All is Fair Game

December 19th, 2015 10:57 AM

The Three Major Appraisal Organizations Announce Mission and Goals of United Coalition to Promote Personal Property Standards

by Todd Paradis | Dec 14, 2015

The three major personal property appraisal organizations jointly announce an initiative to educate the public regarding meaningful qualification standards for Appraisers. The Appraisers Association of America, American Society of Appraisers and the International Society of Appraisers, all support the effort as a needed step to improving overall appraiser professionalism and competency, and as furthering public trust in personal property appraisers.

To help guide the initiative and frame the overall scope, new mission and vision statements were developed. Leadership of the three organizations, Deborah Spanierman (AAA), Linda Trugman (ASA) and Christine Guernsey (ISA), explained in a joint statement, "Our mission is simple, to raise the public awareness of qualification standards for credentialed personal property appraisers who are members of The Appraisal Foundation sponsoring organizations". The motivating intent behind the mission is explained through the coalition's vision statement, "to protect the public from the risk and abuse of unqualified individuals performing personal property appraisals; to bring the Appraisal Foundation’s AQB (Appraisal Qualifications Board) standard to the forefront of public awareness; and to raise the profile of the credentialed personal property appraiser.”

In addition to adhering to a code of ethics and following the Uniform Standards of Professional Appraisal Practice (USPAP), the members of these associations earn their credentials through stringent accreditation processes, as well as completing continuing education requirements. These tough requirements provide a level of professionalism and trust that is unmatched, and ensure the public that the appraisals performed by an accredited appraiser are among the most reliable appraisals available.

All three organizations strongly urge the public to verify the educational and experiential background of an appraiser prior to retaining their services, and to be wary of red flags that indicate an appraiser may not be objective in conducting appraisals. These include charging for appraisals based on the appraised value of an item, or offering to purchase an item the appraiser has appraised. Professional, competent appraisers always conduct appraisals at “arm’s-length,” without self-interest.


Posted in:General and tagged: Valuaing Personal Property
Posted by Greg Shelley Phd on December 19th, 2015 10:57 AMLeave a Comment

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October 23rd, 2013 10:39 AM

FDIC: Dismantling Big Banks is Feasible

Banking regulators speaking Oct. 12 at the Institute of International Finance in Washington, D.C., said the federal government has the capability to dismantle any of the largest banks if one were to fail, Bloomberg reported.

Art Murton, director of the Division of Insurance and Research at the Federal Deposit Insurance

Corporation, who is charged with planning the process for taking apart large financial firms, indicated that dismantling a large bank could become necessary and would be feasible in the event of a major financial crisis.

The Dodd-Frank Act gives the FDIC authority to seize and dismantle a financial firm if regulators feel it cannot go through bankruptcy without causing significant harm to the nation’s or the world’s financial systems.

The FDIC has not yet released a plan on how it would accomplish such a liquidation, although it likely would take a single-entry approach to overtake the bank’s holding company, impose losses on shareholders and then allow healthy subsidiaries to stay open. Federal regulators and banks have called for a process that would prevent future bailouts of so-called “too big to fail” entities.

The FDIC discussed its dismantling abilities in order to instill trust in the nation’s banking system and show the world that banks cannot continue to “socialize their losses and walk away when things blow up,” Bloomberg reported.

Dodd-Frank also requires global banks to file plans for how they would undergo bankruptcy without hurting the world’s financial systems. If the FDIC and Federal Reserve find a bank’s plan unsatisfactory, they could force the institution to restructure or sell off pieces of its business.

In fact, both JPMorgan Chase and Goldman Sachs filed a second round of such plans earlier this month after their first ones failed to gain approval.

 

New Line

Fannie and Freddie Announce Expanded HARP Eligibility Dates
Oct 22 2013, 3:53PM

In a move some borrowers and originators might consider "too little, too late" both Fannie Mae and Freddie Mac announced today they are expanding the eligibility dates for the Home Affordability Refinance Program (HARP). While tremendously useful to the small amount of borrowers who benefit from the change, it's not quite as magnanimous as it might sound.

Previously, loans had to have beendelivered to the agencies by 5/31/2009 to be eligible for HARP, which led towidespread confusion as lenders and borrowers had difficulty determining actual loan delivery dates without researching agency records. In general, loans closed by April 2009 were delivered to Fannie/Freddie by end of May, so were previously eligible; those closing in May 2009, however, may have missed the initial delivery date requirement.

With the changes announced today, the eligibility date will now be based on the NOTE date, thus opening the window of HARP eligibility to all those borrowers who may have closed their loans before the May 31st cutoff, but whose loans weren't acquired by the GSEs until after the cutoff.

Fannie Mae (per Selling Guide SEL-2013-08) will update their Desktop Underwriter (DU) system on Nov 16 to reflect the new eligibility dates; Freddie Mac will update its Loan Prospector (LP) underwriting system to reflect the changes on Oct 27. Lenders are required to have DU/LP approvals for HARP loans, so may be hesitant to start them until the underwriting guidelines are revised.

Best execution rates in May 2009 rose from 4.69 to 4.88%, versus the current 4.25% rate for ideal borrowers. A borrower with a $200,000 loan could anticipate saving approximately $80/mn, an amount that could increase if rates continue their downward trend of the last month amid reduced expectations of Fed tapering.

The chief advantages of HARP loans include their reduced equity requirements, a feature that enables many equity challenged borrowers to reduce their rates without incurring additional mortgage insurance costs, and, in some cases, relaxed income documentation as well.

Home owners who closed their existing conforming loans in May 2009, and who were previously told they were not HARP eligible may want to contact a lender to discuss their HARP eligibility. Both lenders and borrowers might be excused if they wonder why Fannie and Freddie waited until the HARP program was 3 years old to make this logical change.

New Line

"These changes would greatly improve the definition of ‘points and fees’ used to determine whether a loan meets the QM test, and would ensure that those with low and moderate means would continue to be able to obtain their mortgages from their credit union at a reasonable price," Thaler concluded.

Nearly 1.6 million homeowners have received foreclosure prevention counseling from local nonprofits, national intermediaries and state housing finance agencies, according to nonprofit Neighbor Works America. The organization's National Foreclosure Mitigation Counseling program shared updated statistics this week.

“Although the economy is improving, there are still many homeowners who need foreclosure prevention counseling and the NFMC program continues to assist thousands of families,” said NeighborWorks America CEO Eileen Fitzgerald.

“A homeowner who receives help from the NFMC program saves significant money and time and, importantly, often is able to remain in their home. The NFMC program has provided counseling in every state, the District of Columbia and Puerto Rico. We’re proud to spotlight the excellence and perseverance of homeownership counselors in helping people to stay in their homes,” she added.

 

 


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Posted by Greg Shelley Phd on October 23rd, 2013 10:39 AMLeave a Comment

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October 22nd, 2013 2:36 PM

Zoning in North GA

Comments from a Union County GA Commissioner



Q. Why don’t we have zoning in Union County?
A. Occasionally someone will ask me why we do not have zoning, and I try to remind them that while some feel zoning is protection for everyone, in many cases it has simply turned into a way for government to grab more power and control over your property. Personally, I think that government and government regulations should remain as small and simple as possible and certainly should not try to control every move you make, while at the same time provide a reasonable amount of protection for the public.

The large bureaucracy created by zoning is one of the most contentious issues facing counties and commissioners statewide and probably the vast majority of their time, prior to the recession, was spent dealing with variance request and paying zoning attorneys to defend county actions. During the past ten years in Union County there have been less than a dozen new issues pertaining to land use that have created a problem. Thus placing another layer of bureaucracy for zoning for the entire county I do not feel is justified at this time.

Q. Do you see a time in the future that zoning in Union County may be required?
A. It is always possible that at some point in the future, with more growth, zoning or zoning light (a type of land use planning) may be necessary. Also, if we see an increase in people not “caring” or respecting others property rights, then different considerations may be necessary sooner.

How Land use opposed to restrictive zoning effects land values.

Union County GA Land Sales

Gross Sales

Acres

$17,708,503

1238.63

$14,296.85

The average price per acre of qualified sales is currently at $14,296.85 per acre in Union County GA.

Polk County GA Land Sales same time period:

Gross Sales

Acreage

Price per acre

$2,110,802

307.5

$6,864

I can do this all day with any county in the north GA that has land use over zoning.

There are certain restrictions but the land is taxed according the value in use not based on some zoning applied bureaucrats that have no clue of what they’re doing and have and really no idea of what affect it will have on the land owners.

Just a thought!

I will have more data later I have just been busy.


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Posted by Greg Shelley Phd on October 22nd, 2013 2:36 PMLeave a Comment

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July 20th, 2013 12:20 AM
SHADOW MARKETS:
Due to the large number of foreclosed properties over the past 5 years there has become what is called the shadow market. Investors who are well capitalized have purchased properties at fireside prices and have been and continue to hold them until the market improves. When considering that factor and reviewing recent statistical data listings etc., for investment purposes one has to consider the type of investment property they have chosen to the invest in and try to determine how much shadow inventory of that type of property is out there. It is most likely an impossible task. I rarely deal with residential properties so that area of the overall real property market remains a mystery to me. However due to the large number of foreclosed an resold new residential homes at well below market prices and vacant residential developments I can tell there is a huge number of building lots being held by investors at this time. That is one type of property I would stay away from.
Other properties to stay away from are Mini-Warehouses, Car-Washes and C-Stores. These properties require too much owner attention and the failure rate is quite high.
On the bright side there has been a resurgence in Multi-Family housing units and I when I say Multi-Family housing I mean good quality and well maintained properties. These type properties have made a comeback in the outlying areas of the Atlanta sub-markets. Flex use building those being limited office in front and warehouse space in the rear have made some gains in the last year. These types of building are typically 6,000 GBA to 12,500 GBA in size and are usually owner occupied or leased to one tenant.
In the next update I will tell you why the northern counties along the Tennessee line have made modest comebacks and how no zoning in the unincorporated areas have helped in is revitalizing those areas. In addition how restrictive zoning adversely affects the market price of property.

Until then I wish you well,
Greg S


BY JANN SWANSON
Agencies Scuffle Over Best Way to Make Loans More Expensive
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Jul 18 2013, 12:37PM
The Office of Inspector General (OIG) of the Federal Housing Finance Agency (FHFA) has expressed some skepticism about FHFA's plans to gradually raise the guarantee fees (G-fees) of Freddie Mac and Fannie Mae in an attempt to lure private investors back into the housing finance system. In a report issued earlier this week, the OIG looks at the methods the two government sponsored enterprises (GSEs) used in the past to determine frees, the recent history of G-fee increases, and how FHFA will determine if their private sector goals are reached.
In 2012 the GSEs generated $12.5 billion in revenues from the single-family G-fees they charge to protect investors in their mortgage-backed securities (MBS) against potential credit losses. FHFA has argued that the federal financial support for the GSEs has allowed them to set their fees artificially low, increasing their risks and pricing competitors out of the market. FHFA has directed them to increase fees so as to encourage greater private sector investment in mortgage credit risk, lessen taxpayer risk, and reduce the dominant position the GSEs hold in housing finance.
At the same time the Federal Housing Administration (FHA) under the supervision of the Department of Housing and Urban Development (HUD) has raised its insurance premiums several times in recent years also in part to encourage private sector investment. However FHA has now announced it is discontinuing further premium increases. OIG conducted its evaluation to analyze FHFA's initiative and to assess its communications and interactions with FHA on their FHA's initiatives.
The GSEs use several methods in setting their guarantee fees. First, each employs a proprietary financial model to determine the credit risk by modeling the rate at which the underlying mortgages will default and the average losses on those that do (the loss severity rate.) If a GSE can reliably model the default and loss severity rates in a particular MBS set then it can estimate the credit risk and set an appropriate guarantee fee. The GSEs also employ their financial models to ensure that the fees are sufficient to cover their capital and administrative costs and certain other items.
The GSEs also rely upon business judgment in setting fees. They consider factors such as competitive market conditions, return on capital targets, and affordable housing goals. Freddie Mac told OIG investigators they also have traditionally considered the financial markets' view that Fannie Mae's MBS offer superior liquidity to their own and have attempted to provide financial incentives (i.e. lower fees) to compete in the market.
OIG said these methods aside, FHFA and others have argued that federal financial support for the GSEs has allowed them to set their guarantee fees lower than otherwise would have been the case because government support pre-conservatorship allowed the GSEs to issue debt at levels only slightly higher than those charged by the U.S. Treasury on securities with similar maturities. This ability to issue debt at favorable rates has continued under the conservatorships.
FHFA told OIG that this preferential support allows the GSEs to price their products and services, including MBS guarantee fees, at rates lower than would otherwise be feasible for a profit-motivated entity, provided them with an advantage over competitors that has allowed them to dominate the housing finance system and amplified their risks because the fees did not fully reflect the potential credit loses they would ultimately incur in fulfilling their commitments to MBS investors.
OIG found that during the housing boom of 2004-2007 the GSEs' guarantee fee rates were too low to mitigate the risks associated with their mortgage purchase and securitization practices and ultimately the losses on the GSEs' combined single family MBS guarantee business reached $218 billion. These losses exceeded their available capital of about $78 billion at the beginning of the conservatorship by a factor of about three to one. Starting in late 2007 the GSEs started to increase the fees to better protect themselves against credit losses and this trend has continued under the FHFA conservatorship.

FHFA and Enterprise officials have provided several reasons for the low guarantee fees set during the housing boom years. They have said that the financial models severely underestimated the risk from Alt-A and other mortgages and failed to predict the drastic decline in house prices when the housing bubble collapsed. They also concede that the guarantee fees were sometimes lower than called for by the financial models and were sometimes based in part upon business decisions to make the GSEs competitive with private label mortgage-backed securities (PLMBS) issuers.
The GSEs nearly doubled their combined average G-fees to 50 basis points in 2012 due to a legislative mandate and a directive from FHFA. In an attempt to raise federal revenue, the Temporary Payroll Tax Cut Continuation Act of 2011 required FHFA to increase the gees by not less than 10 points, then FHFA required the GSEs to increase fees by 10 basis points as part of an overall plan to increase private sector investment and gradually end the GSEs' dominance in the housing finance system.
FHFA has stated that raising fees is consistent with efforts by Congress and the Administration to reform the housing finance system and many such proposals call for the elimination of the GSEs in their current form and their replacement with a new structure. FHFA's proposal to gradually downsize their market presence appears to be an attempt to provide a foundation for whatever strategy is ultimately adopted.
To this end the agency says it will continue to direct the GSEs to gradually increase the fees. However, OIG says, it is not clear how much higher fees will have to go in order to increase private sector investment nor has FHFA defined how it will measure it. This raises the level of uncertainty associated with the Agency's initiative.
As shown in Figure 4, the two mandated guarantee fee increases in 2012 caused the GSEs' combined guarantee fee to nearly double from 28 basis points in 2011 to 50 basis points by the first quarter of 2013.


Moreover, the Enterprises' guarantee fee income grew 12% in 2012 to $12.5 billion (see Figure 5).


Although recent guarantee fee increases have been substantial, available evidence suggests that they may not be sufficient to cause a material increase in private sector investment in mortgage credit risk. One GSE officials said the fees would, in general, need to rise considerably to affect such investment because they are not yet high enough to offset the GSEs' traditional cost advantages derived from federal support. A private company representative said the fees would need to increase by about one-third, 15 to 20 basis points, before there would be sufficient financial incentives for private investors.
FHFA officials recognize the fee increases must be gradual to avoid disruption to the markets and have said that future increases would likely be modest with considerable intervals between each to permit FHFA to assess market reaction and make adjustments as necessary.
OIG says FHFA has not developed any fixed definitions or methods to measure private sector investment. Such evidence might include a gradual return of a revamped Private Label MBS market, perhaps to historic levels (on average about 20 percent of all MBS issues in the 1990s). Or, an FHFA official said, financial institutions might be more willing to hold loans in their portfolios rather than sell them to the GSEs, thus retaining some credit risk. Alternatively, the fees might increase private sector participation "on the margin"; that is private institutions might be more willing to compete for the purchase of particular pools of mortgages but not conforming mortgages in general.
Officials from one GSE agreed with FHFA that private investment could vary and be difficult to measure. One reason is the private sector generally did not securitize the types of conforming mortgages that are the staple of the GSEs MBS guarantee business but rather those mortgages that did not meet GSE standards . This officials also said the increasing lender retention of mortgages would not necessarily indicate that rising G-fees were working. GSE-related credit costs such as guarantee fees are a relatively small factor in a lender's decision to sell a mortgage to a GSE or retain it on its own books.
While FHFA's could potentially transfer some of the credit risk to private sector investors, it also faces some trade-offs and challenges including reduced demand for mortgage credit and volume.
To some degree guarantee fees have always been built into the cost of conforming mortgages and it is likely that their inclusion in the overall price of mortgages has had only a minimal effect on the demand for housing finance. However as fees continue to rise they could become an important cost factor and any business must make a decision about which increased operating costs they pass on to consumers. "If guarantee fee increases are limited and housing and economic markets are strong, the impact of guarantee fee increases upon borrowers will likely be mitigated."
Recent federal regulator initiatives designed to correct abusive and unsafe lending practices such at the qualified mortgage, retained risk, and ability-to-repay rules could involve trade-offs that present challenges to the FHFA initiative.
Changes could result in potential shifts in mortgage credit and risks between the conforming and government insured markets. FHA has raised its insurance premiums and tightened underwriting standards in order to strengthen its finances and encourage greater private sector investment in credit risk however, there is some potential that the FHFA and FHA initiatives could result in one of their markets becoming relatively more expensive or otherwise less attractive than the other. FHFA maintains that there is not much overlap between its market and that of FHA and both agencies have recently raised prices without significant shifts.
OIG recognizes the distinctions between the two but also notes that the current loan limits on FHA-insured mortgages is significantly higher in high cost areas than the conforming loan limit which could increase the relative attractiveness of FHA-backed mortgages and, although FHFA has directed the GSEs to raise its guarantee fees Ginnie Mae has not raised its MBS guarantee fee since 1972. Consequently there could be a growing cost disadvantage between Ginnie Mae and GSE guaranteed MBS. Further, HUD announced in April 2013 that FHA would no longer increase its mortgage insurance premiums so the potential exists for conforming mortgages and the GSEs' MBS to become relatively more expensive than FHA-backed mortgages and Ginnie Mae issued MBS.
Based on the above, OIG made the following findings and recommendations:
• FHFA has yet to establish definitions or performance measurements for its initiative.
• FHFA should seek to establish a more formalized arrangement with FHA to assess key issues involving their pricing initiatives. This would address critical issues such as the implementation of their pricing initiatives and the potential for shifts of mortgage business and risks between the two markets.
FHFA disagreed with the findings and recommendations of the report. In the first case the agency said it had earlier addressed those concerns and that, in lieu of a fixed quantitative target it intended to monitor the market closely. As regards its interactions with FHA, FHFA said the two were established as separate and independent entities and that FHFA had always found that interactions between such organizations are better handled informally.
BY JANN SWANSON
Underwriting Standards May Have Loosened Too Quickly -BB&T CEO
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Jul 18 2013, 12:04PM
BB&T announced better than expected financial results on Thursday, with second quarter earnings coming in at 0.77 per share, .03 higher than estimates, and revenues of $2.5 billion. A press release from the bank said these were the best quarterly results ever and credited the bank's best credit quality levels in five years.
In an interview with CNBC's Andrew Ross Sorkin following the release BB&T Chairman and CEO Kelly King said loan underwriting standards may have loosened too quickly since the 2008 crash. Going into the Great Recession, he said, underwriting had become too liberal and then it tightened dramatically after the crisis hit. Now it is about halfway back to the "too liberal" standards.
"I have been doing this for 41 years now," King said. "Usually, we go in a 10-year cycle of memories from the bad times to forget all the bad loans and start making bad loans again." He said he was a little concerned that underwriting standards have been "coming back faster" than he had expected.
King also said that the steeper yield curve is not having a material impact on his bank in the short run because the short end is still very low. It is impacting BB&T.'s mortgage business, he said, because as the rates rise the refinancing business is going down. "But as it begins to steepen on a permanent basis you will see all rates rise and that will be good for us because we are asset sensitive. That means we have more assets to price up as the rates go up than liabilities." Right now, he added, the affect is sort of muted except for mortgages and in the long run it will be positive for BB&T.
Kings remarks about lending standards drew quick reaction from several MND readers. Constantine Floropoulos of Quontic Bank said, "I couldn't disagree more that underwriting standards are getting too loose. In no way, shape, or form are we moving back toward the underwriting standards considered to be a key component in the melt-down. When worthy homeowners (families with children, small business owners, entrepreneurs, and veterans to say a few) can't get a loan to reduce their interest rate from 7% to 3.5% even with perfect credit, it's easier to make the case that guidelines are actually too tight. I'm not sure where Mr. King thinks we are with respect to the 10yr cycles he mentioned, but we're roughly 7 years away from the apex of loose underwriting and most originators would agree we have yet to make a meaningful movement back in the other direction.
Matt Hodges, Sales Manager at Presidential Mortgage Group concurred, saying "I find it amazing that BB&T considers current lending standards too loose "half way back to where we were before". Has Mr. King not seen the drastic changes in the industry over the past 6 years? Freddie Mac used to allow unlimited debt to income ratios 6 years ago. If you have perfect file, you might get to 50% now, but more likely a maximum of 45%. Has Mr. King not heard about the upcoming Qualified Mortgage (QM) changes that most lenders will roll out this Fall, capping debt to income at 43%? Is he not aware of FHA's change to MIP costs and their permanence for the life of the loan? Lenders are so concerned about buyback fears and fraud that the guidelines are extremely tight.



Jan 2012 to July 2013 Industrial Report, Carroll, Floyd, Bartow, Haralson and Gordon Counties.





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Posted by Greg Shelley Phd on July 20th, 2013 12:20 AMLeave a Comment

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June 7th, 2013 5:10 PM

We want feedback from our Blog readers. What's on your mind or a do you have a specific question.

 

 63,216,431 people used Craigslist in the month of September. Based on this information, do you think there may be a slight possibility that you could generate additional leads and sales using Craigslist real estate marketing strategies for your business?

Although the answer to this question should be a resounding "yes", there is certainly a right and wrong way to use this platform. Unfortunately, with our years of experience working with agents, investors and brokers around the country, we have found that many professionals are not initially implementing this technique correctly.

Here's the major issue we have found. Since Craigslist closely resembles a form of traditional classifieds based advertising, a majority of users choose to utilize this real estate marketing tactic by simply running basic ads with no or a very poor call to action. We cannot expect visitors to contact us directly. Instead, online marketing strategies require us to be proactive instead.

A Craigslist Case Study


For instance, if you were to spend 15 minutes scanning over local postings on Craigslist, you would typically find a lot of listings that rattle off a bunch of features and benefits of a particular home, with perhaps a link to a website or property search tool.

However, the problem with this approach is that 95% of the population is doing the same exact thing! Unless that prospect is ready to buy or sell on the spot, your ad could quickly be glimpsed over with no action being taken. The difference with using Craigslist real estate marketing strategies is that you must focus on lead capture instead of simply advertising your goods and services to a huge marketplace.

True, this is a super simple concept to grasp, yet too many real estate professionals are still following outdated methodologies to build their lists. Consequently, this calls for a complete mindset shift in order to fully take advantage of all that Craigslist has to offer.

Introducing the Craigslist Ad Sandwich


I decided to cover this exact topic in a recent video training video that I published. I am going to keep the text portion of this part short and sweet. Here is a basic Craigslist real estate marketing outline that you can refer to to get the real nuts and bolts of everything that is involved with this process:

Gripping Headline: What makes your listing or offer unique? Focus on features, benefits, and pain points that will grasp your audience�s attention. This has to be compelling to get people to first click on your ad.

Image/Banner Ad: Once a person opens your ad, the very first thing that should draw their attention is an image or banner ad with a very strong call to action. The offer should be something that will speak to your audience and cause them to click over to your opt in page.

Property Info With Link: This portion of the Craigslist real estate marketing ad should be very short and to the point. The property information can be followed by an HTML link that directs to a property specific landing page with lead capture for future follow up.

Final Call to Action: You can finish off your sandwich with an image or text link call to action. Create a twist on your top offer leading to the same landing page, or perhaps target buyers on your first image ad and sellers for the bottom portion.

In almost every seminar I've ever attended, a lot of time has been devoted to teaching attendees how to find good deals. Because deal-finding IS so crucial to one’s investing success, I recently decided to look back and see which methods have generated the most deals and the best deals for me. In reviewing the 150 properties I've bought or flipped over the last 5 years, I was surprised to find that many of the "traditional" sources of great deals haven't worked for me, while some less obvious methods have been great lead generators. I’d like to share with you the results of my little inventory.

Good: The Multiple Listing Service. The MLS is essentially a catalog of all the properties listed for sale by brokers. Needless to say, some of them are good deals for investors, and some aren’t. The trick is to ferret out which properties have motivated sellers without making offers on all of them. I've honed this skill through years of translating agent lingo like, "Handyman's special" (looks bad, smells bad, has at least one major system that doesn’t function), "needs TLC" (ugly, but not smelly, and everything works).

Why it works: Properties listed in the MLS are for sale. This may seem like an obvious statement, but some of the other methods touted as great ways to find deals involve locating owners, then finding out if they want to sell. Properties in the MLS also have the advantage that all of the information about the property is pretty much laid out for you - a major time saver. And, with the sophisticated, computerized access available to your agent, it's a matter of a few keystrokes to view all of the properties that are handyman's specials, or bank-owned, or in estate, or priced under a certain dollar figure - whatever you’d like to concentrate on.

Another reasons that the MLS has worked so well for me is that I am generally in the market for really ugly properties. Coincidentally, these are the same properties that most agents prefer not to spend a lot of time with. In many cases, they're downright cooperative - particularly when I'm offering all cash and a quick closing.

Bad: Direct mail to real estate agents. In 1994, I had the brilliant idea that I might be able to find MLS-listed properties even faster if I simply let agents know what I was looking for. So I purchased 1,200 agent names from the Board of Realtors and generated a 3-part mailing send to every agent in town.

The theme of this campaign was this: if you, Ms. Agent, have a property listed that fits my criteria, I’ll make an offer and you get to keep the entire commission. Out rolled my brilliant campaign -all mailed first class, incidentally - and in came the phone calls. All 7 of them. That’s right. The week after the first letters went out, we got 7 calls. We had already made offers on three of the properties; two were out of our price range; and two were overpriced listings about to expire.

The next mailing generated even more results - about 15 calls - all basically in the same categories. The final mailing, a postcard, received no notice at all. Basically, I wasted about $1400 on a campaign that generated absolutely nothing.

What went wrong: I still think that this idea has some merit, but if I do it again, I'll make some major changes. First, I'll target only the 200 or so agents who list the types of properties I buy. Second, I'll do a better job of writing the letters, emphasizing how the agent and his seller would benefit from working with me. Third, I'll make my campaign a continuous one throughout the year, testing different letters for response and mailing the best to the same agents over and over. And lastly, I'll personalize the campaign by following up with a phone call to the 50 or so best prospects. Oh well, live and learn.

Good: Ads in the Yellow Pages. For 8 years, I've had an ad in the "real estate" section of the Yellow Pages. Each year, the ad has had some variation of the wording, "I buy houses - all cash”. This ad only generates 3-4 calls a month, but for some reason the quality of the calls is better than those that are generated by any other method I've ever used. The sellers tend to be motivated, cooperative, and have unlisted properties.

Why it's worked for me: I love that you deal with these ads once a year, then forget ‘em. While they’re pricey - up to $3500 per year - the phone company will generally bill you monthly for the cost. In addition, as one of the very few ads in the phonebook that promise to buy houses, I haven’t got much competition.

Bad: Advertised FSBOs. Properties For Sale By Owner, a.k.a. FSBOs, are a favorite for some real estate investors. I, on the other hand, have never purchased a property from an owner who advertised his property for sale rather than calling me.

I've found several problems with trying to buy FSBOs. The first is that some are not actually for sale. Some FSBOs are just “testing the market to see what kind of offer’s he’ll get. Other FSBO sellers are very motivated to sell, but don’t list because they want to keep all of the money from the sale. They don't want to pay a commission - but they don't want to take a lower price, either. And sometimes a seller chooses to try to sell their property by themselves because they owe too much to pay a 5%-7% commission, even if he sells it at full price.

If you are buying expensive homes creatively, these sellers are ripe for the kind of solution you offer. My strategy is to buy ugly houses cheaply and for cash, and I just don't find this type of deal in advertised FSBOs.

Good: Flyers to Targeted Neighborhoods. Last year, I had 10,000 double-sided "I buy houses" flyers printed. I hired someone to put this flyer in the door of every one, two, or three family property they saw in my “farm”. Every 3 weeks, 3,000 of these flyers were delivered, and the response from qualified sellers was excellent. For a cost of less than $500, I made two deals that netted over $6,000.

Bad: Billboards in the same neighborhood. Here's a lesson in messing up a good thing: hot on the heels of my massively successful flyer campaign, I decided to spring for four large billboards in the same neighborhood. The problem was that my marketing budget is only so big, and buying the billboards meant stopping the flyers. Still, I figured that the billboards would get more attention anyway, so I forked over the $1,800 and got...

Absolutely nothing. Not one single phone call. Not even from an unqualified seller. Not even a wrong number. Nothing.

The Moral? Stick with What works
.
Good: Flapping my gums. Luckily, talking - a lot - is something I have little problem with. Laugh if you will, but my willingness to talk about what I do to anyone who will listen - or even pretend to listen - has made me a lot of money.

For instance, when my new hairdresser asked me what I did for a living, I responded that I buy and sell houses. His immediate reaction was, "really? How pretty do they have to be?" Long story short: I bought his unwanted junker house for $4,000 and sold it for $7,000 the same day. When my attorney wanted to know what type of assets I wanted to protect, I told him about my house-buying business. Four months later, he referred a client to me who sold me a $35,000 property for $12,000. You get the picture.

Bad: Using only one lead generator at a time. In my experience, it’s best to use at least 3 different ways of finding deals at the same time: preferably two you’ve used before with some success, plus one that you’re testing. Which brings us to

Ugly: Not knowing which of your deal-finding strategies are working, and which aren’t! If you’re going to spend money on flyers or ads or telephone pole signs or whatever, it’s very important that you pay attention to which methods are generating good leads, and which are duds. In looking over my own deals was very surprised to discover how many great deals came from attorney referrals - a strategy that I haven’t pursued aggressively, but will in the future. If you aren’t tracking your lead generators to discover which are working and which you should give up, you’re wasting time and money that could be put to use making you deals.


Vena Jones-Cox
Vena Jones-Cox is a past president of the Real Estate Investor’s Association of Cincinnati, the Ohio Real Estate Investor’s Association, and the National Real Estate Investor’s Association. Vena has been featured in publications such as The Cincinnati Enquirer, Smart Money Magazine, Money Magazine and Reader’s Digest in articles about successful real estate entrepreneurs.

Vena Jones-Cox’s real estate business focuses on finding great deals on 1-3 family homes, and then lease/optioning them to homeowners or wholesaling them to investors and renovators. All told, she buys and sells about 50 properties per year.

Vena is a frequent guest lecturer at real estate investment groups throughout the country, and particularly enjoys working with new investors. Vena frequently authors articles on real estate investment and the regulatory environment for various newsletters and publications, including her own monthly newsletter. She has been a guest speaker at the Cato Institute in Washington, D.C., lecturing on the effects of lead-based paint regulation on small investors. And in her spare time, Vena Jones-Cox hosts a popular weekly call-in radio program on public radio.

More real-estate investors are seeking solid returns. But they're not buying homes. They're buying mortgages.

As the residential market bounces back, investors are showing renewed interest in buying mortgage-backed securities—loans that the lenders have bundled and sold as consolidated debt. Since selling off jumbo mortgages lessens lenders' risk, more banks, credit unions and other financial institutions are offering jumbos. And more competition could mean better terms for consumers.

In the first quarter of 2013, $4 billion worth of jumbo loans were sold by lenders, more than the $3.5 billion total of securitized jumbos in all of 2012, according to Guy Cecala, publisher of Inside Mortgage Finance. If the pace holds through 2013, the volume of securitized loans could reach $16 billion, Mr. Cecala said.

However, while a 400% annual increase is significant, $16 billion still represents just 7% of the $220 billion volume projected for jumbo loans in 2013, he added. Lenders issued $203 billion in jumbo loans in 2012, and securitized loans accounted for less than 2% of that total.

"The vast majority of jumbo loans aren't securitized still, and the [secondary] market has a long way to go to be any reflection of what it used to be before the housing crash," Mr. Cecala said.

Before 2008, as many as two-thirds to three-fourths of all jumbo residential mortgages were securitized, he said. Then the mortgage meltdown occurred, and investors shunned jumbo securitized mortgages in favor of investments containing pools of government-backed mortgages by Fannie Mae FNMA -0.50% or Freddie Mac, FMCC -1.59% which only guarantee loan amounts up to $417,000 in most of the U.S. and $625,500 in pricey metro areas, such as New York and San Francisco. That dearth of the "secondary market" meant lenders had to hold any jumbo mortgages, which are above those dollar limits, on their books.

Redwood Trust Inc. RWT -0.64% was the first player to re-enter the jumbo secondary market in 2010, and the real-estate investment trust (REIT) has announced plans to securitize $7 billion in jumbo loans in 2013, three times more than its $2 billion volume in 2012. Its success has triggered more investors, including Credit Suisse, CSGN.VX +3.06% Shellpoint Partners, JP Morgan Chase & Co., Two Harbors Investment TWO -0.27% Corp, and PennyMac Mortgage Investment Trust PMT -1.65% .

The secondary market's rebirth has allowed EverBank Financial Corp. EVER +0.12% to offer 30-year, fixed-rate jumbo mortgages, said Tom Wind, executive vice president of residential and commercial lending for the Jacksonville, Fla.-based bank. Interest rates for a 30-year, fixed-rate jumbo mortgage were 4.20% on May 31, just 0.13 basis points more than the 4.07% rate for a conforming mortgage.

EverBank sold its first pool of securitized prime jumbo loans on the secondary market in April, netting $307.4 million, according to a Securities Exchange Commission filing. The lender anticipates bundling and selling more jumbos this year, Mr. Wind said.

The ability to sell loans has allowed San Francisco-based RPM Mortgage to expand its jumbo originations by 233% from 2011 to 2012, said Julian Hebron, vice president of the San Francisco-based boutique lender. RPM is now the second-highest volume lender to home buyers in the nine-county Bay Area, where jumbos now account for 48.1% of all purchase lending, according to DataQuick MDA.T +0.76% . RPM's year-to-date 2013 jumbo production already has exceeded its 2012 total, Mr. Hebron said.

Other issues to consider:

• Credit qualifications remain tight. Investors look to buy securitized loans from lenders with tight qualification standards for borrowers, so solid credit scores, high down payments and excellent loan-to-income ratios are still important, Mr. Wind said.

• Customer service. When lenders securitize loans, they sometimes retain servicing, and sometimes the purchaser takes it on. Currently, RPM retains servicing on 40% of its jumbo loans, but Mr. Hebron said he hopes the expanded secondary market will allow the firm to increase that number to 80%. "We want to remain the point of contact for our customer," he added.

• New rules coming. New Consumer Financial Protection Bureau regulations take effect in early 2014 that may require lenders and/or securitizers to hold 5% of the amount of securitized loans that aren't qualified mortgages. Some loan types, such as interest-only loans, may be more difficult for borrowers to find, since securitizers will be less likely to want to buy them from lenders due to the 5% rule, said Keith Gumbinger, vice president at HSH.com, a mortgage-information website.

A version of this article appeared June 7, 2013, on page M5 in the U.S. edition of The Wall Street Journal, with the headline: Investors Revive Market For Bundled Mortgages.

Retailing giant Wal-Mart Stores' annual shareholders' meeting this week showed signs of the company's recent turbulence, as protesters assembled at corporate headquarters to shout slogans and demands.

Despite a court-issued restraining order, the protesters, including workers who are on strike, decried low wages and called for better safety procedures for supply-chain workers. And some of their views were heard inside the meeting, as well.

The strikers were in Bentonville, Ark., with the support of the United Food and Commercial Workers Union and the labor group OUR Walmart.

Inside the meeting, the lineup of speakers included "former Bangladesh child garment worker turned activist Kalpona Akter, as Jacqueline Froelich reports for Newscast, from Arkansas member station .

Akter took the stage to deliver a speech recommending the adoption of Proposal No. 5, a measure that would give shareholders of 10 percent of common stock the ability to call a special meeting. Such meetings would be useful, she said, in crafting responses to incidents such as the recent collapse of the the Rana Plaza garment factory complex, which killed more than 1,100 people in Bangladesh.

After that tragedy, several large European clothing companies said they will band together to create a program for inspecting factories and ensuring safety upgrades to protect workers. Last month, Wal-Mart said it would not be part of that effort, preferring instead to create its own plan, as .

That didn't satisfy Akter, who noted that repairs that would make the company's factories safer had been deemed too expensive, despite equaling "just two tenths of 1 percent of the company's profit last year."

"Forgive me, but for years every time there's a tragedy Wal-Mart officials have made promises to improve the terrible conditions in my country's garment factories, yet the tragedies continue," . "With all due respect, the time for empty promises is over."

Wal-Mart employs more than 2 million people around the world, . It generated sales of around $466 billion in fiscal year 2013. Friday, Wal-Mart executives unveiled a plan to buy back $15 billion in stock.

Despite appearances by celebrities Hugh Jackman, Kelly Clarkson, John Legend, and Tom Cruise, Wal-Mart's 2013 meeting brought serious concerns along with the company's celebration.

"This year's shareholders' meeting comes at a time of turmoil for the world's largest retailer, which finds itself dealing with empty shelves, labor unrest, bribery scandals and tumbling sales," as .

he director of the National Park Service doesn't have anything against hot dogs or pizza being served in eateries in national parks.

"But I wanted more options, and more healthy choices," told me at a tasting event this week to unveil for the concessionaires who operate more than 250 food and beverage operations in national parks.

"There is no reason that you should have to take a vacation from eating well when you visit a national park," Jarvis told a group that had gathered on the National Mall to sample some of the most innovative new menu options.

As Jarvis announced details of the initiative, the crowd was distracted by the wafting aromas of sauteing crab cakes, a creation of chef Steven Sterritt of in Shenandoah National Park.

"These are fresh jumbo lump Maryland crab with a roasted garlic béchamel sauce. ... It's pure crab, no filler at all," Sterritt told me. Wow. That's a far cry from fried chicken tenders.

Jonathan Jarvis, the director of the National Park Service, announced a new initiative to offer more healthful food choices at national parks starting this summer.

Jonathan Jarvis, the director of the National Park Service, announced a new initiative to offer more healthful food choices at national parks starting this summer.

Maggie Starbard/NPR

And instead of fries or potato chips, there were house chips made from beets and other vegetables.

"We are changing to a healthier fare, of course," Stefan Larsson of Yellowstone National Park told us as he served up things I'd never seen in national parks before.

"This is bison tenderloin," served with a dollop of horseradish sauce, Larsson told us. "Bison is flavorful and lean meat." Also on the menu: regional huckleberries, a rhubarb gazpacho and a brie-style cheese produced in the Yellowstone region.

"So, are park visitors surprised to see these kinds of dishes?" I asked. "Yes, I think so," Larsson told me. But folks are also usually impressed to find the regional cuisine and the fresh approach, he says.

Turns out there's only one flop, so far. Apparently, park visitors are not too keen for his take on ostrich meat. Hmmm. Perhaps the pace of change can come too fast.

The new standards are based, in part, on changes already in place in parks like Yellowstone, where concessions are run by . As part of its Healthy and Sustainable Cuisine program, the company has pledged to adhere to naturally raised meats, cheeses from regional farms, no high-fructose corn syrup and baked goods sweetened with 30 percent less sugar than traditional preparations.

To usher in the new Park Service food initiative, the White House sent over of the campaign, who noshed on almond-crusted baked chicken with a fennel salad.

"You know, baked is the new fried, so that looks delicious," he told the chef.

Kass told the group that the new initiative is "an important step toward making the healthier choice the easy choice for parents and kids."

And after tasting the baked chicken: thumbs up?

Low-fat yogurt parfaits with berries are currently sold in kiosks along the National Mall in D.C. The version served at the tasting event came topped with cinnamon wonton crisps.

Low-fat yogurt parfaits with berries are currently sold in kiosks along the National Mall in D.C. The version served at the tasting event came topped with cinnamon wonton crisps.

Maggie Starbard/NPR

"Absolutely delicious!" Kass said, congratulating the chefs from . and , two additional companies that operate park concessions. "That's really innovative."

Aramark's vice president for food and beverage, , told us that his company has worked with regional wholesalers to procure more local produce and meat.

And how does the new park food initiative influence the bottom line of the companies serving up the food?

Well, , president of Delaware North, which has a contract to run eateries at Shenandoah National Park, didn't hold back in answering me when I asked.

"We're a commercial company, and we're in this to make money," he told me.

Abramson says there's demand for these new options: "What the market wants is what we deliver."

So does this new initiative mean park visitors will pay more? Not for basic concession-stand foods like pizza or ice cream, which will be staying on the menu.

But the Park Service says even the newer, fancier offerings will still be affordable.

FORTUNE -- Today, for the first time, more people worldwide live in cities than in the countryside. What's often missed in this equation is how fast this trend will accelerate. Take China. Currently 650 million people, or 52% of the population, now live in cities. Fast-forward only 10 years or so, and that number is expected to hit one billion. That means that some 350 million people, the equivalent of the entire population of the U.S., will move from the Chinese countryside into urban areas. The number of Chinese cities with a million or more people will hit 221.

This migration presents a challenge. China's urban dwellers on average consume three times more energy than rural ones. That means we must design new cities and rebuild old ones in ways that will allow billions to live, drive, eat, and work sustainably. At today's session on Rethinking Our Cities at  Fortune Global Forum in Chengdu, Zhang Yue, the CEO of Broad Group, a maker of energy equipment and a real estate development company, said that we have to totally redefine what it means to live in cities.

"People don't want to have to get on trains or drive a car to get to work," he said. One solution: Zhang plans to lick the urban congestion problem by building up. His proposed high-rise prefab in Hunan Province called Sky City will soar 202 stories to a height of 838 meters.

MORE: Complete coverage of the Fortune Global Forum

Zhang says that Sky City can be built in seven months compared to at least five years for other super high-rises and is five times more energy efficient. The building will save some 200 hectares compared to typical sprawl development in China and will contain offices, schools, playing fields, stores and restaurants, reducing dependency on the automobile. Says Zhang: "Sky City will take some 2,000 cars off the road simply because its residents can find most of what they need right where they live."

Another proponent of smart cities is Jean-Pascal Tricoire, the CEO of Schneider Electric, the French company that offers solutions for power, grids, traffic systems, and more. Tricoire says cities can embrace social media to make them run more sustainably. "Parisians," he says, "spend a year of their lives looking for parking spaces." He says his company is working on systems where drivers can tap into social media and find an empty parking spot or avoid traffic jams.

David Cote, the CEO of Honeywell (HON), the industrial giant that has more than 50% of its portfolio linked to energy efficiency, gave a telling example of how the city of the future will require dramatically less energy. The company has designed building management systems that integrate core systems such as HVAC, lighting, and security that maximize energy usage while providing cost savings.

MORE: China's big bet on transportation

So the world has recognized the challenge of making our cities more sustainable and has the technology to do it. Cote says that's not enough. "We can't let this process be chaotic. We need much more planning. We need to get a lot of smart people in a room to figure out how to make all this work."

The three executives on this panel would certainly be well-suited to lead the discussion.

 

Please let use here from you. I promise we will not barrage you with crap.

We do not have the time and we really appreciate your input on any subject.


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Posted by Greg Shelley Phd on June 7th, 2013 5:10 PMView Comments (1)

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