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This week Bruce is joined by Lance Martin. Lance has been in the real estate business for 24 years as broker/owner of Coldwell Banker Pioneer Real Estate which serves the Inland Empire. Lance is an expert in residential REO foreclosure sales.
Martin’s business is family owned. In the late 80s, Lance’s family moved from Long Beach to Moreno Valley. Martin and his father opened their business together in 1988. They dealt primarily with single family homes, but they also worked with REOs. Property management was the staple of their business for a long time. His parents retired 10 years ago, but he continued operating the business. The business is independently owned and operated, but it is franchised through Coldwell Banker.
Martin got his real estate license when he was 19, and 1987 was his first year in the business. In those years, real estate sold easily. The market progressively deteriorated after that time. He was fortunate to be connected with REO clients such as Fannie Mae in 1993. To this day, he has leveraged Fannie and Freddie for business. Martin did nothing other than REO until the year 2000.
Property management kept Martin’s business performing when real estate sales were not doing well. Mot traditional real estate companies shy away from property management, because it is a lot of work, and landlords and tenants are difficult.
When Martin looks for an agent, he tries to find someone who is disciplined. Martin has interviewed agents who had great sales skills, but they did not have the discipline to come to work frequently enough. He has also met people who did not have great skills, but they were hard working and they followed up with their clients.
Martin believes a lot of information that has been released from the CAR and NAR has been false. Nevertheless, he has been a big supporter of the local board of realtors. He served as president of that organization in the 90s. There is a lot of education available in that organization. Also, it helps you get recognized. Banks and clients like to know that they are working with someone involved in the industry. He had the opportunity to learn about the politics and legislation involved in the real estate business.
For the last 10 years, Martin has been attending 4 to 6 conferences per year. Over the last two years, he has gone to these conferences to learn how to support his business. Unfortunately, the conferences he has attended during the past two years have been nearly useless. There is not much new content being released. It is hard for economists to explain the current state of the real estate market and where it is going. In Martin’s opinion, we do not have a true real estate market. He believes we have an artificial market created by a large amount of government intervention, and he is not comfortable with it. Martin has been trying to figure out what the government and the banks trying to do to control inventory and the market as a whole. Nobody seems to have the answer to those questions, and because of that, the value of the conferences Martin attends has diminished. He may stop going altogether.
When this happens, you start losing the credibility of the people you need to keep. Bruce was on a panel at one of the conferences Martin attended. After some time, he noticed that the panelist was not asking questions that the audience needed answers to. Bruce then took over the question asking, and he even asked the panelist questions that the audience wanted answers to. At the end of the conference, Bruce was asked to leave from three security guards. Martin supported Bruce’s decision to take control of the questioning that day.
Martin considers Bruce to be worth listening to, and that was one of the big reasons he chose to attend the REOMAC conference which Bruce was taken out of. Martin also has a high level of respect for Chris Thornberg.
Bruce believes anyone will have an audience if they are willing to present the unvarnished picture. You should not have a business plan with phony information.
Some of the forecasts made by NAR over the last few years have been embarrassing. If Martin had relied on NAR’s forecasts, he would be out of business. Bruce feels frustrated for people who have lost credibility because they chose not to support NAR’s information.
In the 90s, people thought the downturn was a once in a lifetime opportunity. The inventory level was easy to predict based on notices of default and notices of sale. Since 2006, the inventory has been difficult to predict, and it has been huge. The number of REOs we currently have dwarfs the number from the 90s. In this market, if the numbers say that 100 properties should come to the market, then there will probably be less than 10. The reality is that all of those properties will have to come to the market eventually.
One of the chapters Bruce wishes he had not included in his book on the California downturn was “How California Prices Decline in a Downturn”. He methodically looked at all of California’s downturns in the past, and tried to estimate how California’s down turn would function based on that information. Those estimations were completely false.
There were sellers with equity in the 90s. In Martin’s current market area, 90% or more of the properties are distressed, and are in the REO or short sale market.
According to a survey from the NAR, only 33% of the people who have recently sold their home are interested in buying right away. This means only 165,000 buyers would be created if you performed 500,000 sales. Martin thinks consumers understand that we are in an unusually distressed market.
Martin’s website is www.pioneerrealestate.com
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