week. However, he has attended an auction on a Monday that was very successful. The time that they choose to hold their auctions does not seem to matter too much. There are times when more people will show up for a Wednesday auction than a Saturday auction.

Bruce asks Randy how many bidders are typically needed for a successful auction. Randy has had successful auctions with as little as 3 bidders. He often feels better when there are only about 5 to 10 people attending. There’s been up to 70. Bruce asks if there’s been any issues with appraisals. At one auction, the bank lowered the $10k. They stuck to their guns and the buyer ended making up the difference.

Bruce talks about The Norris Group’s current appraisal situation and how the verdict is still out.

Back to auctions, when Mike starts an auction he often begins by auctioning something small for charity. He does this because it helps new bidders to relax, and it encourages them to bid. It’s an ice breaker.

Bruce asks if people ever forget about the buyer’s premium. About half of the time, people forget about the buyer’s premium. This still occurs even though they disclose it in all the written terms, and it is disclosed before all the auctions they do. Even Mike has forgotten the buyer’s premium, because there are many times where people come to an auction not thinking about the buyer’s premium; they are thinking about winning the property they want to bid on.

Bruce asks if Mike can tell when buyers feel remorseful over their decision to buy. Mike can tell when people feel bad about their decision because they do not look excited. This is why Mike does his best to make people feel comfortable when they buy his properties. He does his best to answer his buyer’s questions.

Mike believes that receiving a healthy deposit for the closing of a property is of key importance. In this market, you cannot come out and tell people that they need $15,000 dollars for them to bid, because you will knock out all the first time home buyers. On a single family house in Bakersfield, Mike and Randy will often ask for a $5,000 dollar deposit, because it is enough to encourage people to close the deal. Mike and Randy close about 95 percent of their escrows during the first try.

Bruce asks Randy to describe the perfect seller to have as an auction client. Randy thinks that the perfect seller is someone who works with wholesale properties. Those kinds of people have reasonable price expectations, because they often buy at the right price to flip it, and they are willing to pay for the marketing cost with the expectation that Mike and Randy will make them a profit.

The number for Elite Auction is 661-325-6500, and their website is www.sellwithauction.com

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118-TNG Radio – Tommy Williams 4-18-09

Saturday, April 18th, 2009

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Tommy Williams

2008 President of The National Auctioneers Association

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Bruce Norris is joined once again by past President and current Chairman of the Board for the National Auctioneers Association and co-founder of Williams and Williams Auctions, Tommy Williams.

Bruce starts by asking if there is a different process in selling real estate and cattle. Tommy says there is a slight difference but he’s hoping the audience will still understand. He says cattle auction goes a little faster and is a little more entertaining.

Auto auctions generate close to 50% of the proceeds for auctions. The end buyers are typically dealers. There are both dealer and public auctions but some are only available to dealers.

July 13-18th is an auction reunion in Kansas and Bruce asks who attends. Tommy says over 1,000 auctioneers will attend and bring families. It is the best and main time of year to attend education for the auction industry. Over 60 seminars will be available.

Bruce asks about Tommy’s family history in the auctions business. Tommy says there was a little family history but he fell into it on his own. Tommy’s son Dean is an attorney and didn’t plan to be in the auction industry. Tommy moved the business from Illinois to Oklahoma and Dean visited while in school and ended up later partnering. Tommy says he has six grandkids and he thinks a few might be interested in the business.

Bruce talks about the model Williams and Williams has chosen and how it is different from other auction houses. Tommy says online auctions are a very viable way to sell items and Williams and Williams does conduct online auctions. However, Tommy says a property will earn 10% more on the lawn then it will bring online or in a ballroom setting. It’s significant and matters. There is more expense in having these types of auctions.

Tommy describes the difference between absolute and seller reserve auctions. Tommy says the absolute auction is by far the best and motivates the buyer to the ultimate level of bidding. It also attracts the most attendance which is key for the best price. Tommy says many can’t stomach absolute so more are sold with reserve.

Tommy says it not impossible for very experienced auctioneers make mistakes. It’s complicated and not as easy it may look. Advertising has definitely changed over the years. The newspaper has dropped in value each and every day and online advertising has gotten more important. The auction companies track the marketing process very carefully to see where most people are seeing the information.

Tommy says when the word “sold” is uttered, in an absolute auction, it is the most binding contract you can enter into. It is different in a seller reserve. Bruce talks about dealing with deposits in real estate now and how difficult closing can become. Tommy says he thinks 10% down should be at stake to make sure the buyers are truly qualified. Tommy says he doesn’t like the current way real estate is sold because of these issues as buyers can tie up your property will no ramifications if they don’t come through.

Tommy describes how the auction business is commissioned. Williams and Williams gets commissioned directly from the seller. Some lenders require, however, a buyer’s premium. Many more auctions are charging buyers but Tommy actually likes charging the seller. He thinks the buyers see the auction in a more positive light and the premium isn’t seen as a tax on their purchase.

Bruce asks about Tommy dealing with lower priced areas. Tommy says there are minimum fees that must be charged. There does become a point where auctions can’t sell a property because it doesn’t cover the fees.

Bruce talks about lenders not foreclosing on properties because there is more owned on the property then it is worth so lenders don’t do anything with it. Tommy says this issue is really serious and most people aren’t hearing about. Tommy says he’s seen some neighborhoods where 80% of the neighborhood is vacant. There’s almost no choice but to tear them down as they become magnets for vandalism, squatters, and drug labs. Bruce says it doesn’t even have to be an old areas and Tommy sounds surprised. Tommy says that’s why these homes have to be given occupants whether they are investors or owner occupants. Empty properties are not good for neighborhoods.

Bruce talks about Orange County and the FDIC leasing space to set up shop to deal with assets. He asks if Tommy has heard of that and if Williams and Williams were involved in the RTC situation. Tommy says they were slightly involved with the RTC but dealing with government is difficult. Tommy had not heard of the offices being rented in Orange County. Tommy is worried the FDIC will warehouse the properties and it will make the problem worse.

Bruce brings up a new term he saw on the Williams and Williams website called “auction referral cooperative.” Tommy says this is a way to establish a network of like-minded auctioneers that refer one another. There’s no financial obligation and they are simply looking for other auctioneers of the same mind and there’s a referral fee involved.

Thank you Tommy as always for joining us on the show. We look forward to seeing you again this year on September 11th, 2009 for I Survived Real Estate 2009. See more on Williams and Williams at Williamsauction.com.

Tommy served as President of the National Auctioneers Association in 2008 and is current Chairman of the Board. Tommy also graciously took part in I Survived Real Estate 2008 last year.

Thomas L. Williams is a graduate of Penn State University (B.S. Animal Science) and the Certified Auctioneers Institute (CAI). Representing the third generation of Williams family auctioneers dating back to the mid-1800s, Williams is also a graduate of the historic Reppert School of Auctioneering. He has over 40 years experience in real estate auctions, land development and real estate investment. He currently serves as President of the National Auctioneers Association.

A founding partner of Williams & Williams, Williams served as president from 1986-2000, and became board chairman in 2001. He also co-founded and served as managing partner of Lowderman & Williams Auctioneers from 1965-85. He has conducted over 10,000 auctions in all 48 of the contiguous United States and Canada, and is an advisor to auctions conducted throughout Western Europe, South Africa, Australia and New Zealand.

An avid cattleman, Williams also owned and operated Bradmar Angus Farms from 1965-85, after which he continued to serve as a herd and genetics consultant for many of the nation’s premier Angus cattle breeders.

Williams is a licensed auctioneer and real estate broker in over 20 states, and an active member of the National Association of Realtors.

 

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117-TNG Radio – Tommy Williams 4-11-09

Friday, April 10th, 2009

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Tommy Williams

2008 President of The National Auctioneers Association

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Bruce Norris is joined this week by past President and current Chairman of the Board for the National Auctioneers Association and co-founder of Williams and Williams Auctions, Tommy Williams.

Bruce starts the interview by asking what auction companies miss out on when they aren’t members of the National Auctioneers Association. Tommy says non members miss out of networking, best practices, and education which furthers their professional endeavors. April 18th is national auction day and Tommy would like auctioneers to make communities aware of the benefit that auctions bring to the community. Auctions have the huge benefit of establishing market value on a certain day for numerous products and assets. They also might highlight their charity work in the community through charity auctions. Tommy feels the media picks up too much negative information about auctions and doesn’t highlight all the positives.

Bruce says he read that auctions raise as much money for charities that is sold in real estate and Tommy says that is true. Tommy says auctioneers bring a very important piece of expertise to nonprofit organizations.

Bruce asks if Realtors view auctions as competitors or partners and Tommy thinks too many see auctions as competitors. Tommy says there is fear that auctions establish market value and sometimes people don’t want to really know that actual value. The real estate community wants to not take the hit. Bruce says he’s baulked at final bids before and most times he paid for not selling at that time. Tommy says all of us have been in that situation. Usually, the public will tell the truth and auctions are the best barometer for prices and it will also tell you where price trends are going.

Bruce asks if women are getting more involved in auctions. Tommy says this is a growing trend as it used to be a male dominated field. Tommy says 20-30% of classes for auctions are now women.

Bruce asks about legislative issues that are affecting auctions in general. Tommy says that when legislation postpones the sale of assets it usually means there will be net price deterioration. Real estate is very fragile and unattended and vacant homes tend to lose value.

Bruce says Fannie Mae and Freddie Mac postponed auctions for their properties but in April have started back up. Doing this moratorium cost them money. Tommy says their unwillingness to accept market value has cost them millions. The more they postpone, the worse it will get.

Bruce says he read the auction magazine that in the last few years $270 billion worth of assets were sold. Tommy says this is not a record but getting close. There’s been steady growth in the total dollar sold at auction. 2008 saw prices for assets decline so volume went up but prices were down due to devaluation. So in volume, 2007 and 2008 were record setting years.

Bruce talks about trustee sales and how the lack of advertising doesn’t help the cause. Bruce asks if the National Auctioneers Association has any intent to try and get involved in the trustee sale process. Tommy says that was one of his main goals as President was to do away with the traditional foreclosure process. If the home was sold at the trustee sale to an end user it would save the mortgage holder at least $15,000 in transaction fees. This is not including price declines. This would be of huge benefit to the mortgage industry as a new loan with a new end user would immediately take the property.

Bruce talks about current laws and issues of cities hiring people solely to write fines to homes that are considered blight and that are violating codes. Tommy worries that these types of laws only makes lenders not excited to loan which further exacerbates the lending policies we currently face. No one will want to lend in these areas.

Bruce asks Tommy if he’s nervous about a shift in the American perspective. Tommy says he is concerned that capitalism and private enterprise is something that Americans are now wondering if they should be in favor of. Bruce says he’s concerned as well for some of the things that he’s seen and hopes we can solve some of these issues soon. At “I Survived Real Estate 2008” several solutions were presented but none have been implemented. Bruce things banks could save themselves so much time and money by doing so.

Tommy talks about his pre-foreclosure auction concept. Some Realtors are doing something very similar without approval. Tommy says they’ve implemented something very similar in their company and they’ve tried it out with consumers. As soon as a consumer was falling behind, Williams and Williams worked with the consumer to present the property to the public as well as possible. The final offer was presented to the lender. However, the loan servicer is typically the decision maker and is far removed from the actual decision maker. The goal needs to be lenders getting rid of this stuff as soon as possible to get things moving. This particular solutions gets a new person in the home right away.

For more information visit williamsauction.com or thenorrisgroup.com. Join us next week for part two with Tommy Williams.

Tommy served as President of the National Auctioneers Association in 2008 and is current Chairman of the Board. Tommy also graciously took part in I Survived Real Estate 2008 last year.

Thomas L. Williams is a graduate of Penn State University (B.S. Animal Science) and the Certified Auctioneers Institute (CAI). Representing the third generation of Williams family auctioneers dating back to the mid-1800s, Williams is also a graduate of the historic Reppert School of Auctioneering. He has over 40 years experience in real estate auctions, land development and real estate investment. He currently serves as President of the National Auctioneers Association.

A founding partner of Williams & Williams, Williams served as president from 1986-2000, and became board chairman in 2001. He also co-founded and served as managing partner of Lowderman & Williams Auctioneers from 1965-85. He has conducted over 10,000 auctions in all 48 of the contiguous United States and Canada, and is an advisor to auctions conducted throughout Western Europe, South Africa, Australia and New Zealand.

An avid cattleman, Williams also owned and operated Bradmar Angus Farms from 1965-85, after which he continued to serve as a herd and genetics consultant for many of the nation’s premier Angus cattle breeders.

Williams is a licensed auctioneer and real estate broker in over 20 states, and an active member of the National Association of Realtors.

 

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