G-II Varrato II\’s Blog

I know that we have all heard about the Robo-Signers. We have all wondered how in the world could this ever happen. Most of us consider ourselves to be relatively intelligent. We sit and watch these news stories blast on to our television sets and with dismay and some reserved excitement, proclaim… “That person ought to be in jail!”  

We expect our elected officials to press in on these criminals. We expect law enforcement to swoop in and do the right thing; find the bad guys, handcuff them, hand them over to the court system and then have a jury dole out the appropriate, and¦ what appears to be evident, just judgment of GUILTY.  

Well, after you watch this video, your hair will be on fire and you’ll wonder who the hell is manning the kitchen! I couldn’t believe what I was watching. And… at the end of the video, if your anger has swelled to the point mine did, you’ll want to reach through your computer screen and grab Sheila Colleen Bair, Chairman of the U.S. Federal Deposit Insurance Corporation (FDIC), by the arm and shake the living daylight into her. You have to wonder, as you watch this video, who is going to go to jail for this massive fraud perpetrated upon the American home owner? And¦ who is going to fix this mess? Because¦ trust me¦ it is obvious from the tone of Sheila Bair™s conversation, it doesn™t appear that there is much spark in her step to correct this mess.  

60 Minutes – Blatant CRIMINAL Mortgage Fraud by Banks and no one is going to jail!

 First, be sure to leave a comment and second, and perhaps even more important, forward this blog post to everyone you know. It is time that the little guy, you and me, put some real and meaningful pressure on Washington DC.   We cannot continue to let our elected official cozy up to the criminals who nearly destroyed our economy and who have absolutely been complicate in the destruction of the American Dream, Home Ownership.  

G-II Varrato II is a Real Estate Professional with Coldwell Banker Residential Brokerage with over ¼ of a century of real estate experience. He and his wife Lori are mentors for new agents entering the real estate business in the Phoenix Metro Area of Arizona. For the past decade, they have been ranked among the top 3% of all REALTORS ® in Arizona in the Coldwell Banker Residential Brokerage Family and are ranked as the Number 1 Short Sale Agents in Arizona for Coldwell Banker Residential Brokerage. http://ShortSale.AirForceHomeSeller.info

Hi again folks,As you know, Lori & I have taken the NAR SFR Course as well as numerous other Short Sale classes that host non-NAR designations. While we do not post or advertise our other non-NAR designations, many of the training venues provide an abundance of useful and cutting edge information about the Short Sale industry.  Having closed well over 160 Short Sales, we stay up to date on the ever changing landscape of how banks and servicers are responding to short sale offers, as well as what  Treasury and the FED is doing to manage the distressed real estate inventory. We also keep up to date by subscribing to over two dozen blog sites that we read and/or watch every day.To that point, we have been keeping an eye on the FTCs MARS Rule for the past couple of months and now, the newly implemented MARS Rule, now 29 days in its infancy has the industry a-buzz.Many, if not most MLSs have already begun to get the word out to their members. Check out AAR™s notice at http://tinyurl.com/4flygtu, and the FTC™s web site at http://tinyurl.com/4pyfpvf to download a copy of the MARS Compliance Guide For Business and you can catch up on NARs take on the MARS Rule at http://tinyurl.com/4jdrobz but you™ll need to log in with your NAR ID to access the document.The MARS Rules have only been on the playing field for 29 days, first becoming effective 31 January 2011. Folks, Lori & I are confident that you will agree that the MARS Rule will change the way E&O responds to agents who practice in the Short Sale arena. We are also confident that industry leaders, will want to be the first, to embrace the MARS Rule and get their agents up to speed on the use of the required disclosures, if they are going to work in the Short Sale environment. We are already, personally, in the process of making our Short Sale web MARS compliant.This also means that the use of eMail as a medium of soliciting and conducting business has now come into an environment wherein the user must be extremely cognizant of what is disseminated in their posts and even more important, the user must now be mindful of keeping and archiving their eMail and Faxes for two (2) years from the date of œdocument creation whether the transaction closes OR NOT! The level of sophistication required for such record keeping of eMail is not exorbitant, however¦ Lori & I are pretty sure that the majority of real estate agents, nationally, do not understand how to electronically archive their eMail. For example, in our daily conversation with dozens of agents throughout the valley, we know conclusively, that over 90% of all agents, or for that matter all users, DELETE unwanted and œOLD eMail. Under the covenants of MARS, this practice must no longer be the norm for real estate agents who work with short sale transactions. Civil penalties for non-compliance can be up to $16,000 per occurrence of a MARS Rule infraction.Two additional notes of importance about what must be œarchived and the use of specific eMail clients.First: About that œWhat Must Be Archived. The MARS Rule stipulates that ALL documentation, to include flyers, mailers, promotional material of ALL types, including eMail and faxes must be œarchived for two (2) years whether the transaction closes OR NOT! Second: If a user does not control his/her own eMail client by using a system such as Outlook or Outlook Express or some other œon-site/proprietary system wherein the data can be stored on a personal hard drive or if the user does not exercise a œdisaster recovery system for their electronic data, and if the data was never reduced to œpaper copy, the user, if audited by the FTC, could face stiff civil penalties. This means, if a user uses an eMail platform such as AOL, Earthlink, Gmail, HotMail, YaHoo or any other third party eMail service, wherein the eMail account must be purged due to storage capacity limits, the user could well find himself/herself in non-compliance with the MARS Rule.Therefore, it may be well worth the time, of all companies, to investigate the practicality of eliminating their current practice of a maximum storage limit size in the agent™s eMail system.   Or, perhaps provide an alternative eMail exchange server platform that will provide enough storage capacity for agents to comply with the œarchiving MARS Rule. Perhaps mortgage and real estate brokerages may be better served by encouraging their agents to print and œarchive their records in a manual format if they don™t have the technical œknow-how to manage œelectronic archiving of their data and communication files. Of course there may also be an enormous responsibility thrust upon brokers to implement modified œarchive practices and strategies for their short sale transactions as well, in an effort to comply with MARS.     Another possibility could be that mortgage brokers and real estate brokers encourage their agents to adopt the use of eMail systems that allow the agent to œarchive their electronic communications on their personal computers or digital devices. However, a word of caution here¦ if the user/agent does opt to manage their data electronically, it is highly suggested that the user/agent implement a œdisaster recovery strategy and demonstrate their adaptation of such protocols. We use an on-site automatic back-up system, daily backing up ALL of our data to a 1TB HD (soon to be increased to a 2TB HD). We also deploy a redundant offsite disaster recovery platform, œCARBONITE www.carbonite.com.   Carbonite is extremely inexpensive at $55 per year for unlimited storage space and the system can be accessed from anywhere in the world, from any web compliant device, through Carbonite™s secure web interface.One last point to make about third party eMail clients;MARS, the RED Planet!   It appears that, the on the weekend of February 28^th a MARTIAN      has eaten all Gmail in about 50,000 Gmail user™s accounts. Google announced this morning that it accidently DELETED eMail from over 50,000 mail boxes.   While the Google engineers are working on recovering and restoring the missing eMail and attachments, at this time, they are not guaranteeing they will be able to recover all, if any, of the missing eMail and data files.Folks, this is a perfect example of why users and/or brokers must NOT rely on third party eMail platforms, to archive their electronic eMail date, if there is to be a serious effort to œelectronically archive short sale correspondents and digital documents.

Just thought I™d add some joy to your morning¦ LOL   Oh yeah¦ Ok¦ let™s see, Mars is the RED planet.   Did you notice that the cover page of the œMARS Compliance Guide For Business has a house trimmed in RED as the LOGO?   LOL

                                                                                                                                                                   We look forward to a rapid deployment of MARS Rule training by all Mortgage and Real Estate Brokerages.Regards  

It curls my hair, and I don™t have any hair to curl, when the press spins economic news. Yes, it is true that the GDP reported a growth of 1.7% for the 2^nd quarter of 2010 which is in fact on the positive side of œcenterline; however THIS GRAPH, obtain from the U.S. Department of Commerce Bureau of Economic Analysis http://www.bea.gov/ clearly demonstrates that our the US economy, as defined by GDP, is trending down.   You make up your own mind about where you think the next trend indicator will land for the 3^rd & 4^th quarters of 2010.

It is our belief that not until three major pressures are taken out of the equation, will the US economy truly begin to make a meaningful recovery. Those three major pressures are, job creations, meaningful foreclosure prevention and finally a mechanism to repair and address the extraordinary negative equity in residential real estate. According to PR News Wire http://www.prnewswire.com/ SEATTLE, Aug. 9, real estate values continue to fall, reporting that nationally, home owners are suffering with an average of 21% value decline, since the beginning of the economic crisis we are digging out of. The hardest hit areas report more dramatic negative equity conditions. Areas  such as Bakersfield CA at 44.6% negative equity, El Centro CA at 57.5% negative equity, Fresno CA at 38.5% negative equity, Sacramento CA at 58.1% negative equity, Las Vegas NV @ 73.9% negative equity, Reno NV at 61.9% negative equity, Phoenix AZ 66.8% negative equity, Tucson AZ at 41% negative equity, Port St. Lucie FL at 55% negative equity, Sarasota FL at negative equity, Tampa FL at 45.3% negative equity, Miami-Fort Lauderdale FL at 44% negative equity, Ann Arbor MI at 33% negative equity and Detroit MI at 31.4% negative equity. Dozens of additional examples can be viewed at Home Value Index.

The bottom line is this. The private sector must be given the tools to create jobs and the banking and mortgage industry must come up with a way to resolve the foreclosure issue and negative equity in residential real estate.

Currently, there is NO exit strategy available to any homeowner who is suffering with negative equity. In over ½ the country, homeowners who are suffering with negative equity have no way to sell their home in the next 10 to 20 years. Does the current congress and administration truly feel that it is appropriate to allow this financial injustice to be suffered upon homeowners who have played by the rules? Is it appropriate that the economic meltdown, caused primarily by the failure of the sub-prime mortgage industry and major players on Wall Street, should strap a homeowner to his home for the next decade, two decades or in some areas of the country as much as three decades? Does it make sense to you, that some form of œexit strategy for a homeowner should be devised so today™s homeowner can sell his home, weather moving up, moving down or relocating? Does it seem JUST to you that homeowners, who have done nothing wrong, played by all the rules, acted responsible with their finances, should NOT be provided a mechanism to exit their home without being required to write a check to their lien holder to cover the negative equity?

Your thoughts are encouraged and even more important, we suggest that you take the time to write your congressman/women and/or senator. You can reach your congressman/woman at http://www.house.gov/ and your senator at http://tinyurl.com/b1lm.

Do you agree that it is every citizens responsibility to force our opinions, experiences and views upon our elected law makers? We hope you do.

Lori & G-II are raked as the Number 1 Short Sale Team in Arizona at Coldwell Banker Residential Brokerage and are ranked 7th in Arizona in overall productivity. You can reach them at ShortSale@AirForceHomeSeller.info

Dear Congressmen, Congresswomen and Senators,  

For nearly ¼ of a century, my wife and I have been REALTORS ®.   We have been with Coldwell Banker Residential Brokerage in Phoenix, Arizona well over a decade. We have processed over 130 successful short sale approvals.   A growing part of our short sale clientele is comprised of good folks who have been placed in very bad and difficult positions, through either job loss, health issue or job relocations.   Many would love to keep their homes.   Congress has failed to move fast enough to help the growing population of short sale sellers.   There is NO reason why many of these folks should be forced from their homes when a œprincipal reduction loan modification would keep them in their home and allow them to grow their family and their family nest.   The only thing the current HAMP program offers is a band-aid to a current or eminent payment crises. HAMP does NOTHING to address a fundamental problem with home retention and that is the ability for the home owner to be able to, one day in the future, sell his/her home for a profit so they can move up, move down or retire.   HAMP builds into home retention the reality that the current homeowner will, eventually, be forced to sell the home under the terms of a deed in lieu or short sale and then be demoralized by the reality that the next owner will purchase the home for current fair market value, a figure that, had a principal reduction loan modification been implemented for the current homeowner, would have allowed the original owners to retain possession of their home.  

There are plenty of bank officials and pundants and members of congress who say that œprincipal reduction loan modifications would undermine the very fabric of the mortgage market, ultimately scaring away investors from purchasing MBS (Mortgage Back Securities). To that group of idiots I say, get over it! The barn (the current lot of Mortgage Backed Securities) is already on fire. The fire needs to be put out and then you can rebuild the barn (the way MBS are configured insured, sold and traded).   If you don™t fix the problem, the pool of buyers who will offer investment portfolios for the MBS market will dry up like a prune.  

The folks we met with yesterday, Mr. & Mrs.  SECURE are a perfect example of good folks whom the government and the banking industry has turn their backs on.  

Mr. & Mrs.  SECUREs purchased their home in December 2007 for $512,865. They put 5% down, compliant with lending guidelines at the time, to secure a 5 year interest only loan. That loan is set to adjust in January 2012. At the time they purchased their home and were approved for their loan, they had a double income with Mr.  SECURE employed at the Palo Verde Nuclear Power Plant in Arizona and Mrs.  SECURE employed with an accounting firm.   They had a residual income of 4 times their monthly mortgage payment. The Interest Only Loan was sold to them, by their builder, with a story line that was not uncommon back then.   Their FICO scores were in the high 700s at the time as they remain today.The conversation from the loan officer might have gone something like this:  

Loan Officer: œOh yes, we can put you in this home for only 5% down, that way you can conserve your own personal resources. Let™s put you into a 5 year œinterest only ARM.   With the way property values are climbing, you can refinance out of the ARM in two or three years, into a fixed rate mortgage at a rate that will keep your mortgage payments about where they will be when you begin this new loan.  

Of course the loan officer™s projections were dashed to pieces with the total meltdown of the mortgage market and even more incredible is the reality and fact that this œspew of goo and nonsense continued from nearly every lending institution in America, even after the TARP bill had been passed in November 2007, in an assumed effort to stabilize the US economy.   The US economy was racing toward the cliffs, partially because of idiotic loans like the one that was sold to innocent consumers, like the SECUREs, and yet no one put a stop to it.  

Recently, Mrs.  SECURE has lost her job, reducing the household to a single income family.   The  SECURE’s reached out to Bank of America (BofA) for mortgage assistance.   The patch-work loan modification that BofA has offered is but a Band-Aid on a wound that is hemorrhaging gallons of blood.   The conciliatory loan modification offered by BofA reduced the families loan payment by $400 but does nothing to address the long-term problem of the exponential depreciated value of their home. In just over 30 months, the SECURE™s home has been devalued over 50% by the collapsed real estate market and economy. Today the home is somewhere between $230,000 and $280,000 underwater. The home they purchased for $512,865 just 2 ½ years earlier is now valued at around $250,000.  

Given the historic rate of appreciation the Arizona real estate market has enjoyed over the past 2 decades, and the projected and current rate of appreciation now being suffered upon today™s real estate market, it is expected that the home will not appreciate in value, enough to retire the current mortgage, for well over two decades, or longer (not accounting for an inflationary upward spiral which is sure to occur over the next few years). This is an incredible and unacceptable burden to place upon Arizonans and Americans. This story plays out in tens of thousands of households across the United States each day.  

But back to the plight of the SECUREs; BofA has plans to launch a œprincipal reduction loan modification program but will only offer that program to those families who are 60 days or more delinquent. This is an extremely unbalanced, unfair and flawed strategy. While those folks who are delinquent on their mortgages are certainly in need of assistance, the folks who have struggled to stay current on their mortgage, forsaking all other family and life style creature comforts, should be afforded the same or similar programs.  

Until a system is put in place, by every financial institution who holds, services and/or insures a mortgage on residential real estate, that addressed the incredibly desperate contract between current value of a family™s home and the balance owed to their lender, i.e. œprincipal reduction loan modifications the tsunami of foreclosures will not subside and a steady stream of families will continue to be displaced because there is no help for good people caught up in a difficult situation, little if any of which is their own making.

Ladies & Gentlemen of the House and Senate, you MUST do something to FORCE loan servicing companies, MBS investors such as Fannie Mae & Freddie Mac and independent investors and mortgage insurance companies and Ginnie Mae and Sallie Mae/HUD to work out œprincipal reduction loan modifications.  Look at the numbers, nearly  3 in 5 homes in Maricopa country in Arizona and Clark county Nevada have mortgages that are more than 50% underwater. The numbers are exponentially worse in California, Michigan and Florida.   Over 1/5 of the nation™s mortgages are underwater and property values will not recover enough to retire the current mortgages for decades¦ unless each qualifying homeowner is granted a œprincipal reduction loan modification.  

We can be reached direct at 602-796-5674 or through our office at 623-344-4000 and ask to speak to G-II Varrato II.  

Respectfully,  

Lori Klindera & G-II Varrato II, Retired USAF 820th CES Red Horse, rCRMS, ePRO, ABR, CNE, RECS, SFR, Mentor, REALTOR ®
Short Sale / Save The Dream “ Quitting is NEVER an Option! – Coldwell Banker Residnetial Brokerage
3050 W. Agua Fria Freeway, Suite 110
Phoenix, AZ 85027
Lori’s Cell: 602-574-5674 G-II’s Cell: 602-796-5674 Fax: 602-296-0124 http://shortsale.airforcehomeseller.info/Join Lori and G-II on Twitter and our gaggle of congressional leaders¦ J Join G-II at http://www.twitter.com/G2Realtor and join Lori at http://www.twitter.com/YRURenting

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, œit™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, œI 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, œIf 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: œOur office is closed for the weekend. Please call back Monday between the hours of 8am and 5pm.   Or my favorite, œHello, 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 œOn-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 œSecret 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 “ œReal 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 œASSET. 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 œASSET at this point in time?

The origin of the word œasset comes from the French word œasez “ œenough. 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 œQuitting 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 œGeorge 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.