EZblog

Diary of a Short Sale

msatterlee — Sun, 26 Oct 2008 17:22:23 GMT

It looks like I'm about to embark on my third short sale within the last month and a half. With the economy tanking and home values continuing to drift downward, I see many more on the horizon. For the home-owner who is upside down in value and needing to sell - there really is no other option, with the exception of foreclosure. To provide some insight into this process and the reasoning behind it I thought it would be interesting to chronicle one of these short sales from start to finish. So this is part one of what we'll call the Seattle Short Sale.

The owner of the Seattle Short Sale originally purchased this home for $575,000 in the summer of 2006. I ran the comps for the short sale & was very surprised to see the current value coming in at $489,000 - almost $100K less than it was purchased for just 2 years ago! With some trepidation we listed at that price thinking we might be a little low. The listing did generate a tremendous amount of interest and a barrage of phone calls - but only one offer. So I think we hit the value on the mark. We listed by the way on the 5th of September. Since then 161 agents have viewed it on the MLS and 27 have shown it according to the lockbox.

At the time we listed we did not have approval from the Seller's two lenders. The lenders didn't want to be bothered until the home was on the market. Once it was listed they didn't want to be bothered until we had an offer. So we waited until we had and offer which took about a week.

The smartest thing that we did was to hire a loss mitigation negotiator. She has saved us a tremendous amount of time and energy. And with her expert knowledge of this emerging industry, her contacts within the industry - possibly provided the difference in (hopefully) getting this offer approved w/the lenders. The last thing we want is for the lenders to refuse to approve a short sale and then end up in foreclosure. While I'm confident in my ability as an agent, short sales are new to me so I chose not to pretend to be an expert to avoid putting my client at risk.

The offer came in shortly after the home was listed as I mentioned above and we've been waiting on the lenders ever since. Today's date is October 26th. So patience is definitely required by all parties. Another key is open communication - keeping everyone informed of what steps are being taken and where we are in the process.

In part II of this, Diary of a Short Sale, I'll discuss the verbal approval of the offer from the first mortgage and the conditions that they put on the holder of the second mortgage.

Something New for New Construction

msatterlee — Mon, 20 Oct 2008 21:46:32 GMT

At EZdigs we know that the new home market is tough. For builders the days of eager would be buyers swarming their models are a thing of the past. And rightly so - prices are still high given the state of the economy. Prices have been coming down recently, it will be some time however before buyer confidence is fully restored.

This is exactly why we've created the EZPurchase Program. Never mind the fact that it could revolutionize the new home industry. We're doing it because now more than ever we as a company must act on our mission to reduce the cost of home ownership. After all, that's the very principal on which EZdigs was founded over two and a half years ago. This program simply put removes all but $1,000 of the overinflated agent commission. This means that thousands of dollars that would have gone into the agent's back pocket, can now go back into the transaction. These dollars can be used in the negotiations to help both the buyer's and the builders come to agreement. The net result will be reduced upward pressure on new home prices which couldn't come at a better time. Here's how it works:

A buyer shops for a home by looking on line and visiting builders' model homes. Upon finding a home they like said buyer logs onto www.ezdigs.com and fills out our simple one page Intent to Purchase form. This easy to use form is on the New Home section of our "Buyer" page and allows buyers to input their desired terms and offer price. Upon completion it goes to an EZdigs agent who reviews the details and helps the buyer complete it. Then the EZdigs agent submits the EZ Intent to Purchase form to the desired builder. Once everyone has agreed on price and terms the EZdigs agent will finalize the complete agreement with the builder and support the buyer all the way through closing.

Yes - we're giving away thousands of dollars in potential commissions - but we just think it's the right thing to do. We think most people, builders included, will agree. Let us know what you think by clicking on the "comment" link below.

Time to Freeze Interest Rates

msatterlee — Mon, 15 Sep 2008 21:59:15 GMT

I had this argument with my mortgage broker Brother several months ago. It was back when things were starting to spiral downward and the first dozen or so sub-prime lenders were going under. I'm sure you remember - it was back when every pundit out there was blaming the sub-prime companies and the "suckers" that were dumb enough to take out those loans. I remember specifically one talk show host - Dori Monson of KIRO Radio (yes, I'm Mr. Excitement and that's my station of choice) droning on about how these people have no one to blame but themselves! And why should we the taxpayers come to thier aid and bail them out since they were so irresponsible in the first place?

Two key points - 1. Any experienced mortgage broker can talk almost anyone into a short term fixed loan - one that is fixed for 3 or 5 years at an extremely appealing low rate and then adjusts upwards into an arm for the remaining term of the loan (note: these are different from the WaMu neg am loans). These loans can work well for some borrower's but the short of it is that there simply is not enough general education about the mortgage process. These loans sound good and are easily sold to consumers who think they're great when they hear the pitch. 2. As I pointed out to Dori at the time in an e-mail & correctly predicted - this will be and should be a massive government bailout, not to bail out the thousands of homeowners affected but because it will have a severe impact on our entire economy.

Back to the discussion I had with my brother - he was staunchly against my proposal to freeze or limit the initial adjustment of short-term fixed loans. These initial adjustments by the way were as high as 3% and typically 2%. This means that on a $350,000 loan ones payment could permanently adjust upwards by around $700 in one month. This didn't work out for a lot of people for obvious reasons. My Brother's argument against forcing lenders to freeze this initial adjustment is based on his knowledge that doing so would bring our economic system to it's proverbial knees (kind of like it is now). Such a move would render mortgage backed securities worth pennies on the dollar - liquidity would evaporate, our economic system would be critically damaged. Hmmm that sounds really familiar.

So let me ask again - why are we not taking action through Congress or the Fed (if the Fed has the authority) to immediately limit all annual adjustments to short term fixed loans to one percent? We didn't do it initially because we were worried about the economic system - as my Brother so persuasively argued. We were more concerned with our corporations than we were our fellow American Citizens. What everyone failed to realize is that it all starts with the consumer - we hung them out to dry and look where we are now.

Zero Down is Back!

msatterlee — Wed, 21 May 2008 12:06:36 GMT

Actually it never went away. We're tapping into existing programs & current market conditions and applying favorable new program guidelines made possible by the Federal Economic Stimulus Package to make home buying accessible again. We're so excited about it we're calling it our EZ-Own Program. Here's how it works:

A buyer finds a home priced under $585,000 that they want to purchase.
Offer a reasonable price for the home - even full price if it's priced well - w/the seller agreeing to participate in a well established down payment assistance program such as Nehemiah (www.getdownpayment.com). In this market - that's a no brainer.
Submit your offer via an EZdigs agent and you will receive a closing cost credit of 2% of the purchase price on a typical transaction (one where the seller is paying the typical 3% commission to the buyer's agent).

Net result - new home & virtually no money out of pocket! Now, one may ask, why should I do this today given the current market conditions? The better question is - why wouldn't you? Let's break this down:

Home ownership has not been this affordable in years. Home prices have come down on average 4% over last year in King County and almost 8% in Snohomish County (according to Broker/Agent Magazine)
The slow housing market has put upward pressure on rent rates
Interest rates are at historical lows
This program is approved only through the end of the year

The circumstances have never been better and qualifying is easy. Yes, you do have to show income and credit history however the qualifying guidelines for this program are the more favorable FHA guidelines which allows for lenient debt to income ratios, co-signers, gifted down payment and closing cost contributions among other things. So don't wait another second - shoot us an email or call today to learn more!

EZdigs Goes Green For Earth Day

msatterlee — Mon, 21 Apr 2008 10:53:23 GMT

As Earth Day approaches on Tuesday April 22nd we took a look at what we were doing as a company to see how we could reduce our impact on the environment. Not because we're blindly euphoric about "going green" at any cost but because we recognize that we're all in this together. What we do as a company has an impact on the companies and the people around us. What others do certainly has an impact on us. What we do collectively will impact our children and grandchildren.

What we discovered is that our business model - created to save our clients money - is also helping us reduce our impact on the environment. We were so excited about it that we changed the color of our website for the rest of the month and created a press release! Check out our new colors, learn about what we do to reduce our impact and pick up some tips on what you can do at home to reduce your footprint. Go to our home page and click on our "digs being green" link on the left side of the site.

Have a happy Earth Day from all of us at EZdigs!

Let Them Eat Cake

msatterlee — Sat, 08 Dec 2007 01:12:09 GMT

Many in the media are questioning the deal brokered between the administration and the mortgage bankers. The gist of the voluntary agreement is that on certain fixed ARM's borrowers who have remained current on payments (and meet other specific criteria) can request that their low fixed teaser rate remain fixed at their current levels for five additional years.

Appalling - the talk shows have been on fire with hosts and callers alike criticizing the government for intervening with the market. Why should the government bail out these irresponsible borrowers who signed the paperwork and took out the loans that they couldn't afford, they demand to know. Why should the burden fall on the government, the taxpayer to bail these irresponsible, ill informed homeowners out?

Key point - this is not a government bailout. This is a voluntary agreement by the mortgage companies to freeze interest rate increases. No taxpayer money is involved. I said, no taxpayer money is involved in this plan. My god - get it straight people! It's not like the Fed is lowering or raising interest rates or buying treasury bills. No one's placing a tariff on softwood timber from Canada. No one is printing more money or demanding that other countries eliminate tariffs on American made products. It's just a simple, very limited, agreement by the mortgage companies to try to restore confidence in the real estate market.

So please, get off your condescending high horse and stop questioning the logic of a government bail out. At least wait until it actually is a government bail out..........because it probably will be. And when that pisses you off - call the administration or the Fed & tell them to stop manipulating monetary policy. This is a free market for god sakes - stop lowering interest rates, let inflation run it's course.

Builders Giving Away the Farm.........Literally

msatterlee — Fri, 16 Nov 2007 16:50:26 GMT

I recently attended a turkey giveaway promotional event put on by Cam West Development. The purpose of the event was to attract active agents to their sites in the hopes of selling more homes before the end of the year. The fact is, all builders are feeling the pain of the market slowdown. In all fairness to my friends at Cam West, the turkey giveaway is an annual tradition. The good news for buyers however? They really are giving away the farm!

If you have ever dreamed of owning a brand new home but thought you just couldn't afford it........you were probably right.............until now. All builders are wheeling and dealing; big time. Here are some examples: Quadrant Homes is offering up to $45,000 in buyer bonuses in select communities; D.R. Horton is offering up to $30,000 in buyer bonuses in at least one community; Other builders are offering huge financing incentives and contests for agents who bring buyers.

We are in a rare position in this marketplace where the buyer has the upper hand. "Builders are in a position where they have paid too much for land" according to Todd Britsch of New Home Trends. Builders need to liquidate their existing inventory, even if it's at a loss in order to have capitol to reinvest. In the end the bigger builders will be fine. The people who get hurt the most in this situation are the land speculators. According to Britsch we currently have a 12 month supply of recorded lots in King County. This will cause prices for raw land and finished lots to completely "reset." Practically speaking they already have. Land that may have sold for $225K per finished lot a few months ago isn't even being considered currently @ $150K per lot.......but I digress.

What all of this means for today's new home buyer is that, right now - today - is the absolute best new construction home buying opportunity in decades! Here's an example - going back to our friends at Cam West. I have a buyer who is marginally interested in a Cam West home that is almost complete. This home is absolutely gorgeous and reflects Cam Wests' commitment to quality, style & detail. The backyard is enormous, fully fenced and fully landscaped. And as if that's not enough it backs up to a 33 acre greenbelt. The site agents were highly motivated to put a deal together. My buyers wanted a complete appliance package, including, refrigerator and washer and dryer AND they wanted the entire main floor to be hardwoods. Builders response? Let's write it up, as in - no additional price increase, no lot premium, no charge for the fence or rear yard landscaping, etc. Are you kidding me?! This is unheard of! I don't know why my clients didn't buy this home. What I do know is that whoever does will be very thankful they did in about 4 or 5 years.

EZcast3 - Investing in the Current Market

msatterlee — Mon, 29 Oct 2007 15:26:17 GMT

B of A to Shut Down it's Wholesale Lending Division?

msatterlee — Fri, 26 Oct 2007 21:19:25 GMT

Sounds like bad news right? Or could it be the financial play of the decade? Here's what I'm guessing will happen tomorrow in the financial markets.

Countrywide releases it's third quarter earnings tomorrow and guess what, they are going to suck! Countrywide stock will plummet from its current trading range of 17 down to around 12 bucks a share. Remember who rescued Countrywide and kept them from going under 2 months ago with a massive cash infusion? Bingo - Bank of America; B of A to the rescue again buying shares of Countrywide and propping up thier stock - this time with a catch. Here's how the conversation will go: "Your welcome Countrywide. Oh and by the way......since we (Bank of America) just announced the closing of our wholesale division, perhaps we could take over yours? Thanks, I knew you wouldn't mind."

This way everyone wins, Countrywide doesn't "sell" the company, they just give up control in return for badly needed capitol. For their efforts (or cash) B of A takes over a commanding interest in the biggest loan servicing company in the US. Countrywide stays afloat and B of A becomes an even bigger financial juggernaut. So you see, the news isn't all bad.

Lenders Forgiving Back Payments!

msatterlee — Wed, 24 Oct 2007 21:45:05 GMT

Not kidding – a friend of mine was three months behind on his mortgage. His lender called him & mentioned that they noticed he was 3 months behind in payments. They told him they had a solution. Here’s what they did (and this is amazing):

They forgave half of his back debt, wiping it out completely and they said that they would add the remaining debt onto the back of his loan. This effectively brings his loan current as in, no longer behind!

This is, as The Donald would say, “hUGE”. Why would a lender do this? Believe it or not – it makes a lot of sense in the long run. Ultimately it could help stabilize property values. The lenders are protecting their investments by preventing mass foreclosures. More foreclosures will further erode property values by infusing more fear and uncertainty in the housing market.

The rising foreclosure rates are what triggered the sub-prime market collapse. Foreclosures started creeping up, Wall Street didn’t like this so they stopped paying a premium for these loans. Suddenly lenders who had made loan commitments were left holding the bag because they couldn’t sell their current bundle of loans. So these lenders started dropping like flies. Worse yet was the impact all of this has had on the national real estate markets. Housing markets nationwide are in a state of paralysis or an all out free-fall. No one wants to buy a home only to have it worth fifty thousand dollars less next year. So the last thing the markets need is more bad news about rising foreclosure rates.

There are various reporting mechanisms that provide very detailed information about the percentage of households behind in payments. These reports are heavily analyzed these days. By forgiving back debt and/or adding back payments to the end of a loan, the lender has effectively brought this borrower out of the pre-foreclosure stages and more importantly, out of these reports. If this is done on nationwide scale then lenders are collectively (and quietly) buying their way out of a crisis. Foreclosure rates stay lower than they would be otherwise and investor and consumer confidence start to increase. Net result; property values start to stabilize – investors protected, foreclosures prevented, everyone’s happy…….as long as it works.

EZcast Episode 1 - EZdigs.com

msatterlee — Fri, 12 Oct 2007 21:43:12 GMT

To Buy or Not to Buy - That is the Question

msatterlee — Tue, 09 Oct 2007 12:43:46 GMT

There was a big article in the Seattle Times over the weekend about home prices coming down – or at least that the rate of appreciation is slowing. Of course this is old data. Those of us in the thick of the market are seeing the hundreds upon hundreds of price reductions every day. We know full well that prices have been sliding for some time. I think the consumer knows this too. The big question for most people considering a purchase is; how low is it going to go?

My answer? Not low enough to matter.

In other words, we are currently experiencing a temporary softening in the market due to the sub-prime mortgage meltdown and the resulting lack of homebuyers in the market. According to the NWMLS we have about 9 – 10 months of inventory currently on the market. Sellers will continue to add incentives, lower prices and take homes off the market in response to current conditions. Most people who don’t have to sell now will wait. Thus we will have less new inventory. Those who must sell will get more desperate and the incentives and concessions they offer will become more aggressive. So we will start moving through this inventory a little faster – which means it won’t take 9 – 10 months for the market to recover. I think the market will start to pick up during the early part of next year, February of `08, as it always does.

Our local economy is very robust and ad sales, often seen as an early indicator of the health of the broader economy, remain very strong according to an article in September 28th version of the Puget Sound Business Journal. With our economy rooted in technology, aerospace and international trade, the Pacific Northwest is on an entirely different economic wavelength than the rest of the country. So to me all of this indicates that the drop in housing prices is going to be temporary and the dip in pricing trend somewhat shallow.

What does this mean for buyers? If you want to find a great buy on a home – NOW is the time to act! Think about it for a second – if you wait until the market recovers then you’re going to be thrown back in the market with everyone else – competing for the good properties. Right now there is no competition from buyers – and no one is offering full price! So if you’re at all thinking about buying, roll up your sleeves sharpen your pencil and lowball! You will be surprised at how receptive the seller’s are.

-Mike Satterlee

Why I started EZdigs

msatterlee — Fri, 21 Sep 2007 18:33:15 GMT

The actual start date of EZdigs was April of 06 when I founded the company out of my garage. We “upgraded” the ownership structure to an LLC a few months later. The early going was tough but I had dogged perseverance and a clear idea of what I wanted to do – reduce the cost of buying or selling a home by drastically reducing the commissions paid at closing.

I have always been an advocate for affordable housing options. In fact I wrote an article about it way back in October of 1996 when I was working for my Great Grandfather’s company, Iverson Construction. I was managing a 30 unit section 8 HUD certified apartment building for senior citizens that my Grandfather had built in 1980. He did it because he cared about affordability and wanted to do something positive for the community. In my capacity as Building Manager, I worked directly with the tenants on an ongoing basis certifying them as they came in and re-certifying them annually. It is this experience that created the foundation for my beliefs about the need for affordable housing. These beliefs stuck with me as I moved through the real estate and lending industries.

Since the late 1800’s our family businesses have involved homebuilding, banking and the buying and selling of real estate contracts. During those years we were involved in lending and I was also a Loan Officer for another family business, Foss & Associates, Inc. At Foss I learned about the lending and note buying side of things from my uncles, Skip and Eric Foss. I learned a few other things from these two whose reputations precede them but those are stories for another day. It was here that I first obtained my real estate license thinking it would help me in my work as a loan officer. I eventually went on to work with other lenders such as Washington Mutual but the call to build was strong. There was one problem however; I had never really built anything. I was too young to ever work directly for my Grandfather’s construction company so I did the next best thing. I went to work for other builders.

I started with Weyerhaeuser Real Estate up at Snoqualmie Ridge. I soon became the Sales and Marketing Manager for both Snoqualmie Ridge and Redmond Ridge. I became a Quadrant Homes employee when Weyerhaeuser transferred ownership of their planned communities to Quadrant. I reported directly to the forward thinking Executive VP of Sales and Marketing and learned their very successful system for building and selling over 1,000 homes per year. It was here that I first thought of the possibility of adapting this sales model to residential real estate. During the next few years I worked as Director of Sales for D.R. Horton Custom Homes. I worked on the residential resale model often however hoping to some day see it come to life.

Having worked with the two biggest builders in the Pacific Northwest, I understood the efficiencies that could be achieved by working with volume. Having had my real estate license for the last 10 years and working in several different big brokerages, I fully understood the inefficiencies that were commonplace in the existing real estate paradigm. Quite frankly the Internet age caught the real estate industry off guard. Information about homes and home prices was suddenly available online. The consumer no longer needed to walk into a brokerage and talk to the greenhorn at the “up-desk” to get the information they wanted about a home. This is when the air started leaking out of the real estate balloon.

The smart brokers at least started talking about technology but they were so far behind the technology curve that a whole industry of “middlemen” was spawned to connect potential clients from the Internet to the traditional agents. Almost overnight most buyers were shopping online prior to engaging with an agent and early on most agents and brokerages did not have a strong online presence. Companies like HouseValues and others sprang up to fill the void and started selling leads to agents. The fact that agents had to buy leads simply perpetuated the high commission structure.

This development frustrated me to no end. Here you have the technology and the information in the hands of the consumer but the consumer doesn’t know it. Most are still paying the higher commissions thinking those high priced agents do something different or magical that others can’t do. The only thing the high price traditional agents do that’s different is spend hundreds of thousand of dollars every week on pages of classified & print ads that no one reads and pay hundreds of thousands of dollars on storefront offices that no one walks into. Oh yeah, they also practice how to overcome objections to their unnecessary fees, i.e. “I have to split the commission with my broker” (only true for the inexperienced agents – and not your problem); “my broker won’t allow me to lower the commission” (agents are independent contractors & all commissions are negotiable); “I’d have to lower the commission that we offer to the buyer’s agent and this would deter agents from showing your home” (lie, lie, lie – any listing agent can lower their own fee without lowering the fee to the buyers agent). I’ve worked for the big brokerages, I’ve seen and heard it all first hand. Traditional agents have simply had it too good for too long and they are fighting tooth and nail to preserve it.

I built EZdigs to be more company centric where the corporate office supports the agents in the field by assisting with marketing, advertising, contract coordination and basically everything else the agent needs so she can focus on her clients. This allows for consistency in branding, customer service and marketing/advertising. It also allows the broker to have more direct involvement with her agents’ transactions. Simply put; it’s a better, more efficient way to do business.

So….how does all of this relate to the cost of housing? Here’s an example; on purchases we provide a credit to our buyers. The seller typically pays a 3% commission to the buyer’s agent; since we only retain 1% for our services, we credit the difference to our buyers. On a few occasions in lieu of the credit we have simply lowered the price of the home by 2%. In this case the seller actually nets more because they don’t pay the commission and they pay slightly less in excise tax (lower price = less excise tax). So, clearly there is a direct correlation between real estate commissions and higher home prices.

So by lowering real estate commissions we can have a direct impact on the cost of housing. My belief is that real estate commissions will be reduced to 2% of a home’s selling price and that amount will be split between the buyers and seller’s agents (1% each). With median home prices hovering around $500,000 in areas like King County, this should be more than enough for hard working agents & their efficient corporate brokerages.

The irony is that groups like the National Association of Realtors®, Washington Association of Realtors® (both of which I’m a member) talk about how the high cost of housing is a “priority”. The reality is that real estate agents can do more than any one entity in the home buying process to lower the cost of housing by simply lowering their commissions.

If traditional brokerages want to continue to try and justify their high fees, well that’s OK with me. As more and more consumers educate themselves on the process and their options there is more of a backlash against the traditional fee structure. In fact last months edition of Realtor Magazine stated that 63% of Americans think that a 5 or 6 percent commission on just a $300,000 home is too high. The official response from the National Associations Of Realtors®? “All commissions are negotiable.”

New Website Design and New Blog!!

msatterlee — Mon, 10 Sep 2007 13:49:37 GMT

Thanks to the help of many, we have a newly designed website and blog!

The blog will have current real estate market info and the latest with EZdigs.

Let me know what you think!

Mike