What you can get for $15,000 down and $2,800 per month in Mission Viejo.

I answer the question "What would you show me if I had $15,000 to put down and could afford $2,800 per month and wanted to live in Mission Viejo".  

Risky Lending is Back.

Today at my weekly morning office meeting a representative from Wells Fargo was reviewing all the different loan programs that are available to our buyers. As he reviewed the programs one in particular caused murmurs and quick remarks to each other under are breath. To give you some back ground our office meeting has 50 plus real estate agents, a couple of bankers, a few title insurance reps and various venders. The Wells Fargo rep is a well respected and trusted banker that is a fixture in our office and the Orange County real estate market. 

The loan program caused such a reaction because it has haunted many, many people and in my opinion was the beginning of the end for the country's real estate whoes. Ever since the banks risky lending practices led to the financial meltdown the banks lending attitude has been very conservative, basically only giving 30-year fixed loans and making the borrower qualify for the whole payments including tax. At the extreme end of the scale just a few years ago you could get a loan based on a payment that was temporarily low for a few years. When the payment went up it didn't matter if you could afford it anymore. 

Well, it's back. Today Wells Fargo announced that it has a 5/1 ARM and will qualify you based on the teaser payment. In simple terms your first 60 payments or 5-years are a lot lower than your last 25-years payment. This alone is not the issue, when the bank allows the borrower to qualify for this loan based on only the first 60 payments is defiantly a problem and in the risky lending category.

I would have bet you a million dollars that the banks would never ever do this type of lending again in my life time but, here we are. I just hope that this type of lending doesn't get out of control again. This is exactly how it started almost 10-years-ago.

Realtors don't add value to Real Estate

Who the heck is going around telling people that Realtors add value to a home. In what world do you live in? The idea that we add 6% or any amount to the value of a home is outrageous.

Ask any appraiser if they give any value to the fact that a home is sold with or without a Realtor. He or she will inevitably tell you "of course not". So why in a book, "What would Google Do?" by author, tech guru and professor Jeff Jarvis spend a whole section on rebuking the "fact" that Realtors do not add value. And then proceeds to completely trash the real estate agent model and replacing it with an a la' carte version of agents.

Not to bite off more than I can chew, but I would have to agree with Jeff's thought's on agents not adding value. This guys entire argument is based on the presumption that as agents we believe that we add value. Well, being a veteran Realtor I would say to anybody who would listen that I provide a service and most defiantly don't add value, although what we do is very valuable.

I see my role strictly as a service provided and rendered. With the advent of the internet the gap between experts and the consumer have narrowed. The time when a Realtor had an informational advantage is over. Our clients have access to the comparables, school reports, current laws and disclosure requirement, all the forms and anything else we can access. The difference now is purely service based, ..isn't it.

I look at being an agent, from the perspective as a project manager. A project that last months, involves hundreds of thousands of dollars, if not millions. Not to mention that there is over 25 parties involved in every transaction ranging from insurance company's, banks, crazy sellers, confused buyers, lazy agents, etc.

The complexity of a transaction is overwelming and has a million moving parts that needs constant tweeking and massaging. So when I hear other agents clients say "I love looking at house's, I would be a great agent". I get slightly offended that the public's view of my job skills are summed up in (house + like = great Realtor).

All the things we do the consumer can do for themselves, but chooses not to. They refer to the professional to do these things efficiently and professionally. So Jeff, I would like to say to you "thank you for giving me a jumping off point for Service vs. Value".

P.S. a la-carte agency's will never work in the real world because you get what you pay for. At least in the sense of a $2,000,000 home buyer does not want to be driven around on the back of a motorcycle. They want to ride in style with the agent that has similar interest i.e. Bentley.

That's why the commission needs to be tied to the price because buyers and agents differentiate with that price. I'm not saying more money = better agent. I'm saying more money = agent with more money who has more in common with their clients.