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Mitt Romney’s housing policy: GOP candidate offers ideas on mortgages | Bedford NY Real Estate

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Mitt Romney’s presidential campaign made the odd decision to release a new policy document about housing issues last Friday in the late afternoon. The Friday afternoon “news dump” is when you put things out that you think will reflect poorly on you, knowing that reporters will give them scant attention. The housing paper was doubly-obscured, first by the weekend and second by release of Romney’s tax documents the same day.

Burying housing policy was a strange choice for the Romney campaign, because housing policy (foreclosures, mortgage disasters, etc.) has been a giant failure for the Obama administration, and one where Romney could easily score substantive points.

Having spent my weekend perusing the Romney position paper, I’m prepared to offer an explanation for why they buried it: It sucks.

Faced with the opportunity to take a nice big swing at the piñata of Obama-era foreclosures, Romney whiffed, offering a “plan” chock of platitudes, bromides, and non sequiturs. Why the campaign preferred dumping it out when they thought nobody would notice to simply not releasing it is a mystery. But perhaps the greater mystery is why they couldn’t stir themselves to write a policy that made sense.

The context here is the epic failure of the Obama administration to do anything of sufficient scale to address the foreclosures roiling the nation. Foreclosures aren’t just unpleasant to the families that experience them, but also have significant knock-on consequences for the rest of the community and consequently constitute secondary shocks to a country already devastated by a severe recession.

In 2009, when the administration was at the peak of its powers—Fannie Mae and Freddie Mac nationalized by the federal government, banks desperately in need of federal money, the president popular and backed by large congressional majorities—President Obama didn’t think addressing the issue was important. His primary premise was the not-unreasonable one that the best solution to housing pain was overall economic recovery. A secondary, less-reasonable premise was that restoring the “confidence” of the banking sector was a key element of broad economic recovery. So at the margin the administration wasn’t interest in diverting federal time and money to housing problem, and discouraged solutions that would help indebted homeowners at the cost of hurting the very banks that TARP was supposed to prop up.

Later programs such as HAMP and HARP were hamstrung by extreme political paranoia about delivering aid to “unworthy” borrowers. So while the programs (especially HARP) have done some good, the policy has been to specifically not target the most severe needs. Bigger plans released this year would do more, but are being blocked by a holdover Fannie/Freddie regulator whom the administration didn’t replace when it had the chance.

To all this, Team Romney has essentially nothing to say. One of their five bullet points is that we need to improve the job market. Another is to sell government-owned foreclosed property to private investors, which is already happening. A third is to encourage short-sales as an alternative to foreclosure, which the administration has been doing for years now through various initiatives that seem to be bearing some fruit.

In terms of something the parties actually disagree about, Romney proposes to replace the Dodd-Frank Act with “sensible regulation.” If we repeal Dodd-Frank and its tools for orderly liquidation, what would we do instead? Well, the last plank of the Romney plan argues that “the Romney-Ryan plan will completely end ‘too-big-to-fail’ by reforming the GSEs,” i.e. Fannie Mae and Freddie Mac.

This is a real head-scratcher. Not only does Romney not say how he would reform Fannie and Freddie, he doesn’t even begin to try to explain how this would end the “too-big-to-fail” dilemma—presumably because it wouldn’t. Fannie and Freddie may have exacerbated the extent of the housing bubble, but this has literally no bearing on the question of whether or not the economy can survive the liquidation of a diversified mega-bank. If a bank goes bust under Romney’s plan—what happens? Nobody knows. Presumably something “sensible,” but Fannie and Freddie have nothing to do with it. Conservatives have long been rightly critical of Fannie and Freddie, and accurately warned that the free lunch they seemed to create for homeownership might someday prove quite costly to the taxpayer. But retreading a timeless conservative argument about the risks of federal loan guarantees, no matter how valid, isn’t a credible response to too-big-to-fail private banks or problems in today’s mortgage lending.

Romney’s housing plan is depressing. Faced with a clear policy area in which Obama has not succeeded, his opponent came out with a seven-page white paper so embarrassing the campaign dropped it on a Friday night.

This housing issue is the entire 2012 economic debate in miniature. There’s stuff to like in the Obama administration’s record, but there’s simply no denying that overall economic performance has been bad and the president deserves his share of the blame. But rather than giving us a pragmatic turnaround guy, the Republicans are offering a copy-and-paste agenda that could have been rolled out any time in the past 20 years and has nothing to do with today’s specific problem

via slate.com

Home prices in Southern California hit four-year high | Bedford NY Real Estate

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Southern California is on the rebound when it comes to home prices, but sales are beginning to fall as inventory levels decline, DataQuick said in a report Friday.

During the month of September, counties in Southern California saw the median home price edge up to $315,000, a 1.9% jump from $309,000 in August and a 12.5% increase from September of 2011.

It’s also the highest median in more than four years.

San Diego-based DataQuick attributes the jump to a modest supply of homes for sale and demand sparked by recent levels of affordability in the market.

Still, prices are ticking up and sales are falling with low-end deals and foreclosure resales hitting five-year lows.

Low mortgage rates and a falling supply of homes are doing two things in the region: sparking new sales and cutting back on supply levels. Meanwhile, more mid-to-high end homebuyers are moving into the market to pick up the slack while taking advantage of low interest rates.

“It appears that not quite half of the 12.5% year-over-year gain in last month’s median sale price can be attributed to a shift in the types of homes selling,” DataQuick said. “In September, price levels for the lowest-cost third of Southern California’s housing stock rose 13.2% year-over-year, while they rose 7.7% in the middle and 3.5% in the top third.”

Sale levels fell with only 17,859 properties sold in the counties of Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange during the month. That number is down 20.4% from the 22,438 sales recorded a month earlier and down 1.6% from last year.

via housingwire.com

How to create a sense of urgency for buyers | Bedford NY Real Estate

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Question: When is the last time you sold a home when the buyer had no urgency to buy the ones you showed?

Notice I did not say, “No urgency to buy a home.” I said, “No urgency to buy the ones you showed.”

My guess: Not recently, if ever.

Let us ask this another way. Why would your prospects submit an offer if they saw no benefit or had no fear of losing the homes you showed them to another buyer?

“There is no way I can create urgency if it is not there,” say some real estate agents.

Uh … that is exactly what we do for a living. We help real estate buyers find deals so good that the self-imposed pressure is so great — they have to buy it if they can.

Stay with me on this, because I am about to help some of you make huge commissions by tweaking your showing schedule.

Usually “urgency” has to do with the action the other party needs to take by a certain date or time period. When it comes to buyer urgency, the buyer must have a strong desire to make the purchase, or the urgency factor will not be a factor.

If there is no fear of losing the house if they do not act soon, there is no urgency. So after you have developed trust and determined their needs, including a vision for their lifestyle, your showing schedule must meet or exceed their expectations.

We are talking buying pressure here, but not sales pressure. We are talking about the buyer’s urgency, their desire to make a buying decision before they lose the opportunity.

The best sales I ever made were ones where I put no pressure on the prospects, but showed them properties, prices and terms they could not resist. It makes it a lot more fun this way.

Experienced, successful agents know what I am sharing is the truth. Case in point:

I recently helped a couple purchase a presale home from a production builder. They both liked the home. In this case, the home was not the urgency. The price of the home was not the urgency. How can these be urgent when they are building 300 homes in that location, and my prospect would be buyer No. 3?

The builder offered them a substantial upgrade allowance package. We all knew that all the builders were offering something close to this number, so while the offer was competitive, it was not a reason to buy NOW. So far, we are still ahead of the builder.

But when the on-site agent reminded us one more time, now that we had settled on the house we got into a serious financing discussion with a couple who planned to pay cash for the home.

If the couple used the builder’s mortgage financing, they would get a $5,000 contribution towards closing costs, IF they were one of the first five to purchase in their new community. So far, one person had bought two homes, so my couple would be the third.

So, with just that, they quickly understood that they could lose $5,000 by just being the sixth person to purchase.

The “urgency” phase of this presentation was just getting warmed up.

It was time to see the actual home sites, to get an idea of the view. At this point, the on-site consultant knew that the couple had a dog. The builder had only a few home sites available in this phase, one of which was directly across from the dog walk.

The wife, who was constantly taking the “I don’t know why we are moving” stance, commented on how she could walk her dog and sit on the front porch watching others walk their dog. She got so excited that she turned to her husband and told him to write a $15,000 check “right now. We don’t want to lose this home site.” Fear of losing something she had not a vision for, until she visited the site.

Her husband didn’t move that fast, but within two days, they were signing a contract, which the builder prepared, and now are taking care of every detail of a presale, while I am off doing other things, waiting on a nice commission check in December.

As I have thought about first-time homebuyers or those coming back into the market, I can see why with cash contributions and incentives “new homes” are projected to be a preference over short sales.

It is not hard to see why qualified, cash-strapped homebuyers at any level might buy a new home.

Showing new homes requires a GPS, an automobile and the ability to make an introduction, and giving your prospects time to understand the complete deal, price, financing and incentives.

This not only will help you close more new homes, but it gives your buyer prospect a real price baseline from which to judge the value of resales. This cannot help but help your resales’ closings ratios.

For too long, the real estate industry has wondered why prospects would shop new homes, then buy a new one, many times without using the broker.

The reality is that the only urgency you have going for you is the urgency or perceived urgency residing somewhere in the prospect’s mind. You can affect “urgency” by showing them homes they get excited about living in.

You control no urgency tools nor have you exposed your prospects to any that would give them a solid reason to purchase soon. Thousands of dollars are riding on the buyer’s decision to act or not to act.

You must give the buyers decision-making tools that help them feel good and smart not only about the home they buy, but also about themselves.

Many prospects will end up preferring a resale to a new home, but it does not matter. What matters is that they closed on a home you showed them and are happy with the deal.

Make sure your buyers get the “urgency” story. It is an urgent imperative in your showing schedule. What are your thoughts?

via inman.com