Let's Increase Drilling and the Supply of US Domestic Oil and Get Price at the Pump Down

Business people must recognize that we have a serious problem in the US with the price of oil and gas at the pump.

The Democrats in US Congress are keeping us from exploring and drilling for domestic oil. And they are helping to limit our domestic supply.

The U.S. House and its appropriations committee (lead by Democrats) refused during the week of June 11, 2008, to lift the ban on oil exploration on the outer continental shelf (at least 50 miles from American shores).

We need to get more domestic oil. We need to increase US oil production and get price at the gas pump down. Drilling for oil is a way to accomplish that.

Let's tap our own US resources for oil. Otherwise, the international price of oil will rise to $250 a barrel, and we will be paying more than $10 a gallon at the pump.

Posted by Harrison K. Long, Explore Properties Group, Coldwell Banker Previews

NAR Approves New Model Rules For MLS About "Short Sales"

The National Association of Realtors (NAR) board of directors has recently adopted new policy for disclosure of short sale listings in a multiple listing service.

The NAR directors “approved new model rules for Multiple Listing Services (MLSs) that would enable practitioners to alert one another to potential short sales and put them on notice about the sharing of any reduction in gross listing commission required by a lender. MLSs are given the authority to decide whether or not their participants have to disclose reasonablyknown short sales."

All MLSs must provide their members with the means to disclose that a given listing is a short sale.

For purposes of the new rule, short sales are defined as “a transaction where title transfers; where the sale price is insufficient to pay the total of all liens and costs of sale; and where the seller does not bring sufficient liquid assets to the closing to cure all deciencies.”

Agents for buyers in short sales must advise the buyer clients that a proposed short sale price accepted by the seller might not be approved by the lender. Buyers should be careful and not get too excited about a possible bargain at short sale.

It's not the easy road for a real buyer.

Posted by Harrison K. Long, Explore Properties Group, June 5, 2008
Source: Bob Hunt.

What Does The NAR v. DOJ Case Settlement Mean?

The U.S. Lawsuit vs. the National Association of Realtors Online Listing Policy Is Being Settled as of May 27, 2008, which calls for the adoption of a new online listings policy.

Source: settlement proposal (United States v. National Association of Realtors, May 27, 2008)

The lawsuit had challenged the NAR policies governing the online sharing and display of property listings, including Virtual Office Web site (VOW) and Internet Listings Display (ILD) policies.

The biggest win for NAR was the DOJ's concession that MLS members must be actively engaged in real estate transactions, which is defined broadly include brokers who make an effort to be engaged in real estate transactions, but fail to close any deals over an extended period of time.
Another NAR win is a registration requirement that will restrict access to VOWs and enable brokers to keep records of VOW-registered e-mail addresses. Those must be confirmed before the registrant can access the VOW.
Other data-sharing policies for multiple listing services and participants, known as Internet Data Exchange (IDX) policies, were not challenged in the lawsuit and are not affected by the proposed settlement.

The proposed settlement provides that the display of listing information on a VOW site does not require separate permission from the participant whose listings will be available on the VOW. However, it does provide that individual sellers can choose to block information about their home from display on the Internet.

The proposed settlement is not yet final, will be published in the Federal Register and is subject to a 60-day comment period and a 30-day review by a judge. NAR must adopt the modified VOW policy within five business days of the final judgment on the settlement agreement.

Posted by Harrison K. Long, Explore Properties Group, May 28, 2008
Source: settlement proposal (United States v. National Association of Realtors, May 27, 2008)

U.S. Lawsuit vs. National Association of Realtors Online Listing Policy Is Being Settled (5-27-08)

The U.S. antitrust lawsuit filed against the National Association of Realtors in 2005 has reached a proposed settlement, May 27, 2008, that calls for the adoption of a new online listings policy.

The lawsuit had challenged the NAR policies governing the online sharing and display of property listings, including Virtual Office Web site (VOW) and Internet Listings Display (ILD) policies.

Other data-sharing policies for multiple listing services and participants, known as Internet Data Exchange (IDX) policies, were not challenged in the lawsuit and are not affected by the proposed settlement.

The Justice Department had alleged that NAR's policies could restrict competition and consumer choice in real estate services, that those policies would discourage low-cost services.

The DOJ had challenged the NAR requirement that multiple listing services permit brokers to selectively withhold property listings from companies that operate VOW-based search sites that feature a collection of property listings from MLS members.

The proposed settlement provides that the display of listing information on a VOW site does not require separate permission from the participant whose listings will be available on the VOW. However, it does provide that individual sellers can choose to block information about their home from display on the Internet.

The DOJ said that the MLSs that had adopted policies in violation of the settlement proposal must rescind those rules. The DOJ reports that under the new policy, brokers participating in a NAR-affiliated MLS will not be permitted to withhold their listings from brokers who serve their customers through virtual office Web sites.

Another rule challenged by Justice Department related to restrictions in using VOW sites as a source of referral fees from other brokers. The proposed settlement provides that an MLS may not prohibit, restrict, or impede a participant from referring registrants to any person or from obtaining a fee for such referral.

The NAR position is that all members of MLS must be actively engaged in the act of real estate buying and selling, which prevents MLS members from joining an MLS specifically to "scrape" property listings from other members.

The proposed settlement is not yet final. It will be published in the Federal Register and is subject to a 60-day comment period and a 30-day review by a judge. NAR must adopt the modified VOW policy within five business days of the final judgment on the settlement agreement.

Posted by Harrison K. Long, Explore Properties Group, May 28, 2008
Source: settlement proposal (United States v. National Association of Realtors, May 27, 2008)

It's Good that NAR Will Consider New Rules for Listing & Advertising of Short Sales & Distressed Properties

The good news during April 2008 from the National Assoc. of Realtors is that it is considering new rules for listing and advertising of short sale and distressed properties.

It's about time.

Rules must be made and followed regarding listing of these properties with the MLS services. The rules should bind owners and sellers, listing agents, and lenders, through the short sale process.

The health of our real estate market is dependent upon buyers having sufficient and accurage information on which they can rely for truth about the properties.

Regarding distressed properties, the market and folks who buy need MLS listings to identify whether there is lender approval of offers on short-sale.

The market needs to have MLS rules on advertising of commission offered by the owner and lender to the broker Realtors for the buyers. Buyers and their agents are dependent upon accuracy of information provided to them in order to make informed decisions and protect value.

The market and buyers deserve to know from the MLS whether the property will be tied up in a lengthy process of lender determination of eligibility, whether there is non-judicial foreclosure in the works, and what is exactly being offered.

After the rules are established, the NAR, California Association of Realtors, and local MLS groups, must enforce those rules, and not allow listings that don't comply.

Banks, lenders, and holders of notes, must not be allowed to set rules and information to be provided in the MLS listings.

Posted by Harrison K. Long, Explore Group, Realtor and Broker, Irvine, CA, May 8, 2008.

Labels: Ethics and business practices, marketing, Realtors and Brokers, short sales

Is A Home Buyer Equity Sharing Arrangement a Good Thing in This Market? -- Part One

A man contacted us a week ago about his predicament. He and his wife had entered into an EQUITY SHARING AGREEMENT with a mortgage broker during 2006 to buy a home in South OC. This family made payments to the mortgage company as rent on the agreement. The mortgage company in turn made some payments to the lender on the note. The mortgage company went out of business six months ago and is not now making payments. This family could be facing foreclosure and evication? Was this EQUITY SHARING ARRANGEMENT a good thing?

...........

Investments in real property can take various forms, such as syndication, partnership, limited partnership, or LLC, where none of the parties live in the property and the property is rented to tenants.

An EQUITY SHARING ARRANGEMENT involves one party (the owner-occupant) occupying the property and the other (investor) putting up the bulk of the financing. Both the owner-occupant and the investor can receive tax benefits and share in the profit according to their investments as described in their equity sharing agreement. First-time homeowners are the typical owner-occupant while the investor can be a family member, a seller, or any real estate investor.

EQUITY SHARING is a form of ownership and investment that allows two or more parties to share an interest in real property. It is frequently used in situations where, because of the high cost of housing, one party, the investor, puts down the bulk of the downpayment, and the other, the owner-occupant (also caller the "occupier") puts down little or no downpayment but agrees to pay a monthly amount consisting of "rental payments," mortgage payments, taxes, and other specified charges, and lives in the dwelling. The owner-occupant may pay all of the mortage costs as "rent" or may pay two different amounts, one portion representing the rent and the other representing mortgage, which would include interest for which he or she could receive a tax deduction.

Depending on the specific terms of the contract, there are tax and ownership advantages to EQUITY SHARING.

Be very careful. There are potential tax and financial pitfalls in an equity sharing agreement that is loosely worded. Since the owner-occupant does not own 100 percent of the property, he or she must pay a "fair market rental" to the investor for living in the dwelling. The rent paid by the owner-occupant should be proportional to the percentage interest that the owner-occupant has, and should be based on the fair market rental value determined in good faith. Ideally, they have both signed the note and trust deed and are also on title. The rental paid to the investor is taxable income, and the interest paid on the mortgage is tax deductible. On the other hand, the investor also pays the remaining fraction of the mortgage each month based on his or her proportional share of ownership and can deduct the interest as an expense of the property, subject to passive loss and other restrictions.

Be careful with EQUITY SHARING AGREEMENTS. Consult a qualified Realtor and also with an experienced real estate lawyer in your area and jurisdiction.

Posted by Harrison K. Long, Explore Properties Group, May 3, 2008
Source: California Association of Realtors, March, 2008

Homeowners Who Are Upside Down on Loans Should Be Careful When Considering to List a Short Sale

Upside Down Homeowners Should Be Careful When Considering to List a Short Sale

With home loan foreclosure or deed-in-lieu of foreclosure, sellers will take a hit of 200 to 300 points on their FICO scores. The exact penalty on FICO will depend on overall condition of credit.

The effect of a short sale on a seller's credit FICO score is the same as a foreclosure. The penalty on a credit report will appear as a pre-foreclosure in redemption status and result in a loss of 200 to 300 points on FICO.

With a foreclosure or deed-in-lieu of foreclosure situation, a seller who wants to buy another home later will end up waiting about 36 months before a lender will offer a reasonable opportunity.

With a short sale, the notation on a seller's credit profile of 'settled for less than owed' (short sale) prevents the consumer from obtaining an institutional loan for about 24 months, depending on the lender program (Fannie Mae guidelines).

More bad news is that the short sale seller could be subject to lawsuit and deficiency court judgment for the difference between the loan amount and the amount paid.

In California, purchase money loans are not subject to lawsuit and deficiency judgments. However, hard money loans, equity loans and refinances are subject to lawsuit and deficiency judgments. Other states have laws regarding personal guarantees on loans, which could also result in lawsuit and deficiency judgment against the owner.

This is complicated. Homeowners considering to list for a short sale should be careful and consult a qualified real estate or tax attorney in their state and jurisdiction.

Posted by Harrison K. Long, Explore Properties Group, April 30, 2008

Rising Gas Prices Is Not Good For Our Economy, Business & Real Estate

Some folks believe our high prices at the gas pump can be blamed on the big oil companies. Wrong.

Rising prices in free markets result from an increase in demand and/or decrease in supply. Supplies of oil have been reduced by environmentalists’ demands that no more oil wells be drilled, that no petroleum products be refined and that no oil be transported. Supplies of oil have been taken off the market by OPEC (which has a monopoly), not the big oil companies. Producing, refining and transporting oil has become more expensive, at least in part because of pressure from environmental activists.

Demand for gasoline has increased to some extent by growing economies of China and India, and others, and to some extent by wars in Iraq and Afghanistan.

The desire for safety and convenience causes some people to prefer larger, heavier, safer cars, which use more oil and gas.

The global warming movement criticizes the use of petroleum products, causing additional costs in taxes, regulation, carbon permits.

Let's discuss this as business people and Realtors, asking our policy and lawmakers to plan and focus on getting us better supply of oil products.

Posted by Harrison K. Long, Explore Properties Group, Irvine, CA, April 28, 2008

Sellers Should Require Serious Earnest Money Deposits On The Sale of a Home

Sellers sometimes make the mistake of contracting with a buyer for a home sale and asking earnest money deposits of less than three percent of the price. That's painful when the buyer backs out of the deal.
One way to assure that a buyer is serious is to require 3 percent or more of earnest money deposit. If the buyer doesn't and later backs out, he would only lose the small deposit and cause financial hardship for the seller. The seller would also lose the benefit of finding a buyer during the time the home was taken off the market.
Smart sellers ask buyer deposit of at least 3 percent, so that the buyer will think twice about walking away.
In some states and according to contract, if the buyer defaults prior to sale closing, the earnest money goes to the seller. In some states, the seller can also sue the buyer for damages, if the house subsequently sells for less than the original contract price, plus costs sellers incurred to carry the house until it sells. In some situations, seller can sue the buyer for specific performance, which is asking the court to force the buyer to close the deal.

Be careful and consult a local attorney for guidance on this. Keep in mind that litigation is time-consuming, expensive and uncertain.

Posted by Harrison K. Long, Explore Group, April 28, 2008

Do Lower FED Rates Signal That Mortgage Rates Will Fall?

Do Lower FED Rates Signal That Mortgage Rates Will Fall?
That depends.
The 30-year fixed rate mortgage is not tied to short-term treasuries. Fixed mortgage rates are tied to long-term bond yields that move based on anticipation of the economy and inflation. Fixed rates usually come down when there is outlook for slow economic growth. Long term mortgages are securitized and sold on the global market, and investors now demand a higher risk premium on these mortgages.
If you have 7 and 5-1 Adjustable Rate Mortgages (ARMs), there is good news, and it's tied to the treasury index. If the FED cuts rates, it usually signals better rates for ARMs.
If the FED cuts rates, those with Home Equity Lines of Credit (HELOC) will be pleased. HELOCs are mostly pegged to the prime rate, which moves in step with the Federal Reserve.

For good mortgage information, rates and products, contact Tim Sibley, First Capital Mortgage, 949-718-1511.

Posted by Harrison K. Long, Explore Group, Coldwell Banker Previews, April 27, 2008.

Good News that NAR Will Consider New Rules for Listing & Advertising of Short Sales

News is that the National Assoc. of Realtors is considering new rules for listing and advertising of short sale and distressed properties. That's good. We need strict rules to bind owners and sellers, listing agents, and lenders, int the short sale process. The market needs all such MLS listings to identify whether there is lender approval of offers on short-sale. The market needs to have specific MLS rules on commission offered by the owner and lender to the broker Realtors for the buyers. The market and buyers deserve to know by MLS whether the property will be tied up in a lengthy process of lender determination of eligibility, whether there is non-judicial foreclosure in the works, and what is exactly being offered. After the new rules are established, the NAR, California Association of Realtors, and local MLS groups, must enforce those rules, and not allow listings that don't comply. Banks and lenders must not be allowed to set all rules and information to be provided in the MLS listings.
Posted by Harrison K. Long, Explore Group, April 24, 2008.

The Market Needs More Control Over Information on MLS Listings for Distressed Properties

The Market Needs More Control Over Information on MLS Listings for Distressed Properties.
Consumers and buyers need more accurate information on distressed property listings. The markets and MLS should have better control over listings of distressed properties, including foreclosures and short sales.
On a short sale, the owner lister should be responsible for accuracy of information and sign to certify it. The owner and their agent should be contractually and legally responsible to pay the buyer's broker the amount of commission set forth on the listing.
On a bank owned property, the bank should certify its contractual agreement to pay the buyer's broker the set commission prior to the property being listed by the MLS.
These and other simple measures would help Realtors provide better service, assure the consumer a better handle on whether and how to purchase such properties.

As of April 19, 2008, distressed properties, short sales and foreclosures, were 35.1 percent of MLS listings in Orange County, California.

Posted by Harrison K. Long, Explore Properties Group, April 22, 2008

Top Five Reasons to Use a REALTOR®

Top Five Reasons to Use a REALTOR®
1. REALTORS® subscribe to a strict Code of Ethics—a set of obligations that often go above those mandated by law. Known as the REALTOR® Code of Ethics, these principles embody a strong commitment to fairness, integrity, and moral conduct in business relations. Under the Code of Ethics, REALTORS® put the needs and well-being of their clients above anything else.
2. As members of C.A.R., California REALTORS® have access to confidential legal counsel, innovative marketing tools, and an extensive repository of market data. With these resources, REALTORS® are equipped to help you make important decisions throughout the home-buying or –selling process, such as how much home you can afford or what information you must disclose to the other party.
3. Among the top skills REALTORS®’ bring to the table is the ability to negotiate a favorable price. REALTORS® are knowledgeable about the small repairs and improvements you can make to enhance the “salability” of your home. According to the NATIONAL ASSOCIATION OF REALTORS®, the median price of a home sold using an agent is 16 percent higher than a home sold without the guidance of an agent.
4. Your REALTOR® acts as your advocate during each step of the transaction. Whether evaluating buyer proposals or preparing counteroffers, your REALTOR® saves you time by serving as a liaison between you and the other parties of the transaction, prepares and reviews necessary paperwork, and guides you through the process to make sure everything is handled appropriately.
5. REALTORS® are well-versed in up-to-date market data, such as inventory levels, time on market, and ratios of list-to-sold prices. Backed by education and experience in the real estate industry, your REALTOR® can help you leverage this market information to aid in your decision-making process.

Source: California Association of Realtors, 2008
Posted by Harrison K. Long, Explore Properties Group

The Art of Life is to Show Your Hand

"The Art of Life is to show your hand. There is no diplomacy like candor. You may lose by it now and then, but it will be a loss well gained if you do. Nothing is so boring as having to keep up a deception."
-- E.V. Lucas, 1868-1938, prolific British author

Posted by Harrison K. Long, Explore Group, April 3, 2008

Credibility Is All We Have At The End of the Day

A journalist once said: "In our business, credibility is all we have at the end of the day. If you can't believe what's published in the newspaper, or the magazine, you move on. The lesson may be in how we think when we become the leaders. Too often, the best lesson of leadership - only by being last can you be first - is lost amid the power. Rocket scientists aren't the only ones who can pick out the people in the room acting better than the rest."
[Source: Craig Reem, OC Metro magazine, July 2007].
We agree.
Posted by Harrison K. Long, Explore Group.