Sunday, July 13, 2008

Patience is a virtue...

Complicated issue...and yes, probably largely self-inflicted.

As a licensed agent and a member of the National Association of REALTORS, I've seen some "stuff" in the last few years. I've seen hot markets and cold markets, for both buyers and sellers, and I watched the investors from California start bailing out and looking for other markets to invest in.

The market I live in is not as volatile as most, and I've done my best to help keep it that way. When the Californians started calling a couple of years ago--asking me to show them around for a half a day (while they made the same request of other agents--trying to decide which one was the most entertaining and made the most promises, I suppose) I explained how our market is different and told them they would have to adjust their expectations. I also said I didn't "do group real estate" and if they wanted me to represent them, they'd have to commit to me. Most of them moved on to an agent who wanted to risk their time and do a song and dance. They probably bought something from one of those agents, earned the agent a commission for it, and are now likely trying to manage a short sale, with the bank's permission, or they've been foreclosed on. If they were lucky, they paid cash and they'll sit on it for a few years and it will grow. Patience is a virtue. Patience is what I think most investors lack these days.

I didn't pick up many clients that way, but I sleep well at night, knowing I won't get sued, or feel guilty about them losing their shirts or their credit ratings. I also won't get snagged for participating in shady deals (aka loan fraud). I didn't make much commission off investors the last couple of years. Some agents did, and sometimes I envy them, but when one of my clients says:
"I’m sure you already know this, but I have to tell you anyway – it is great to work with you. You are honest and ethical, and I couldn’t ask for more." I know it's all worth it.

In those feeding frenzy days, we would regularly get e-mails from mortgage lenders with titles like:
"100% investor financing!" and we kept wondering why they would want to lend money to someone to buy and investment property (not a home they would be living in) and offer to let them buy it with no money down--no skin in the game to keep them from walking if the market tanked. One day my husband decided he had seen too many offers like that and hit reply. His response was short and sweet: "Why?"

Those were the days when we frequently, jokingly, said "fog a mirror? GET A LOAN!", only we were only half joking.

I heard a little of this show on Fresh Air Tuesday.
Fresh Air July 8, 2008

I was very interested in some of the observations made about the run up to this fiasco.

I heard it while driving across town to get the key from a house we just sold. It's a foreclosure and the owner is a bank. Fortunately I didn't sell it to the investor--I'm bailing out the bank that ended up buying the loan from the originator. We're selling to homeowners and to the second round of investors to hit the market--the ones that are getting the better deal. The one's who had the patience to wait. It's still going to take a while for it to mature, but it will mature.


Blogger Ronni said...

I heard that Fresh Air episode, too.

I'm glad my house is paid for!

You are always one up on the rest of the world if you're honest. That way, you like the person you see in the mirror. It doesn't get any better than that!

11:17 PM  

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