Monthly Archives: October 2010

The Foreclosure Story No One is Talking About

Fear and loathing Marty, fear and loathing…that’s what Vince Gonzalez, the then KPHO news reporter, used to say to me whenever we’d head out of the newsroom on our daily search for the latest victim of wrongdoing.

Vince and I once got into a heated on-camera exchange with the owner of a mortuary.  Evidentially, this guy was cremating people using sub-standard equipment and techniques.  Let’s just say the loved ones of the deceased and the Arizona Department of Environmental Quality were not too happy with this mortician.   So we did what all good local TV news teams do – we ambushed him at this place of business. He nearly punched out Vince and ripped the camera off my shoulder.  Good journalism?  No.  Good TV?  Yes.

Last I heard Vince was a correspondent for the CBS Evening News.  I left the news business in 2002 to embark on a more stable career in real estate.  These days whenever I read or hear a real-estate related news story I remember Vince’s words – fear and loathing.

The news media’s job is to attract the maximum amount of readers/viewers.  More readers/viewers equal more money.  It’s a simple formula that media executives have mastered – scare the crap out of your readers/viewers and they will read/watch your news more often.  That is why at least once a quarter you’ll hear a moronic news reporter saying that the bacteria in your kitchen sink could kill you.

For the past month Bank of America has dominated the headlines.  Their moratorium on foreclosures has created an industry-wide panic.  Retail home buyers and investors have put the brakes on because of all the uncertainty.  The mainstream media loves this stuff.  It’s good for their bottom line but lousy for us real estate investors.

Needless to say, it came as no surprise to me that THE foreclosure story no one is talking about, first announced on October 12th and updated October 20th, is a story no one is talking about.  Why?  The story puts an end to all of the fear, speculation and uncertainty circling “foreclosure-gate.”  The wide reporting of this story would get scared retail buyers and investors back into the real estate market – exactly what we need to continue the recovery.

The Associated Press headline read ‘Fidelity National, Bank of America in Foreclosure Deal’.  You don’t have to read the entire article.  Here’s the deal in one sentence – Fidelity National will continue to issue title insurance on all foreclosed homes and Bank of America will pick up the tab for any potential litigation that could come from cutting corners on paperwork or legal procedures. 

What does that mean if you are a retail buyer or investor?  It means you will get a title insurance policy on that foreclosed home you want to buy.  It means that if the former owner tries to sue, Bank of America will step in and cover all the costs.  You no longer have to worry about giving up that foreclosed home you just bought to the prior homeowner.  This deal removes the cloud of uncertainty that hovers over the huge supply of foreclosed homes. 

That’s good news for retail buyers and investors.  But like I said, news outlets prefer fear and loathing.  It’s like an economist once proclaimed, “If the media was there the day Jesus walked on water next day’s headline would have read JESUS CAN’T SWIM!”

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Facts Tell, Pictures Sell

I know certain things.  For example, I know that I should exercise at least three times a week for 30 minutes.  I know that I should eat a balanced diet of lean protein, fruits and vegetables.  I know I shouldn’t drink soda, smoke cigarettes, or drink alcohol excessively.   I also know I shouldn’t speed on the freeway or talk on my cell phone while driving.  I know I should floss my teeth every night before I go to bed and tell my wife that I love her.  So, if I know and accept these things to be fundamental truths then I must do them religiously and without fail right?  Well, if you’re anything like me then the answer is a big fat no!

Why is that?  Most of us know exactly what we need to do to be successful, from our diet to our fitness.  The trouble is following through.  Some experts believe it’s because as a society we are undisciplined.  That’s part of the reason but not the real answer.  I believe it’s because it’s just too darn easy not to be successful.  The consequences are often unrecognizable and far off in the distant future.

As a Realtor there are things I know in my business too.  I know my listings will seller faster and for more money if they have lots of clean, well-composed, high quality pictures.  I know that potential buyers will most likely find my listing online and will call their Realtor to see it because of the pictures.  The bottom line is that facts tell and pictures sell.  You probably know that too.  But do your listings show it?

I’m not advocating dropping thousands of dollars on expensive camera and lighting equipment, nor am I suggesting you go back to school and study photography.  However, I do recommend you invest about $500 in a digital camera and learn some basic photography techniques like the rule of thirds.

 I recently purchased a Canon G11 digital camera.  Keep in mind I’m no photo geek so I’m not going to bore you with the specs.  What I like about this camera is that it’s high resolution (10 MP), has a built-in wide angle lens (a must for taking pictures of houses) and is excellent in low light.  The Canon G11 is a hybrid between a standard point and shoot and DSLR.  It won’t weigh you down like a big DSLR but it has easy-to-use settings that allow you to switch back and forth between inside and outside shots.

Once you have a good camera it’s time to work on your technique.  For starters, turn off the date stamp feature and don’t ever shoot directly into the sun.  And unless you want to end up on UglyHousePhotos.com, do not to capture your reflection in the mirror while taking that picture of the master bathroom (a little tip here – kneel down below the mirror.)  Leif Swanson a Realtor and creator of the site, also says you should never take pictures from your car or at night, and never have people or pets in the image.

There you have it.  You now know what you already knew.  What I have written here may not get you to the gym or prevent you from drinking a bottle of wine at dinner but at least you’ll start selling more houses.

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Housing Recovery Consistently Inconsistent

Larry Martel was a TV news reporter at KPHO Television, the CBS affiliate in Phoenix.  I worked with him there as a photojournalist for about 10 years.  Larry was a wordsmith and his timing was impeccable.  He was “telling it like it is” long before the station started using that tag line in all of their local promotions.  I didn’t work with him side by side very often because we were on different schedules.  However, I would hear about his colorful comments from fellow photojournalists, reporters and news anchors.

In 1990, the Interstate 10 deck park tunnel opened up.  Larry was asked to report live and describe the scene to our viewing audience.  The tunnel walls were lined with small white tiles from the guard rail all the way up to the ceiling.  He accurately explained that it looked like “the world’s largest men’s room!”  During another live appearance from the site of a rattlesnake removal operation Larry told our viewers that these critters would “no longer have a pit to hiss in.”  The news anchors on set were laughing so uncontrollably that the director had to run an unscheduled commercial break.

Larry once told me that the KPHO news department was “consistently inconsistent.”  We would never earn ratings supremacy because internally we lacked leadership and planning.  As I sit here today and try to make sense of Bank of America’s 50 state foreclosure moratorium and Arizona joining other states in a probe of the mortgage industry I can’t help but compare our newsroom woes to the foreclosure crisis of 2010.

Uncertainty of any kind generally paralyzes people – especially if they have to make decision that involves money.  Toyota is a perfect example.  After decades of selling reliable, economical cars their sales plummeted when faulty brake pedals forced them to make numerous recalls.  The problems have been corrected but Toyota’s sales are still struggling because the public remains uncertain.

Homebuyers on the fence may likely stay there now.  Fear, and a news media that seems to enjoy promoting the idea that anyone who buys a foreclosed home today may have to give it back to the original owner in 3-5 years after all this plays out in the courts, could bring any hope of further recovery to a dead stop.

There don’t seem to be any simple solutions.  But this much I do know for certain – the homeowner in foreclosure borrowed the money to buy the house – the homeowner in foreclosure hasn’t made a payment in at least six months, probably more AND the homeowner agreed contractually (even if the bank can’t find the contract) to surrender the home if default occurred.  In the end this fact, above all else, should trump whatever irresponsible, reprehensible and unorganized system the big bad bank used to initiate the foreclosure proceedings.

Now don’t get me wrong.  I believe the banks should be held accountable and severely penalized for their misconduct.  I just don’t think they should stop foreclosing on homeowners because these self-imposed moratoriums prolong the inevitable and hurt everyone.  Mix together the creation of the homebuyer tax credit, the extension of the tax credit, the expiry of the tax credit, the sporadic lowering of interest rates and now the foreclosure moratorium and the result is a housing market recovery that is consistently inconsistent.

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Future of Real Estate Marketing guest blogger this week – Marty Boardman

I have a lot to celebrate this week.  On Friday, I’ll be catching up with my classmates at our 20 year high school reunion.  Sunday is my 12th wedding anniversary.    

I’m also incredibly honored to be chosen the Future of Real Estate Marketing (FOREM) guest blogger for the week. FOREM and Inman.com are two of my favorite real-estate related websites.  Here’s a sneak peak at what I’ll be writing about:

  • Tuesday, 10/5 – 3 Steps to Writing a Better Blog
  • Wednesday, 10/6 – Facts Tell, Pictures Sell
  • Friday, 10/8 – The Man Who Mentored a Billionaire

 Your feedback is always appreciated.  I could also use a few suggestions on an anniversary gift for my wife.

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Filed under Business Development, Finance, Homeownership, Investing, Loan Modification