TR Realty and TR Alliance

There is a place in the mall where everyone goes, yet no one purchases anything. It is a place that is in a more central, accessible location than any other, yet it generates no revenue at all. It is a place that people are happy to visit, yet it produces no profit at all. That place is the information desk.

Many real estate professionals provide excellent customer service to the public. They answer questions, they provide data and reports, and they act as tour guides and taxi drivers. But at the end of the day, they are unable to achieve success in the real estate business. It is as if they are operating information desks.

A successful real estate agent is one who can balance customer service and sales. To some people, the objectives of customer service and sales may seem to be in polar opposition. But to succeed in the real estate industry, sales associates must blend the two concepts smoother than an ice cold frappuccino on a hot summer’s day.

The real estate business is just that: “a business”. And in order to survive and prosper (and eat!), an agent must generate significant, and hopefully even substantial, income. Income is not produced in our industry by providing copious amounts of information without reservation, protections or strategy. Neither is it produced by functioning as an information provider. In another words, agents will answer questions about available properties, market conditions, price trends, mortgage rates and more, and they will show house after house, just hoping at some point that their prospective customer will pull the trigger and consummate a purchase.

Often, they will provide all of these services without even requesting a commitment from their prospective customer. But as all too many real estate agents mercilessly and eventually discover, “hope” does not pay the bills.

I am not advocating that real estate professionals omit the requisite component of customer service. I am advocating, however, that more agents take their business and themselves more seriously, more professionally. When working with a prospective customer, upon the provision of information and/or service at each step, the real estate agent should gradually suss out their customer’s seriousness, and should gently move the customer forward toward commitment.

Early stages of commitment should include a customer’s willingness to provide their full name, alternative methods of communication, insight into their real estate needs, as well as communicating a clear sense of direction.

Then, customers should be willing to view properties, provide feedback of their likes and dislikes of each one, and demonstrate either sufficient liquid funds or a mortgage preapproval in alignment with the type of properties they are pursuing.

Later stages of commitment should include a written agreement to officially hire the agent (exclusive buyer’s brokerage agreement), a decisive willingness to make an offer on a suitable property when one is located, and the provision of earnest money funds.

Many real estate agents excel at providing customer service, yet they fall woefully short when it comes to making sales. In order to function efficiently, successfully and profitably in our industry, an ability to provide customer service must be artfully woven with the fortitude to effectuate a successful transaction. A real estate agent who is unable to see this and unable to achieve this may very well find himself impoverished and seated behind the information desk for a long, long time.

Last year at this time, I produced a blog with my predictions for 2011. Before I gaze forward into 2012, let’s look back at how things played out in 2011.

First of all, I predicted that there would be no major changes to the Las Vegas real estate market. And in fact, that seemed to be the case. In some pockets of the valley, prices dropped a tiny bit more, but we did continue to “bounce along the bottom”, as I put it.

Second, I said that an improvement in the unemployment numbers would be the key to recovery, but there was no substantial gain in hiring, and consequently, no great recovery in the market.

Third, I predicted that foreign investors would be the dominant force behind any strengthening of the market. I think this was very accurate. Without investors, specifically Chinese investors, the market would have fared far worse. Once again, roughly half of all residential transactions in the Las Vegas area were cash. Foreign investors usually cannot qualify for financing and therefore must pay cash. Also, banks kept up, and in some cases even strengthened, their qualification standards. Mortgage rates did not increase - yet; nonetheless, the requirements for obtaining a mortgage kept most potential buyers on the sidelines unless they have sufficient cash to complete a purchase without a mortgage.

Fourth, I said that after a dark beginning to the year, foreclosures would go on the decrease as the year progressed. Again: this was the case.

Fifth, I speculated that short sales would dominate the market, and that, too, was the case. Although the percentage of sales that were short sales did not get to the 50% that I estimated, it did increase and approach that number. Had banks cooperated more than they did, the number would have been substantially higher. In other words: it wasn’t for trying; it’s just that so many short sales ultimately failed.

Sixth, I said that the number of real estate professionals would decrease. Later in this article, I will comment on that as we move forward into 2012. But paying Realtor dues for many has become burdensome. As proof of that, our non-MLS company, TR Alliance, which does not require Realtor dues, has continued to grow and blossom.

So, all in all, my predictions for the Las Vegas real estate market, 2011, were highly accurate. Now what about 2012?

2012 promises to look much like 2011, which looked much like 2010. With one possible exception, which I will get to in a minute, 2012 will crawl forward toward “recovery”. But unfortunately, there will be no magic moment, no silver bullet, no watershed event.

Inventory of available residential properties will be tighter in 2012, as the results of Assembly Bill 284 will increasingly be felt. (In you haven’t read my blog on this new law, it requires lenders to tighten up their paperwork prior to being able to file a Notice of Default, the first major step in the foreclosure process). We are already seeing a diminished number of foreclosed properties come on the market as we enter the new year, consequently reducing overall available inventory. And if banks can’t file NOD’s, then they can’t foreclose. Also, a reduction in the number of foreclosures, which are largely responsible for dragging down home values, means that prices will shore up. In fact, I believe that prices will be higher at the end of the year than they are at the start. I will go out on a limb and say that yes, prices will increase a bit in 2012.

I mentioned one possible exception: some pundits have expressed concern that once banks figure out the remedy to AB284, a glut of foreclosures will ensue. I do not think that will happen. I also do not think the bill will be repealed any time soon. I believe that AB284 will serve its intended purpose for the most part, and will curtail the glut of foreclosures entering the market. The oft-cited “wave” of foreclosures will ease this year, most assuredly.

If we see a reduction in the number of foreclosures, we will see another increase in the number of short sales. Some experts have said the opposite: that if people know banks cannot foreclose on them, they are likely to stay as long as they can in their property, especially if they are not making any mortgage payments at all. They can live for free! Well, some homeowners will do that for sure. But my experience tells me that in the majority of cases, people want to relieve themselves of the burden that is an underwater property; they do not want to simply delay the suffering.

Lenders, I hear, are already working on new programs for homeowners to induce them to cooperate with the short sale process. While this may be a Nevada-specific strategy, lenders know they have to do something. The whole foreclosure/short sale/loan modification debate really centers on lender attempting to minimize their losses. In other words, when property values fell, lenders took a hit. But that has already happened, and we cannot get the toothpaste back into the tube. So now, how can we move forward and minimize the loss that has already occurred? I think that lenders will see short sales as the least of the evils, and I think that lenders will cooperate more with the short sale process this year. Some of the new strategies that lenders are working on are variations of the ”cash for keys” program, in which lenders pay foreclosed homeowners to vacate their former homes promptly and cleanly. I hear that some lenders are planning to offer cash for short sale cooperation way beyond what has been offered in a HAMP/HAFA short sale.

It is my opinion that there are other ways lenders could facilitate the short sale process beyond writing a check. They should streamline the paperwork; they should accept that a substantial drop in value IS a hardship and cease requiring any other evidence of hardship; they should allow real estate professionals the luxury of being able to complete the process quickly; and they should (if allowed under federal law) lessen the hit that short sellers’ credit scores take.

I am not sure if we will see any real change in interest rates, but if we do, it will be up. I am inclined to believe that at the end of 2012, we will look back at this time and remember the opportunity that existed with the lowest interest rates in decades. I believe that interest rates should begin to creep upward soon.

I think 2012 will continue to be terrible for commercial real estate, which has not yet hit bottom. Commercial vacancies will remain at unprecedented levels throughout the valley, with North Las Vegas most likely the hardest hit.

What about the Las Vegas market as it pertains to the real estate professionals trying to work their way through these trying times?

Every January, when annual dues come up for GLVAR members, there is some attrition, naturally. Dues are not cheap, especially for part-time agents. Although I firmly believe that if a person has a real estate license, they should have Realtor membership, it will be quite difficult for some agents to pay. Speculation has it that membership may drop below 9,000 during the month of January.

Therefore, just as I said last year, there will be a slightly larger piece of the pie for those who are able to pay their dues and survive.

TR Alliance offers license-hanging without GLVAR dues, and with no monthly fee, for those who wish to pursue that option. Then, they may transfer over to TR Realty at any time, with no fees, when they feel ready to do so.

Another critical component of surviving as a real estate professional in this market is reevaluating the company with which a licensee is affiliated. Those offices that charge monthly fees, franchise fees, desk fees and the like should be shunned. Deals are not that easy to close these days, and sometimes, months can pass between transactions. Agents should not be paying fees to an office for nothing. Furthermore, commissions are smaller and more important than ever. The days of a Broker keeping a third or a half of the commission should be in the past. I have always believed in the 100%-commission method of running a real estate brokerage, and have always offered this at TR Realty. We are lean, efficient, tech-savvy, green, and able to pass these great savings and benefits along to our associates at every turn.

Last year, I said there would be more short sales, fewer foreclosures, fewer Brokers and agents, increasing interest rates and lots of foreign investors. Those trends should all continue well into 2012 and beyond.

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What? Possible good news for the Las Vegas real estate market?

On October 1, 2011, Assembly Bill 284 took effect. The bill was designed to ensure that mortgage lenders and servicers play fair. In an attempt to mitigate the tremendously negative consequences of robo-signing and other dubious conduct on the part of financial institutions, Nevada lawmakers sought both transparency and full disclosure throughout the foreclosure process. And in my opinion, this bill is a great step in the right direction.

I don’t think this new law has gotten as much press and attention as it deserves; therefore, I find it to be an excellent blog topic.

Notices of Default (NOD), which lenders may file in the county in which a delinquent property is located, are required prior to scheduling a sale date. They are the first real legal step in the foreclosure process, and may be filed when a borrower falls three payments behind. Once a Notice of Default has been (properly) filed, Nevada law mandates a three month and 20 day period that commences with the filing, during which the lender may not sell the property. When the NOD expires, the lender is then legally able to proceed with the sale, by serving proper notice and scheduling an auction. In other words: no NOD, no foreclosure sale.

The new Nevada law addresses the filing of the NOD. Lenders are now required to submit, along with other documents, something new called “Affidavit of Authority”. It must state the identity of the party that owns the loan, the identity of any beneficiaries and servicers, and it requires the lender to be completely honest and forthcoming. Failure to shoot straight will consequently result in penalties, even the possibility of felony charges brought against the lender.

So, if lenders can no longer forge, or should I say “fudge”, documents, they will be, in many cases, out of luck. Some experts are predicting an unprecedented drop-off in the number of foreclosures in Nevada.

How will this affect the local housing market?

Any NODs that were filed prior to the new law taking effect have been grandfathered in, meaning that those NOD filings are not subject to the new law. Those earlier NODs can still lead to foreclosure sales for many homeowners. But once those NODs are disposed of, either through short sales, loan modifications, deeds-in-lieu or actual auction sales, the inventory of new REO (real estate owned) listings is likely to dry up.

Long term, if the law changes, or if some loophole is found to exist, there could be a new wave of NODs, followed closely by a new wave of bank-owned properties flooding onto the market. But if the law stands, and is found to work as planned, then the housing market could find the momentum it needs to improve, finally.

It has been roughly four years since the housing market in Las Vegas began its free fall. Could the tide be turning?

If foreclosures drop substantially, then inventory drops substantially, since REOs have constituted roughly a third of all sales activity in the Las Vegas area over the last few years. And if inventory is down, then prices might begin to inch upward.

Successful short sales, as well, should be on the increase due to the new law. If banks are finding it difficult to file NODs, then they will be much more likely to acquiesce to short sales. It may even be easier for real estate professionals to get their short sales approved, if the threat of foreclosure, which is often used during the short sale negotiation process as a weapon against us by the banks, is dramatically lessened.

Several months ago, I blogged that short sales could reach 50% of Las Vegas real estate transactions. That prophecy could finally become truer than ever.

Another thought on home values: often, when real estate professionals are attempting to evaluate a property doing what is referred to as “comps” (comparable sales), foreclosed properties are responsible for dragging down values. This has made comps for short sales difficult and for regular (non-distressed) sales almost impossible. But if foreclosures are taken out of the mix, values should be easier to determine, and more representative of fair market value.

It is my opinion that by and large, banks will have great difficulty complying with this new law. They have never before had to jump through so many hoops in order to commence a foreclosure. And, since this is state-specific (just Nevada), it will make it even tougher for banks to follow our laws. No more lying about who actually owns the mortgage, or who the actual beneficiaries are. No more robo-signing. No more playing fast and loose with the documents. No more obfuscation, misrepresentation or outright fraud. And if they try it, they will be sorry, at least inside Nevada’s borders. Now, we have transparency, honesty and fair dealing, or we have no foreclosures at all.

With foreclosures on the way down, short sale approvals on the way up, and traditional sales once again able to move forward at fair market values, the Las Vegas real estate market could very well be in for recovery. I am not expecting boom times like we experienced several years ago, but rather, a more modest, healthy real estate market. Assembly Bill 284 could be just what the doctor ordered.

Recently, I received a telephone call from someone (a potential fraud victim) regarding my posting on Craigslist for a house for rent in Henderson. The only problem with that is that I do not have an ad on Craigslist for a house for rent in Henderson.

It seems as if someone (I am still investigating who) used my name to put an ad on the internet. He (or she) included my name as part of the email address to which prospective tenants should respond. The email address also included a number after my name, which either coincidentally or intentionally happens to be my age.

The ad listed a house way below market rent, so it was sure to get a lot of responses. When the “landlord” was contacted, he wrote a VERY long email, explaining in incredible (and suspicious) detail why the property was for rent, along with countless other unnecessary specifics. He went on to say that he was recently transferred to Africa, so initial rent and security deposit payments would have to be sent via Western Union. (Sound suspicious yet?)

He sent (by email) a lease agreement that is not one that real estate professionals use, which was pre-signed by him. He also sent photos of the property that he obtained off the internet.

The person who brought this scam to my attention smartly checked tax records, and determined that the name of the owner listed with the county was someone very different. She then visited the house, only to find someone already living there. The current owner- occupant said that the house was for sale, not for rent at all, and of course, he had no idea that any of this was going on.

It makes perfect sense that someone would go to these lengths to extort money from unsuspecting strangers using my good name. He surmised that if anyone suspected a scam, they would simply search my name on the internet (which is how the would-be victim found me), or perhaps visit the Nevada Real Estate Division, or Greater Las Vegas Association of Realtor web sites, and a simple search would reveal that I am, in fact, in excellent standing with all. The problem, of course, is that he is not me.

I suppose an effective way to run a scam would be to prey upon the established well-known name of a reputable professional in the field in which you prefer to perpetrate a hoax, thereby alleviating or diminishing suspicious thoughts that a savvy consumer may have.

So, I warn the public: NEVER SEND MONEY VIA WESTERN UNION TO AN UNKNOWN PERSON!

If anyone is interested in the response letter from this scammer, just email me and I will happily send it to you.

I have blogged on scams before, and now, here is another variation to add to the list.

Whether dealing in real estate or any other business or service: watch out, use your head, and if it smells bad or seems too good to be true, it most likely is.

For all the years that I have been involved in one form of real estate or another, I have resisted the temptation to expand my company into property management. It is considered to be very time consuming, detail-oriented, and it requires tremendous effort for little apparent return. But the recent changes to the Las Vegas real estate market have finally brought me into a “must-do” field of thinking.

Only a few years ago, cash purchases accounted for roughly 5 percent of Las Vegas home purchases. That number today is greater than 50%. One reason, of course, is the significant reduction in home prices. But even more responsible for the change is the number of investors entering the Las Vegas real estate market: specifically, the number of investors who do not live here. Recently ranked number one in the nation for real estate investment opportunities, Las Vegas has become, once again, an investment hot spot.

Because so many out-of-state (and out-of-country) investors have been snatching up local properties in the Las Vegas, Henderson, Summerlin and North Las Vegas areas, property management services are in high demand. And if we wish to retain our clients for future real estate business, we need to service them properly for all their real estate needs, and that increasingly includes property management.

TR Realty Property Management Division was recently born, after long-term planning and preparation. It was well-thought out, well-capitalized and highly organized. We have invested in the best software and tools, in order to provide the highest level of service to our property owners. Management personally attended property management school, successfully completed exams, and obtained proper licensing, rather than simply hiring a designated property manager like many other real estate firms. That means in TR Realty, there are already four fully licensed and insured certified real estate professionals with active property management permits, all of whom share the vision that ethics are paramount.

Furthermore, we have expanded our offices to include a separate facility exclusively for property management. Virtually all of the time, a licensed property manager is on site. Hours vary for each individual, but Jose Montez, Allan Lovinger, Emily Tien or I are always happy to facilitate services. Yes, we are very serious about property management at TR Realty.

TR Realty Property Management Division services include tenant screenings (credit, eviction, criminal and sexual offender), 7-day rental showings, full-service property oversight, tenant procurement, lease preparation and execution, security deposit trust account, rent collection, repairs and renovations, on-site property inspections, online tenant rent payment options, electronic landlord payments, environmentally-friendly services, fast landlord rent submission, and much, much more. Our property managers are multi-lingual, as well. And, referral fees are happily and expeditiously paid to licensed real estate professionals throughout the United States who send us their property management clients.

Unlike many property management companies, we do not do just the bare minimum. We do the absolute maximum. We don’t just put a tenant into a property and hope for the best. We do our homework, exercise great diligence, reduce loss, and take care of each property as if it is our own.

Different properties and different property owners have different needs. Therefore, allow our property managers to customize a strategy for your property: one that will enhance and protect your piece of real estate, minimize your headaches and maximize your investment. Please contact Jose Montez, Allan Lovinger, Emily Tien, or me, Bradford Roberts, to discuss your Las Vegas area property management needs.