VARbuzz » Danilo Bogdanovic

HARP Throws Life-Line to “Upside-Down” Homeowners

Danilo Bogdanovic — Thu, 02 Jul 2009 18:52:49 +0000

Many homeowners who are trying to refinance, but can’t because they are “upside-down” have just been thrown a life-line. The Home Affordable Refinance Program (HARP) has just been expanded from the present loan-to-value (LTV) of 105 to 125 percent. This increase is aimed at keeping more people in their homes and out of foreclosure or short-sale situations.

Previously, homeowners with an LTV greater than 105 percent could not refinance under HARP. This often lead to financial hardship and even foreclosure for many of those homeowners who saw their mortgage payments increase once their rate reset up.

With the LTV raised to 125 percent, many of those who did not previously qualify now do. Those who now qualify under the raised ceiling may be able to lower their mortgage payments and/or better budget their money with a new (lower) fixed mortgage rate. This should help keep more people in their homes.

There are some restrictions:

The loan mush be currently owned or guaranteed by Fannie Mae or Freddie Mac
The homeowner(s) must be current on their mortgage payments
The homeowner(s) must meet all HARP criteria

Here’s the official Federal Housing Finance Agency press release and fact sheet (click here if you don’t see the document below):

Fannie Freddie Raise Refi LTV to 125% 7-1-09 –

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Increased Tax Bills – Fair or Unfair?

Danilo Bogdanovic — Tue, 05 May 2009 11:36:58 +0000

A lot of what people and the media are talking about these days is tax rates and taxes. Some are wondering why their taxes didn’t go down while others don’t mind them being the same or even a bit higher, but questioning why they’ve gone up so much.

The argument is that it’s not fair that some are paying less in taxes this year while others are paying more. Home owners who live in areas where values dropped the most are typically getting a tax reduction while those that live in areas that didn’t get hit as hard and held their values better are paying more in taxes.

Personally, I don’t think you can have your cake and eat it too. You may be paying more in taxes this year, but it’s because you’ve lost less in market value than others. You may be paying 1, 5 or even 10 percent more in taxes than last year while someone a few miles down the road in another community is paying 1, 5 or even 10 percent less. But they’ve lost 50 percent in market value since the market turned while you’ve lost 25 percent.

Let’s break it down in plain English…

Let’s say you paid $6000 in real estate taxes last year and this year’s tax bill went up by 10 percent – that’s an increase of $600. But your market value at the peak of the market was $650,000 and now it’s $487,500 (25 percent decrease).

The home owner in the community down the street paid $3000 in real estate taxes last year and this year’s tax bill went down by 10 percent – that’s a decrease of $300. But their market value at the peak of the market was $350,000 and now it’s $175,000 (50 percent decrease).

Would you trade your 25 percent decrease in market value for a 50 percent decrease in market value just to pay a total of $1200 less in taxes?

(Personally, I’ll take a 10 percent increase in taxes over an additional 25 percent decrese in market value any day of the week and twice on Sunday)

Some more food for thought…

The more your market value declined since you bought the property, the less chance you have of being able to refinance (due to Loan-To-Value requirements by the lender). There are hundreds of thousands if not millions of home owners that are too upside down to be able to refinance at today’s historically low interest rates. Refinancing at today’s rates versus the rate you got a few years ago could easily mean a monthly cost savings of $25, $50 or even $100+ per month.

This is yet another reason why I’d rather take a slightly higher tax bill and a smaller loss of market value.

Some people will still say that there’s got to be a way to make things more fair (for them). I don’t think there’s a way to do so aside from wasting countless hours and resources trying to create an algorithm that rivals Google’s secret search results and ranking algorithm. And I don’t think it’s necessary. The bad comes with the good…

What is NAR going to talk about on Capitol Hill during Mid-Year?

Danilo Bogdanovic — Fri, 01 May 2009 12:00:02 +0000

Wondering what NAR will be talking about on Capitol Hill during the Mid-Year meetings? Here are some of the main talking points:

Move the Housing Market Forward and Safeguard Our Communities
Health Care Coverage for the Self Employed and Small Businesses
Preserve the Mortgage Interest Deduction
Energy Efficiency in Homes and Buildings
Stabilize and Provide Liquidity to Commercial Real Estate Markets

Click here for more information about the talking points (pdf).

For summaries of NAR issues, check out the NAR Mid-Year page on Realtor.org.

Mortgage Scam Hits Virginia

Danilo Bogdanovic — Fri, 09 Jan 2009 13:00:09 +0000

If you’re a homeowner who has an existing mortgage, beware (and if you’re an agent or broker, you may want to pass this on to your clients). A mortgage scam going around the country has made it to Virginia.

The scam involves receiving a "hello" letter in the mail saying something like,

Dear (insert your full name here),

Your mortgage has been sold to (insert name of a reputable lender here). Beginning (the first of next month), please remit payment to the following address:

(insert name of reputable lender here), P.O. Box (XXX), (city, state and zip code)

The letter may seem valid and very real with further language such as,

"Your terms and rate will not change whatsoever. The only thing that will change is the address where you sent your payment. If you have any questions, feel free to call (insert phone number here)."

What may actually be happening is that you’re sending your mortgage payment to a scam artist that collects your check, cashes it and runs off with your money. Often times, the P.O. Box is forwarded to an overseas "boiler room" address that’s controlled by scam artists. You will not only lose your money, but your existing mortgage company will come after you for non-payment.

Your mortgage being sold to another lender or servicing company is not uncommon. But you should receive a "goodbye" letter from your existing lender before you receive a "hello" letter from the new lender/servicing company.

If you have not received a "goodbye" letter from your existing lender prior to receiving a "hello" letter, contact your existing lender to confirm that your loan has been sold before you send any payments to the new lender. You will need your loan number to confirm the change so have that ready before you call.

And don’t worry…you have up to 60 days after your loan has been sold to send payments to the original lender before having to send it to the new lender. That gives you plenty of time to contact your existing lender to confirm the change while continuing to pay your mortgage payment on time to your existing lender.

Note: Even if you have received a "goodbye" letter, it may be a good idea to verify your loan has been sold prior to sending a payment to the new lender/address.

And if you do find out that you’ve received a bogus letter that’s actually a scam, let your lender know immediately.

REO Listing Agents, Brokers Beware

Danilo Bogdanovic — Fri, 14 Nov 2008 17:00:54 +0000

If you’re a listing agent or broker who does REO work for banks and financial institutions, you may soon be out of new listings and business.

Banks are starting to freeze foreclosures and the steady stream of REO listings is turning into just a few drips out of a leaky faucet. Countrywide/BoA, JPMorgan Chase and Citi have all started to freeze their foreclosures. And other banks are sure to follow in their footsteps shortly.

Why? Because President-Elect Obama has publicly said that he wants to put a 90-day moratorium on foreclosures once he takes office. But the banks aren’t waiting until January 20 to start freezing their foreclosures. In addition, some banks such as Countrywide are cancelling short-sales.

What affect will this have on you? You will see at least a temporary (90 to 180 day) dry-spell of new REO listings. Once you’ve sold what’s in your pipeline, you’ll have few, if any, REO listings. The greater the percentage REO listings are/were of your total business, the greater the financial hit you will take.

And since many short-sales end up turning into REO listings, the cancelling of short-sales puts a hold on some of the REO listings you may have received 6 to 12+ months from now.

What can you do about it? Diversify. If part of your business is traditional resales and buyers, start focusing on reinforcing your relationships with them and asking for referrals. If you’ve neglected your past clients because you were too busy working with REOs, well…you can still try to rebuild the relationship you once had with them. It may not be too late.

If none or just a miniscule part of your business is traditional sellers and buyers, you’d better start marketing and networking now.

P.S. This won’t just affect REALTORS…it will affect buyers, sellers and the real estate market as a whole.

VAR Convention Speaker Rushkoff Speaks The Hard Truth

Danilo Bogdanovic — Mon, 29 Sep 2008 23:18:47 +0000

The speaker chosen for closing session at the 2008 VAR Convention was Douglas Rushkoff. And what a great choice it was. Why? Because he told it like it is and the blunt truth is exactly what the doctor ordered.

Rushkoff spoke about the current economic turmoil, the changes going on in and outside the real estate industry and the effect it’s having on our profession. Here are some of the highlights:

the current method of doing business began 400 years ago
the current business cycle is coming to an end
lending business model is set up expecting businesses/people to fail (hence interest to cover losses)
money is only a medium (check out a related post on Agent Genius)
outsourcing stops us from actually doing something and makes us managers
a return to core competencies is coming (and necessary)
focus on “self-interest” is shifting to the “experience of life”
the more educated a consumer is, the more value they will find in an expert
being a community expert is more important to consumers than you being a ”top producer”
Rushkoff told a story of how he thought one person’s blog showed they were the community expert and how he later found out they were a REALTOR® – (community expert first, REALTOR second)
personally reaching out to your community builds bonds large companies can not
be on the side of people and not business/your own self-interests
the contraction occuring due to market conditions will separate the real RE professionals from the fake ones

The two things that really stuck out for me personally because they most directly relate to a REALTOR’s® business success were:

Be the community expert.
The real RE professionals will separate themselves from the fake ones.

Consumers are now looking for community experts, not just “top producers”. They want someone who knows the ins and outs of a local area, knows what the builders are up to, where the ammenities are, future development plans, upcoming infrastructure changes, etc.

More importantly, they’re looking for someone who is connected to the community on a personal, not just a real estate level. Consumers want someone who knows the people, the businesses, key contacts, etc. They want someone who knows that the produce section at the local mom-and-pop market is better than at Harris Teeter or Safeway.

In regards to how the real RE professionals will separate themselves from the fake ones, I say “AMEN!”. Too many shady and inexperienced agents and brokers who were only looking out for their own self-interests (one of Rushkoff’s points) gave the industry a bad name. A huge number of agents and brokers jumped into the profession thinking they could make a ton of money by doing very little. They didn’t bother to equip themselves with the knowledge and tools to be great REALTORS®. Too many agents and brokers didn’t take their jobs seriously nor did they realize that they were dealing with people’s livelihood’s, their family’s well-being and thousands of consumer’s dollars.

Those agents and brokers are quickly dissappearing while the agents and brokers who take their jobs seriously, know what they’re doing and do it well are the ones rising to the top. And more importantly…these are the agents and brokers that will survive.

There’s a reason why real estate agents are at the bottom of the barrel when it comes to trustworthiness in the eyes of the public. And there’s only one way to get that trust and credibility back - earn it. This shift in the market and the weeding out of those who thought real estate was an easy-money gig with few responsibilities is a first step. Personally, I’m thrilled to see it happening.

These are things that some of you may not want to hear. But I believe that they are the truth and must be heard. The economy, real estate market and consumers have all spoken and we have to adapt and respond.

IMHO, Rushkoff’s session was as much of a wake-up call as it was inspiring and we all needed to hear it.

Focus On Quality, Not Quantity

Danilo Bogdanovic — Fri, 12 Sep 2008 23:19:24 +0000

It seems that some REALTORS® focus on quantity rather than quality. They go after the most amount of business, not the best type of business. This seems to be more so the case these days due to the tough market conditions. But taking the “quantity” approach may not be the smartest thing to do despite it seeming ludicrous to some.

That’s where the phrase “quality over quantity” and the other definition of the “80/20 rule” come in to play. You’ll find that 80 percent of your clients make you 20 percent of your income while taking up 80 percent of your time. You’ll also find that the other 20 percent make you 80 percent of your income and only take up 20 percent of your time.

Let’s dig a little deeper…

Imagine all of the “cool” and “great” clients you’ve worked with (or are currently working with) this year. Why are they “cool” and “great” (let’s call them “A” clients from now on)? Is it because they listened to and took your professional advice to heart; respected your time and efforts and they didn’t jerk you around or use you and then leave you out to dry?

You probably spent less time on the last three “A” clients than you did on the one that is still making you drive around in circles looking at houses that they’ll never buy or who’s property is listed for $50K more than market value and doesn’t want to ever adjust their price.

Do you get upset at those “non-A” clients – the ones who don’t listen to you or value your time? Then why do you still have them as clients and spend time and energy acquiring more of them?

Once you’ve established a core group of past “A” clients, focus on getting referrals from them and attracting the same type of clients. Remember…”birds of a feather, flock together”.

If your “A” client was a referral, make sure you thank the person who referred them to you and keep that relationship alive and well and ask for more referrals. And make sure that keep the relationship with your “A” client healthy and ask them for referrals.

If your “A” client found you online, make sure you ask them exactly where and how (e.g. Google search, keywords, blog post, social media site, etc). Then focus more of your energy on that medium so that you attract more of the same types of clients in the future.

And don’t be afraid to speak up! Don’t hesitate to say things like, “You guys were really great to work with. Thank you for trusting me and listening to my advice. I wish all my clients were as cool as you”.

Is it cheesy? No. Because it’s true and your clients will sense that and know you’re not blowing smoke… In fact, they will appreciate your comment (and compliment) more than you know.

Just imagine all the time you’ve spent on clients who fought you tooth and nail on everything you advised them on. Now take just half of that time and apply it in ways such as the examples above. Pretty soon, you’ll be able to respectfully decline those clients who don’t appreciate your time, energy or opinion and you will have a full book of those that do – the “A” clients.

Once you realize that focusing on acquiring the best type of business is better than acquiring the most amount of business, you will find yourself happier, less stressed out, wealthier and perhaps even with a day or two off to enjoy life.

Just Say “NO”

Danilo Bogdanovic — Thu, 07 Aug 2008 11:16:05 +0000

OK, ready? Repeat after me… “NO”

Try it again…”NO”

That’s what you should be saying firmly when the bank/lender says or “demands” that you lower your commission on your short-sale listing.

That’s also what you should be saying firmly when the listing agent says that the bank “demands” that the commission be lowered and that you, as the buyer’s agent, have to “split the difference”.

Too many agents are letting banks get the best of them. I’ve said “no” several times and have never had a problem. There are plenty of other agents that have also said “no” and have not had a problem either.

Can you actually say “no”?

Yes, you can! And you should. If you haven’t already, check out Lem Marshall’s presentation on short-sales which covers what’s required and what’s not and what’s legal and ethical.

Will the bank kill the deal if you say “no”?

I’ve yet to hear of a bank not approving a short-sale over 1 percent worth of commission. If someone has, please let me know and I will stand corrected.

So next time the bank tells you that you have to cut your commission to almost nothing, just say “no” and move on to the next subject. You’d be surprised at how well that works…

Are Agents Truly Independent Contractors?

Danilo Bogdanovic — Fri, 11 Jul 2008 13:27:34 +0000

- Are we truly independent contractors? Or are we independent contractors when it comes to (not) being paid benefits and social security, and employees when it comes to “sales meetings”, “floor duty” and other “mandatory” things?

- To achieve real success, should we be “interdependent contractors”?

- Who’s really in control?

- Is a pulse and a few hundred dollars being necessary to get a license the reason why consumers look down on us?

I can’t express my personal views or say it much better than Matthew Ferrara did in his post entitled The Consumer-Unfriendly Myth of the REALTOR Independent Contractor. (It’s long, but definitely worth the read)

To Make A Change Or Make Money?

Danilo Bogdanovic — Wed, 25 Jun 2008 21:00:24 +0000

Most of us are passionate about the real estate industry and would love to see things improve and change for the better. And though many of us would love to help make that happen, few actually get involved to help do so.

Why is that? The one reason I keep hearing over and over again is, “I don’t have time because I’m busy selling real estate”.

If you’re a full time Realtor, it’s easy to work 12 or 14 hour days, five, six even seven days per week. And that doesn’t include continuing education, seminars, learning about new business practices, laws, etc. To make things worse, many of us struggle in the “time management skills” category to begin with.

But what if you found out that there were bills, laws, policies or strategic plans being discussed and voted on that would directly affect the way you do business? What if your local or state association did something that made your life harder as a Realtor? What if it was harder to sell more homes every year which directly affected your income and overall livelihood?

You’d want to say or do something about it, wouldn’t you? That’s why you…I…all of us can’t afford to not get involved and help make a change.

“Can I really make a change?”

Up until about nine months ago, I thought “no way.” I thought that associations were all set in their ways and that no one would care what lil-ol-me had to say. But after being on several committees on the local and state level, I can tell you that you associations do care about what you have to say and you can help make a change.

It’s not always an easy task and can be mind-numbing at times. Sometimes associations run into issues of red tape and politics. But that’s in any line of business including your own brokerage firm. But even with some red tape and politics here and there, change is made and things do improve. In fact, you may be pleasantly suprised at how quickly some of the decisions can be made and the changes implemented.

“So how much time do I have to devote in order to get involved?”

Local association committee meetings typically meet up for about two hours every month to two months. In-between meetings, you’ll probably spend an hour or so communicating with other committee members via email and checking out updates and giving input on projects in the works. If the committee you’re on has a really big project in the works, it might take up an extra hour or two in-between meetings, but that’s the most time you’ll spend from what I’ve seen.

State association committee meetings vary. Some are a few hours while others are one or two days long every few months. But if it’s longer than a day, VAR takes good care of you. They feed you (well might I add), provide a hotel room if you’re coming from across the state and they have free access to WiFi, fax machines, printers, etc. I’ve been at Strategic Planning Committee meetings at VAR and still managed to send paperwork back and forth and close deals during breaks, lunch and before and after the meeting. In fact, almost every time I go to a committee meeting at VAR in Richmond, I end up selling a home just before or while there.

“What about scheduling conflicts?”

Yes, committee meetings sometimes convene at not-so-convenient times. I’ve had to schedule showing property, home inspections and settlements around committee meetings or conventions. But if I can schedule those things around personal vacations or family events, why can’t I do it around a committee meeting? After all, what happens in the committee meeting will directly affect my well-being as a Realtor. If I don’t have a livelihood as a Realtor, there won’t be any vacations in the first place.

I’m not trying to convince anyone to take my word for it and join a committee meeting tomorrow. No one could have convinced me of that nine months ago either. But if you’re even somewhat interested, at least inquire more about it and talk to those who are involved to see what their personal experiences are. You can also contact your local or state association and/or the Chairman of a committee you’re thinking about joining to get more information.

You may be surprised to find out just how much of a change you can really make while making money at the same time.

Special thanks to Jim Duncan for the great discussion we had about this a while back.