G-II Varrato II’s Blog

Ok… so I’m on a rant and boy this one has simply really got my goat!

My wife and I have been in this great industry for over two decades. We, like many of those of us who are seasoned professionals, pride ourselves in how we manage our business and how we respond to one another in our profession.  We respect our clients property and offer the most up-to-date methods of securing ingress/egress to the property.

•        We ANSWER our phone

•        We RETURN our eMail messages

•        We use a secure SUPRA KEY Lock Box ingress/egress system

•        We DO NOT place our clients property at risk with unsecure mechanical lock boxes

•        We RETURN our text messages

•        We publish our cell phone numbers in our MLS listings

We make it nearly impossible for anyone to ever say that they couldn’t get in touch with us. We maintain between 20 and 30 listings at any given point in time and all of our listings have all of our methods of contact such as cell phone, fax, office phone, text message and eMail. We know everything about our listings. If the listing is a short sale, we know who the lien holders are and we know how many lien holders are involved; we know who the negotiators are; we have points of contact for each lien holder negotiator; such as eMail, fax, phone and supervisors name and points of contact. We know if the properties utilities are active.

If the property is not a distressed listing, I.E. owned by some seller who simply wants to sell their home to move up or move down in size or for any number of normal, and some time abnormal, reasons, we know everything there is to know about that property. We know that one of the best ways to get another REALTOR® to show the property is if he or she has as much Intel as possible, and… can get that Intel from a real live person.

 LACK OF SECURIETY AND RESPECT

Now, contrast that with many, if not most, REO Secret Agents who handle REO properties. These agents make it extremely difficult to show properties. Many of them don’t use any form of secure ingress/egress control, I.E. a secure SUPRA Lock Box system. There is no way that these agents can protect their client’s property without a secure and accountable method of monitoring who has entered the property. IMO, these less than professional acts of inexcusable lacks of professionalism show a total disrespect for their client’s property.

My favorite all time reason that I hear REO agents use for not putting a secure SUPRA lock box system on the property is, “it’s too expensive”.

•        Do you really feel you have a right to not offer your client the most complete and competent protection of their property?

•        Do you not feel your client would like to be able to tell the police, in the event of a break-in and/or the property being vandalized… who the last persons were who entered the property?

•        Do you not think your client would like, at the very least, a small chance of seeing justice done to those who would destroy their property?

•        Do you not think it appropriate to hold real estate agents who are inattentive to their tasks to re-secure a property rafter showing, to be held accountable?

•        What in the world are you thinking? And… what in the world would your client think if you said, “I can’t really afford to secure your property with a secure SUPRA lock box system, you’ll simply have to deal with the consequences of not knowing who has entered your property last”.

DISRESPECT OF FELLOW REALTORS

Try calling a REO listing. If you’re lucky, you might get a recorded message that says something like, “If you see a listing that is showing ACTIVE and not under contract, that is accurate information, our listing are updated every day”. Yeah, right! But that does not include updating their listings over the weekend. Oh here’s a bute… you call on Friday afternoon, about 7pm so you can vet the list of homes you’re going to show tomorrow. You begin to make phone calls to vet the availability of the home and you get this: “Our office is closed for the weekend. Please call back Monday between the hours of 8am and 5pm.”  Or my favorite, “Hello, you have reached Agent Brown. I am sorry I can’t take your call at the moment. I return my calls between 2pm and 5pm Monday through Friday. If you have called after 5pm, please try to reach me the following day after 8am. If you have called me on the weekend, I will return your call the next business day. Please leave a message”.  Like heck I will!!! If you want my client’s business, you should have answered your phone or at the very least, answered the voice mail message I left you.

 WHAT ARE REO ASSET MANAGERS THINKING?

Would someone kindly let me know why any asset manager would want to hire a real estate agent or even better, an entire team of real estate agents who will not give the property the proper attention it deserves? Is there an asset manager out there who can explain why you would not want your property protected by a secure Ingress/Egress verifiable lock box system? Is there an asset manager out there who can explain why you insist on hiring real estate agents who are, well… Secret Sgents? That is to say, why don’t you want the agent or team of agents, you hired to answerer their phone in response to a buyer or buyer agent? Do asset managers simply have a death wish for the property they represent? Do asset managers find wisdom in conducing business with real estate agents who do not have the best interest of their client at the forefront?

I just don’t get it!

I could go on and on about the most unprofessional niche of our industry, the REO listing agent.

Now, don’t misunderstand, there are some GREAT REO listing agents. They secure homes properly, they have a team of agents who really answer their phones or if they are lone wolfs, they answer their own phone. But… sadly, this gallant and noble group of REO listing agents is but fraction of an infinitely small fraction of REO agents and agent teams who manage and list REOs. To this truly noble group; Congratulations on a Job Well Done. This very small microcosm of REO listing agents even knows all about each listing. WoW! That’s simply refreshing.

But to the rest of you… get the heck out of the kitchen if you can’t stand the heat. You, who match up to my comments in the beginning of this post, do not belong in the REO business. GET OUT and get a 9 to 5 job… or… do the job the asset manager hired you to do, in a dignified and respectable and professional fashion.

1. Answer your phone!
2. Properly secure the property!
3. List your cell phone or the cell phone of an “On-Call” team member!
4. Return your voice mail messages!
5. Return your eMail messages
6. Return your text messages!

And… participate in our industry as professional agents, not “Secret Agents”

G-II Varrato II is a licensed REALTOR® with Coldwell Banker Residential Brokerage. You can reach G-II (G2) at 602-796-5674 or by eMail at G-II@AllAboutRealEstate.pro

Last week, Senator Johnny Isakson, a Republican from Georgia, flanked by Joe Lieberman, Senator from Connecticut, introduced the Isakson-Lieberman amendment to the pending economic stimulus bill. The amendment is aimed at kick-starting sluggish home sales that plague the nations real estate industry.I am not going to rehash reporting on the proposed legislation, you can read about it HERE. And while the proposed tax credit is certainly a step in the right direction, in terms of efforts to move home buyers off the couch and on to their computer to begin their search for their piece of the American Dream, in this REALTORs opinion, this is a case of, which comes first, the chicken or the egg.

Property values are down across the US. According to recent figures released February 4th 2009 by the National Association of Realtors (NAR) property values lost ground in the past 12 months, sighting a net property value depreciation of 7.8% in the Northeast, 11.5% in the Midwest and over 30% in the Western United States and 8% in the South. That is a national average of value depreciation of right around 14.575% Additionally, according to NAR the average home price in America now hovers around $176,000. By region, these figures break down to around $212,000 in the West, $235,000 in the Northeast, $141,500 in the Mid-West and about $157,000 in the South.

Data Source: National Association of Realtors

Now, do a little math and I do not want my message to scare home owners from taking advantage of the $15,000 tax credit that is coming down the pike. However, President Obama and Congress and Mr. Geitner need a reality check here.Let us take a buyer who purchases a $175,000 home. If property values suffer, even modest depression of say 7% over the next 12 months, that means that the buyer of the $175,000 home will lose about $12,250 in value, virtually wiping out any gain realized by the $15,000 tax credit. The negative numbers only grow larger as the price point of the purchase increases. For example, what if the buyer makes a purchase of a $250,000 home? Well, that would mean, given our scenario of a continued slide of property values of only 7% over the next 12 months that the buyer of our $250,000 home could lose up to $17,500 in property value unless President Obama and his administration can stop the bleeding of property values. At this time, there is no end in sight of property value depreciation over the next year.

Property values will continue to decline unless the tsunami of foreclosures is defused. There are two methods that can help slow and perhaps, even turn the tide of collapsing property values. First, Congress must enact legislation that will FORCE lien holders to work out mortgage alternatives for home owners who can demonstrate a willingness to work toward home owner retention and who have the resources to do so. Second, and on an equal plane of importance and urgancy, is legislation that will FORCE lien holders to work more quickly and more successfully to work out Short Sale Approvals. The over whelming majority of inventory, all over the United States, is comprised of Foreclosed Listing and Short Sale Listings. Here in Maricopa County, nearly 20% of the roughly 51,000 homes for sale are Short Sale listings; about 25% are REOs and about 25% are builder inventory homes. That means that nearly 3/4s of the inventory is exerting downward pressure on property values.

The people of the United States are growing weary of the Bail Out Fever that has plagued the halls of congress over the past months. We have been told that TARP 3 is nearly a forgone conclusion. If Congress and President Obama think the American People are going to allow Congress to write another check to bail out the big banks and Wall Street, without an immediate and direct impact to the tax payer, they are sadly mistaken. Immediate does not mean, sometime within the next year, immediate to this REALTOR means NOW. Not in a month, not in two or three months, but NOW!

The President, his administration and Congress MUST use every vehicle available to them to FORCE lien holders to get serious about home retention where possible and failing that as an option, preserving property values by working more aggressively toward successfully closing Short Sale transactions.

Lori & G-IIs eTeam of Professional REALTORS in Phoenix Arizona. Visit us at ShortSale.AirForceHomeSeller.info or give us a call at 623-344-4000

Real Estate Agency Relationship Disclosure is one of the most misunderstood and under-disclosed events between REALTORS and buyers/sellers. This video helps buyers and sellers, understand, WHY they have unique rights in a transaction. If you would like more info about Agency Disclosure Requirements, eMail G-II@AirForceHomeBuyer.info

This article was republished and reprinted, with our permission, by Lorman Education Systems and used in their materials for a Continuing Legal Education seminar – “Real Estate Litigation in Arizona” – 9/14/07.
Point of Contract - Michael A. Fleishman - Butler & Associates, P.L.C. - mfleishman@mjbutlerlaw.com

A lot has been written and debated about the subject of Dual Agency. So, what the heck is the big deal?

Let’s break it down. The assumption is that most people are aware that a real estate broker or salesperson (”Broker”) is an agent with fiduciary duties to the party that the Broker represents. The reality and the problem is that most people do not know this. Now… most real estate agents should know this but unfortunately, many do not. You see, an “agency relationship” is most often created by express agreement, I.E. a listing agreement and/or a buyer broker agreement. Normally, both documents clearly outline the fiduciary relationship and duties of the real estate agent. However, an agency relationship can be legally implied by the parties’ “agent’s” actions. Regardless of whether the agency relationship is express or implied, the agency relationship imposes on a Broker the fiduciary duties of loyalty, obedience, disclosure, confidentiality, and accounting.

In King County, Washington State, in Busk v. Hoard, 396 P.2d 171 (1964 Wash. 1964). , the King County Supreme Court held that:  “…The concept of agency is one of law. Its existence depends upon factual elements that enable a determination, as to whether an agency relationship existed, to be made from all the peculiar circumstances of the particular case. No one fact, seized from its setting, should be regarded as conclusive or controlling under any and all circumstances…”

So, what is “fiduciary duty”?  First let’s define what the Realtor’s Code of Ethics says of Fiduciary Duty

• Standard of Practice 11-2

Ok… so what the heck does that all mean? For me, perhaps the best definition of “fiduciary” was found on the Internet at
www.websiteupgrades.ca/glossary/free/F.shtml:

Here Fiduciary is defined as:

Consider the agent acting as an advocate/fiduciary for a buyer or seller. For our example, we’ll assume that our real estate agent is involved with a buyer who wishes to purchase a particular piece of real estate listed by the agent’s brokerage, we’ll call them Dual Agency Inc. The agent will, first discuss with the seller, the potential of an offer from a buyer who has been working with the agent in search of a piece of real estate to purchase.  And… not until the seller agrees to the potential of limited disclosed dual agency, should the agent present the offer to the seller and not until the buyer has agreed to the potential of limited disclosed dual agency, should the agent prepare the offer for the buyer.

“1. Powers of real estate broker or salesman
Section 1. Any person holding a valid license as a real estate broker or a real estate salesman regularly issued by the Arizona State Real Estate Department when acting in such capacity as broker or salesman for the parties, or agent for one of the parties to a sale, exchange, or trade, or the renting and leasing of property, shall have the right to draft or fill out and complete, without charge, any and all instruments incident thereto including, but not limited to, preliminary purchase agreements and earnest money receipts, deeds, mortgages, leases, assignments, releases, contracts for sale of realty, and bills of sale.”

Ok, so why is this important?  Because Article 26 sets the foundation for how real estate agents engage the public.  We have an inherent duty to understand our craft.  If we engage a consumer in a transaction, we have an obligation to lay out all of the nuances of the transaction, all of the nuances and peculiarities of each document that becomes an integrated part of the transaction.  Our duty is not only to help negotiate the transaction, but more importantly, our duty is to help the consumer fully understand their duties to the transaction. 

Too many folks, real estate agents and the public, place way too much emphasis on the negotiations of a transaction rather than the complexities of the transaction.  Any monkey on a chain can fill in a contract form, it’s not rocket science.  And, while we, as an industry are heralded as learned negotiators, we are all too often dismissed for our knowledge of the intricacies of keeping a transaction together.  It is this Realtor’s opinion that we are not paid the big bucks for our slight of tongue or negotiating strategy; we are, or should be, paid the big bucks for making sure that the transaction makes it to the finish line.  We are entrusted with an overwhelming responsibility to fully understand and explain the meaning of the contract, the meaning of each form to the contract, the ins-and-outs of surveys, disclosure of waste water treatment requirements, the ability to dissect the potential pot-holes in a transaction and how to navigate around or through them and to explain the particular responsibility of each party to the transaction.  We have an obligation to the parties to help them complete the transaction with as little inconvenience as possible.  The particulars of who “gets the best deal”, buyer or seller, is an arguable point if the transaction never closes!

In no way is Disclosed Dual Agency an obstacle to these duties!  Just because one party or the other loses the edge of gaining an advantage of ‘covert knowledge gained’ about the other side, has little bearing on the real estate agent’s responsibility to deal fairly and honestly with both the buyer and seller in a Disclosed Dual Agency transaction or any transaction!

Article 26 of the Arizona Constitution places Arizona Real Estate Professionals on a playing field that is far more different than any real estate agent in any other part of the United States.  Moreover an excerpt from the AAR-On-Line publication March 2006 written by Michelle Lind, General Council to the Arizona Association of Realtors read:

So, where does this all lead with respect to Disclosed Dual Agency?  In this Realtor’s opinion, simply stated, as an industry we have an obligation to be fair and honest with the public, the consumers of our services.  We have a duty to be honest and upfront about how Agency Relationship works and what it means.  There are numerous instances of case law, in Arizona and around the US that tell of tales of dubious dealings by agents, knowingly and unknowingly, mismanaging the public’s expectations of these relationships.  This is not a bi-product of Disclosed Dual Agency, this is a bi-product of inexperience and incompetence by real estate practitioners who do not take the necessary steps to fully explain the fine distinction between advocacy and fiduciary VS fair and honest dealings with the public.

If we, as an industry, take a more responsible roll in explaining Disclosed Dual Agency Representation VS Single Agency Representation, we will find that there will be many fewer complaints filed with the Arizona Department of Real Estate over this subject.

Yes, there are advantages for a buyer or seller to be represented by an exclusive agency relationship.  For example, the ability to take advantage of misguided disclosure of the motivations by one side or the other can be valuable during the initial negotiations and throughout the transaction.  But… if the buyer or seller has been properly schooled by his/her real estate agent, there is little chance of either side ever coming across such, foolishly disclosed, information.

Lori Klindera and “G-II” Varrato II are Realtors with Coldwell Banker Residential Brokerage, 3050 W. Agua Fria Freeway, Suite 110, Phoenix, AZ.  85027.  We can be reached at cell phones 602-574-5674 for Lori, 602-796-5674 for G-II or by eMail at any number of eMail addresses, such as Lori.and.G-II@RealEstateInPhoenix.net or Lori.G-II@AirForceHomeSeller.com.

Bye till next time.  Lori and I truly wish you and your family a Happy, Healthy, Safe, and Prosperous 2009

One of our clients recently expressed an interest in refinancing their home, given the incredibly low interest rates available today. Before they undertook such an ambitious effort, we thought it extremely important that they gave carful consideration to a more detailed view of current real estate conditions and became familiar with the projected real estate picture. To that end, we prepared a current market study of their home so they could compare it to the market study we had conducted just 60 days earlier.

We wanted to ensure for our clients, the information we offered would help them assess their next move and provided enough information to conclude that it was wise… or not… to invest additional capital into their home… given the current local and world economic climate.

Lori & I have been professional full time real estate practitioners well over two decades. We have been through four of these earth shattering real estate tsunamis but this is, by far, the worst one ever… even though we do see… light at the end of the tunnel, albeit a small dot at the moment.

In the market studies we prepared, we used properties that are as close to similar, to our client’s home, as possible. We only used homes in their exact neighborhood and made all appropriate adjustments for differences between each of the 8 homes that have sold within the last 90 days.

We felt it was important that our clients stayed mindful that property values continue to plummet here in the valley. We explained to them that their home lost nearly $50,000 value in the last 60 days. [Side Bar - It is this REALTOR’s opinion that until the flood of foreclosures comes to a halt and not until MI companies will once again underwrite conventional mortgages with less than 10% down, communities here in the valley will continue to experience depressed market values.]

The Market Study, also known as a CMA (Comparative Market Analysis), we conducted in of their home in October, found the value range to be between $190,000 and $275,000 which was consistent with the expected decline from when they first put their home on the market. The market study we concluded most recently now placed the value range of their home between $132,000 and $213,000. You’ll see that the study was conducted in exactly the same search grid, their very neighborhood. These statistical models can be duplicated in nearly every neighborhood in the valley. The value disparities grow wider as the price point of homes increase.

Our clients had already been in touch with a lender, Morgan-Stanley-Chase. The maximum amount their lender would loan on their home was 80% of the appraised value and could be as low as only 75% of the appraised value. We suspect that the appraised figure could come in somewhere around $175,000. Our client owed about $175,000 on their home. If their lender agreed to an 80% LTV (Loan To Value) loan, that would mean that our client would have to supplement their re-fi with about $35,000 of their own money plus any additional closing costs. While their monthly mortgage payment would drop significantly, perhaps as low as $950.00 PITI, if they were successful in securing a loan at 5% interest. The challenge we saw for them was that the recovery time for such an investment could be very objectionable to them… and in fact it was.

The reality is that local real estate industry analysts project, in some communities of Maricopa county, property values could fall an additional 5% to 10% over the next 12 months. If industry analysts and pundants are even partially accurate about the future of the economy and if the downward landslide of property values finally comes to rest in mid to late 2010 and then flat-lines until the end of that year, that would mean that the upward march of property appreciation may not begin until the first ¼ of 2011.

A Few Numbers To Consider

Our clients purchased their home in August 2005 for about $265,000. They spent an additional $80,000 in upgrades, brining their total investment to $345,000.

Given our market studies, let’s assume today their home is valued, by an appraiser, at $175,000. If property values decline even… only… an additional 5% over the next 12 months, such depreciation would devalue their home an additional $8,700 down to $166,250. That puts their property value nearly $100,000 below their initial purchase price of $264,605 in August 2005. Now add in improvements and upgrades they expensed, and you see that the economic ground to make up will be considerable; nearly $180,000.

If we agree that property values will begin their upward appreciation value march by January 2011 and if we use a 20 year historic statistic, here in the valley, of 3.75% annual appreciation, that would translate into our client not recovering, simply the original value of $264,000, until about 2026. If they have hopes of recovering all of their investment, such an aspiration may not occur until 2037. The time could be a bit shorter given the reality that, statistically and traditionally, as real estate markets recover from each cycle of downward trending, the annual appreciation scale may grow by .5% to 1% per year. However… we would wager that it will be decades, if not longer, before the valley or the nation sees the kind of property value inclines that were experienced between 2004 and 2006.

We are hopeful that our clients will give very attentive consideration to investing any additional capital into, what is currently a depreciating asset.

Here’s a really head twister about the word “ASSET”. Dictionary.com defines the word “ASSET” as (a single item of ownership having exchange value). Hummmm… exchange value… hummm… if our clients will need to add an additional $30,000 to $35,000 of their own money… just to obtain refinancing loan approval… is their home truly an “ASSET” at this point in time?

The origin of the word “asset” comes from the French word “asez” – “enough”. Now… there’s a real enlightening word, “enough“. When is it time to simply call it a day and say… “enough is enough“? One could argue that in today’s economy, real estate is hardly an “ASSET“. Oh… don’t misunderstand… real estate values will incline and rise again, they always do. The question is, how long is a property owner willing to wait to reach the point of ROI (Return On Investment?)

If you have sufficient equity in your home, to refinance at the terrific fixed interest rates that are on the table today, DO IT NOW. If you wait to see… “…just how low rates will drop…” you might just miss out on a golden opportunity. Simply use good judgment when you select your lender. It is usually best to stay with the lender who currently holds your note. You can usually work out relatively favorable closing cost concessions.  Oh yes… the term, “sufficient equity” should not be confused with having to add additional capital to your investment in order to complete the refinance. If you plan on remaining in your home for a length of time that would translate into a recapture of any additional cash investment within a fixed and acceptable period of time, then take the step and make the investment. However… if you’re upside down to the magnitude of the example in this BLOG, you may want to rethink carefully if such an investment is a prudent place to warehouse your hard earned dollars.

For buyers, it couldn’t be a better time to invest in real estate, as long as they have the intention of remain in their new home for, at a minimum, of 3 to 5 years. Anything less could prove to be a challenge when it comes time to sell their home. Real estate will always remain the fulcrum that helps balance the economic scales of our economy. The recovery time may take just a bit longer this time, when compared to other cyclical downturns then upswings.

Lori & G-II are licensed REALTORS® with Coldwell Banker Residential Brokerage. They can be reached by cell phone at either 602.574.5674 for Lori or 602.796.5674 for G-II or via eMail at Lori.and.G-II@GoAirForceHomes.info. 

If you would like to chat with us live, simply click the Google Talk Icon.  

G-II and his wife Lori Klindera are a husband and wife real estate team. They have been in this industry over 2 decades, as of 2008. One hundred percent (100%) of their business is generated from the Internet Empowered Consumer. They have helped clients all over the world buy and sell homes in the Phoenix, Arizona area. Many of our US Air Force clients have originated from, Guam, Italy, Germany, Japan, England, Spain, Saudi Arabia and… even the good O’l USA.

Prior to entering the real estate profession, Lori was a paralegal for over 25 years. Lori practiced her prior trade with law firms from Chicago to Florida, finally exiting her old profession for a new life and career as a Realtor in 1988.

G-II is a practiced electro-mechanical engineer. Prior to entering the real estate profession, G-II was a quality assurance engineer, overseeing various components fabricated for the United States Department of Defense by independent sub contractors.

I have made my share of mistakes in my life time. I am now 57yrs old, as of January 2008; some mistakes a bit more embarrassing than others. Nevertheless, from every mistake and miscalculation I grow in my ability to become more aware of my abilities and what I have to offer to my fellow human and my community and, most importantly, to my wife and family. I continue to hone my situational awareness. Besides my motto of “Quitting Is NEVER An Option” I also believe, if one is going to do a job, then focus on the job and DO THE JOB! Never Quit! Never Give Up! My dad once told me, it’s a fool who isn’t afraid, but it is a coward who runs from his fear. I believe that and have tried to live my life by his standard and live up to his, and my, expectations of who I should be.

We have helped thousands of folks buy or sell their real estate investments. We currently are working diligently, with a group of real estate professionals, across the USA, to try to get Congress to force… or strongly encourage banks to be more aggressive in their efforts to affect work out scenarios for home owners in jeopardy of losing their homes. Be sure to keep track of our BLOGs. You can track our BLOGs at www.GoAirForceHomes.info or www.AirForceHomeBuyer.info or www.AirForceHomeSeller.info. If you are an Arizonan, living in Maricopa County, and have questions about real estate, please feel free to contact us either at Lori.and.G-II@RealEstateInPhoenix.net or by cell at 602.796.5674 to reach G-II (G2) or 602.574.5674 to reach my wife, Lori, or

A side note about my name, G-II (G2). I was christened “George Leo Robert Varrato II”. But… when I was growing up, my name was shortened, by my father, to G-II and I grew up with that tag name. I’ll share more of the story if you write me at G-IIsLapTop@HomesInPhoenix.net.

My Heroes are: My DAD, My Mom, My Wife, My Daughters… all four of them, Jennifer, Kira, Carie and Josette and President Kennedy, First Responders, Police, Fire Fighters, Medics, Our Military, Air Force, Army, Marines, Navy, Coast Guard, Air National Guard and National Guard.

We are hopeful that you will find our Blog helpful & informative.