Monday, May 31, 2010


Found a series of very interesting charts this week in a new report from LPS (Lender Processing Services), one of the nation's leading providers of mortgage analytics. 

Over the next few days, we'll take a look at a couple of different charts, with some background on what they mean and how to interpret them.

Let's start with a bar chart on delinquencies dating back to 2006.  This chart shows the nationwide increase in foreclosure filings on a month by month basis over the past four years. 

Quite simply, this chart shows a significant stabilization of the nation's housing market over the past 24 months after foreclosure filing growth "topped out" in April of 2008. 

Remember that this chart reflects overall foreclosure filings, which is a leading indicator of the real estate market's economic health.  Some areas (like Colorado) are outperforming the curve, while others (like Nevada, Arizona, Florida and Michigan) continue to struggle.

Put it all together, though, and this chart makes a compelling argument for the Fed to start reigning in the easy money policies of the past two years.  Sooner or later, interest rates must rise.  And once the Fed thinks the housing market has stabilized, you can bet rate increases will be on the agenda. 

Friday, May 28, 2010


Denver has the third strongest economy of 366 metro areas in the United States according to Policom Consulting, which released a national report this week covering 23 different economic metrics including wages and income, job growth, and government spending.

It’s the highest ranking ever for Denver in Policom’s annual report. The Denver area moved up from seventh place last year, 17th in 2008 and 19th in 2007.

Other Colorado cities ranked in the report include Colorado Springs (#40), Boulder (#87), Fort Collins (#103) and Pueblo (#293). 

The top ten cities in the Policom index were as follows:

1.  Seattle
2.  Washington D.C.
3.  Denver
4.  Houston
5.  Sacramento
6.  Salt Lake City
7.  Des Moines
8.  San Diego
9.  Madison, Wisc
10.  Dallas

Sunday, May 23, 2010


I’ve run into into a number of deals lately involving fix and flips... not a surprise with the huge demand among first time buyers as the April tax credits expired.

So the question often arises, how are these flippers able to purchase homes for 60 or 70 cents on the dollar before rehabbing and relisting them for sale?

Often, it involves buying foreclosed properties at the public trustee’s sale.

When a house is foreclosed on, it is first offered for sale “as is”, with no warranties, inspections, or rescission period, subject to any and all liens and encumbrances, on the county courthouse steps.

Normally, a bank will authorize a bid with the public trustee up to whatever it is owed on the property.  If the borrower being foreclosed on owed $144,000, for example, then the bank which financed the property would bid $144,000. 

But what if the home is worth $200,000?

In this is the case, you can bet investors will take note.  Because foreclosure actions are matters of public record, many investors scour the foreclosure records, looking at each foreclosure filing, how much is owed on the property, and then figuring out roughly what the property is worth. 

If the outstanding loans are close to (or exceed) the value of the home, then it's best to keep looking.  But every now and then, you do find a foreclosure on a property with significant equity.  At that point, for investors, the game is on.

If an investor is willing to buy the house sight unseen, not knowing what it looks like inside, and is willing to pay on the spot with certified funds (no financing), then he or she has a chance to purchase a property with built-in equity. 

The process is fascinating, but also fraught with risk. 

Check out this video:

Sunday, May 16, 2010


The Denver Business Journal has released its 2009 ranking of Denver’s top real estate brokerages. Here is the list, in terms of sales volume. 

Let's call these, "Rankings by Size":

1) Coldwell Banker – 14 offices, sales volume of $2,363,348,000
2) RE/MAX Alliance – 17 offices, sales volume of $2,135,252,781
3) Kentwood Real Estate – 3 offices, sales volume of $904,038,718
4) Fuller Sotheby’s – 5 offices, sales volume of $715,488,652
5) Home Real Estate – 3 offices, sales volume of $554,140,900
6) RE/MAX of Boulder – 1 office, sales volume of $520,597,438
7) RE/MAX Masters – 1 office, sales volume of $464,280,229
8) RE/MAX of Cherry Creek – 1 office, sales volume of $355,261,098
9) Keller Williams Central – 4 offices, sales volume of $329,288,134
10) RE/MAX Southeast – 1 office, sales volume of $277,350,010

This is an impressive list, and it shows who the “power brokerages” are in the Denver market. In terms of sales volume, my company, RE/MAX Masters, is number seven.

Now let’s dig a little deeper, and take a look at “transaction sides per agent”. This number is calculated by dividing the total number of closed transactions by the number of agents in the office.

Let's call these, "Rankings by Productivity":

1) RE/MAX Masters – 1,726 sides / 101 agents = 17.08 TPA (transactions per agent)
2) RE/MAX of Boulder – 1,237 sides / 84 agents = 14.72 TPA
3) Kentwood Real Estate – 2,231 sides / 157 agents = 14.21 TPA
4) RE/MAX Alliance – 8,834 sides / 658 agents = 13.42 TPA
5) RE/MAX Southeast – 1,342 sides / 117 agents = 11.47 TPA
6) RE/MAX of Cherry Creek – 1,077 sides / 96 agents = 11.21 TPA
7) Fuller Sotheby’s – 1,323 sides / 161 agents = 8.21 TPA
8) Coldwell Banker – 8,695 sides / 1,115 agents = 7.79 TPA
9) Keller Williams Central – 1,396 sides / 350 agents = 3.98 TPA
10) Home Real Estate – 2,532 sides / 794 agents = 3.18 TPA

So which office has the most productive agents in Denver? It’s RE/MAX Masters, which is exactly why I chose to affiliate with this office nearly three years ago.

Significantly, five of the six most productive offices in Denver are part of the RE/MAX network, which makes sense since RE/MAX agents average more experience and more productivity than agents in any other brand. 

If you want to be the best, associate with the best. RE/MAX Masters sets the standard for results.

(To view or print the entire report in a larger frame, click on the image)

Thursday, May 6, 2010


Took two days out of a very busy schedule this week to attend CRS 201, a 16 hour seminar course on listing strategies offered by the Council of Residential Specialists.

First, some background... the CRS designation (which I carry) is widely considered to be the most prestigious credential in real estate, earned by less than 4% of Realtors. 

To qualify, an agent must close a minimum of 75 transactions over a five year period and complete an intensive coursework and seminar program than can add up to well over 60 classroom hours.

Last year, CRS agents accounted for more than 25% of all sales transactions in the United States.  CRS agents had a median transaction count of 21, a production level 350% higher than the national average.

Being a CRS is like playing baseball for the New York Yankees, or singing at Carnegie Hall.  It is a privilege earned, not granted.

So what did I learn this week?  The focus, as always, was on IPODS - Identifiable Points of Difference. 

We talked extensively about the psychology of buyers and sellers in today's market... we were challenged to make our marketing more relevant to buyers by emphasizing "benefits" instead of focusing on "features"... we learned (or relearned) the four pillars of branding... explored "global marketing"... and took a hard look at how we must continue to create value above and beyond what a seller can do on his or her own to remain relevant in the market.

We also role played - a lot.  We were ambushed with hard questions, challenged to think differently and forced to get clarity about what we can and cannot do.  We were put on the spot in front of 35 other top producing agents, forced to think on our feet and challenged to solve problems many others would simply walk away from.  CRS classes are experiences, not events.  They are designed to force change and foster new thinking.

In short, it was two days of excellent personal and professional growth.  The ultimate goal in working with sellers to help them achieve their goals... quickly, and with minimum stress.  If we can effectively market in ways that net our sellers the most money in the shortest period of time, we have a competitive advantage.  And that's what being a CRS is all about.

Tuesday, May 4, 2010


If it felt crazy, that's because it was.

I got my last "tax credit deal" under contract around 6:30 Friday night, roughly 5 1/2 hours before the end of the "tax credit era".  Over the past two years, I have helped over 35 first-time buyers take advantage of one of the three tax credits which first surfaced in April of 2008. 

During the final days of April, it was just plain nuts, with buyers scrambling as if they were playing musical chairs and sellers rushing to hurry homes onto the market.  With 6,616 homes under contract in April, we came within 44 homes of recording the largest sales month in the history of the Denver Multiple Listing Service.  And that happened with the most rigid, inflexible and credit-starved mortgage conditions I have seen in 16 years as a broker.

So now what?  What do things look like going forward?

For the next month or so, there will clearly be a hangover in the market.  With first-time buyers traditionally making up 40 to 45% of our market, the deck has largely been cleared.  Interest rates are still ridiculously low, helped by the tumult in Europe and widespread uncertainty about the health of our economy here at home.  The inventory of homes is also low, down more than 40% from the "high water" mark we reached during the summer of 2007.  So there aren't a lot of homes, and buyers are either under contract or exhausted.

Whether it was worth the $30 billion price tag is debatable, but the truth is the tax credit worked.  It picked up the housing market and created a bridge from recession to recovery, at least with the inventory at the entry level, which was unquestionably the most adversely affected by the first phase of the housing crisis.

The entry level has stabilized and recovered (with the exception of condos).  The soft spots in the market are now clearly at the mid-to-high end, but tax credits are not enough to revitalize the upper crust.  For that, it's going to take jobs.  And that is unquestionably where our focus should be going forward.