Here Today, Gone Tomorrow

I've been thinking about something that struck me the other day. Actually, it's struck me several times in the fifteen years I've been in real estate. What is it, you ask? Read on.....

There are many different types of people that choose to go into real estate. Many people get into real estate as a second career. Very few people start their professional career as a real estate agent. So, we get people from all walks of life. Some are the business-minded types, you know, the ones with MBA's that want to "start a business venture." There are the "salespeople," those who have had success with selling something else and want to try their hand at real estate. There are the "investors" who decide if they're going to make ongoing investments they might as well get their real estate license. And then, there are what I call the "opportunists." One can only imagine how their eyes widen and they begin to salivate as they run through their "business model" with their friend as they sip a grande latte at Starbucks. It all seems pretty easy: start with a giant, blazing marketing plan, position yourself as an "expert," get all the tools in place, jump in, and get rich quickly. Have you seen them? I have. What bothers me most about these types? They are all about slick marketing. They have the look, the style, and the confidence. Their websites are spot-on. They speak the lingo, they look the part. But in the end, they have no substance. And many times, they're gone as fast as they appear. Truly, many of these "opportunists" are nothing more than flashes in the pan. Maybe you need some help spotting one of them. Here are some things to watch out for:

First, they come on the scene out of nowhere. They seem to have a huge presence but it doesn't appear that they've been around very long. They seem to have answers for everything, how it all works. They seem very sharp and they are well-connected to technology. They use a lot of real estate buzzwords in their advertising and when they talk. They are usually young and tech-savvy. They have an err of impersonalness, very business-like. They might talk a previous "successful venture" that they were involved in. They seem to change companies a lot. They like to talk about "systems" and "investment potential" and things like that. They seem confident but always moving around, not satisfied with what they are currently doing. They position themselves as the ones who "know the tricks of the trade" and they talk about how they are "the top Realtor" in town. Don't get me wrong. Many of the previous attributes are good ones to have in a career like real estate. But there is a certain type, one who seems to possesses all those qualities and more. There's just something about them....

You can call it jealousy if you'd like. But honestly, I have a couple of issues with these types. First, they tend to attract unsuspecting buyers and sellers by their pitch. It sounds real good but when you get down to it there isn't a lot of substance. They don't back up what they say. Unfortunately, these types of Realtors do appeal to some people. Second, they are opportunists of the worst kind. Is there anything wrong with chasing an opportunity? Not at all. But those of us who have done this for a while know that the successful people in the business are in for the long haul. Many of these "opportunist" types have a short-term plan. Get in, make money, get out. Move on to the "next big thing." And in the meantime they seem to lack attention to detail and care little about service to their customer or their client. After all, everybody else is really just a means-to-and. You've seen these types, whether you know it, or not. You can't miss them. Because I am so unlike them, and because I've been around a while, I can spot them from a mile away. People in my profession who are committed to their craft and have chosen a career rather than a "money-making venture" know who these types are. We see them when they come, we watch them and then we see them go. And we're not surprised when they go. Some go unwilling via loosing their licenses and others just go, looking for the "next big thing" out there. But for the most part, they flash, and then they're gone. And our industry is better when they leave. Not only that, but the public at large is much better off.

If you are a buyer, or a seller, do your homework. Don't be a victim of one of these slickmeisters just trying to make a buck at your expense. Find out how long they've been around. Ask them if they've switched real estate companies and ask them why, if they did. Ask them what they did before they got into real estate. If they say they are the "best" Realtor, or "most successful," or that they've won awards, ask them how many transactions they've done. I checked on a couple of these opportunists and they had very average numbers, at best. Ask for references, many of them. Ask they whey they are in real estate and ask them what their philosophy is when it comes to buyers and sellers. I can tell you from experience if you ask them these questions and something doesn't feel right it probably isn't. Trust your instincts. Happy hunting!

Another One Bites the Dust, Part 2

So, my first blog posting a few weeks ago was regarding a case where a few Realtors, a builder, and some other people were convicted of fraud involving the purchase of real estate. Here is the follow- up story from the Columbus Dispatch on December 09, 2010. As I said before, I don't take satisfaction when others get punished but I am glad that justice was served here, for the benefit of the public at large and for the real estate community.

Realty agent gets 18 months in fraud case

Thursday, December 9, 2010 02:55 AM

By Kathy Lynn Gray

THE COLUMBUS DISPATCH

A real-estate agent for convicted builder Thomas Parenteau was sent to prison yesterday for helping Parenteau set up fraudulent real-estate deals in Franklin County and lying about it.
U.S. District Judge Michael Watson sentenced Bonnie Helt to 18 months for conspiring to commit bank fraud, then the same amount of time for conspiring to obstruct justice and tamper with witnesses. Watson ordered, however, that the sentences run concurrently.
Helt was indicted in June 2009 along with Parenteau and his accountant, Dennis G. Sartain, for a tax-evasion scheme and a plot to defraud lending institutions of millions of dollars.
Helt, 61, pleaded guilty in January to the bank fraud and obstruction charges.
As part of a plea agreement, she agreed to forfeit $124,544, the amount she earned in commission on the fraudulent deals.
Prosecutors had recommended a sentence of two years and nine months.
"She was one of the last of his (Parenteau's) co-conspirators to take responsibility for her actions and to offer to cooperate," the government's sentencing memorandum states. Greed led her into the conspiracy, it says.
"As the licensed real-estate professional in the transaction, she should have been the one to say 'no' to this conduct," it says.
William A. Settina, Helt's attorney, requested a sentence of nine to 13 months. He argued in court that his client was naive and unsophisticated, and didn't really understand until it was too late that what she was doing was wrong.
"Ms. Helt clearly was Mr. Parenteau's dupe, easily manipulated and too unsure of herself to object or question methods and motives," he said.
Settina said Parenteau used Helt's belief that she had spiritual powers and could talk to the dead to control her behavior.
Settina said Helt lost her home and her license to practice real estate, and has filed for bankruptcy.
Parenteau's sentencing date has not been set.
Sartain was sentenced to 11 years in prison. Co-defendant Todd M. Gongwer, also a real-estate agent, was given two years in prison.
kgray@dispatch.com

What Really Caused the Mortgage Crisis of 2008?

(note: this is a blog message that I posted back in October of 2008 when the market was truly in a crisis mode. I wanted to re-post it on here because I think it still has relevance, especially looking back to (2) years ago. Note my comment toward the end:

"In the future I guarantee that banks will make wiser decisions and there will be more oversight into how banks loan money."

I couldn't have been more prophetic. The Federal Government enacted sweeping bank regulations affecting mortgage lending that took affect on January 01, 2010. I wonder what else I said (2) years ago still resonates at the end of 2010?)

SNIP>>>>>>>>>>>>

October, 2008

Sure, you’ve heard all kinds of reasons why Wall Street is in crisis mode right now. Everybody has a reason as to why several prominent banks have failed. But I think it’s a little more complex than people think. Most people seem to be blaming it on “greedy executives.” I’ve got another take on this.

No doubt you’ve heard about “bad loans” and loan officers giving out some of these bad loans to “unsuspecting home buyers.” I am sure there are unscrupulous loan originators and mortgage people out there. Am I am also sure there some loan originators who were “casually” explaining the terms of their loan programs glossing over things like “adjustable” and “balloon payment” and the like.

So, many loan originators made mistakes, that's a fact. But who also should shoulder the blame? Maybe the consumer? That’s right, that “unknowing, innocent victim” that was taken advantage of by the loan officer with a pitchfork and a spiked tail. This crisis that is befalling Wall Street is partially caused by consumers who were getting loans but had no real ability to pay that mortgage. “You mean consumers knowingly got loans that they knew they couldn’t pay back?” (FYI, many of the buyers I have worked with had a budget and knew exactly what they could afford.)

I didn’t say the borrowers knew they couldn’t pay back the loan itself but I'm sure some of them knew that the amount of the loan and the payment "seemed kind-of high." I am also sure some loan officers and the underwriters knew that many of these borrowers were questionable. So even though the loan officers knew there was a risk involved with giving a loan to a questionable borrower, was the borrower actually “duped” into agreeing to a mortgage they didn’t understand? Did the loan officer hypnotize the borrowers and then make them sign something that would put them into ruin? Or did the borrowers maybe, just maybe, have a feeling they were getting in over their head? Did the borrowers read what they were signing?

We already know that many of the loans that were defaulted on were initially given to borrowers that were considered “risky” or even very risky. So why would the banks loan money to these people? First, because they could. This is because of the loosening of regulations that banks must follow in order to lend money to people. You’ve already heard about this. But what is the other reason that banks gave loans to people who may never pay them back? Because people wanted them. "If you'll give it to me, I'll take it."

Look, I’m not saying that there were not people who were mislead or outright lied to. There were. But there were many borrowers who knew what they were getting into. To be fair, lenders are required to give borrowers a “good-faith” estimate so that they understand things like interest rate, payment, closing costs, points, etc. If these borrowers didn’t understand the terms of their loan they could have asked. So, borrowers are given a good-faith estimate when they apply for a loan and then sign papers at closing that tell them what kind of loan and what kind of terms they are getting. Did somebody pull a fast one? Buyers can actually back out at closing if they do not agree to the terms of the loan. If a buyer signs something they don’t understand or don’t agree with I’d say that’s on them. Again, this is assuming that the lender didn't do something completely deceptive.

Mortgage people get a bad rap because of a few bad apples. But we have to remember that many of these people who defaulted on loans already had a history of credit problems and were “marginal” borrowers from the beginning. It’s not that hard to understand when the loan officer says “this loan is adjustable, that means your payment may go up.” Many buyers have a “buy now pay later mentality” these days. They see their friends buying big homes and they want one, too. So why would they want to risk loosing a house later for something like an adjustable rate mortgage or a balloon mortgage? Because it’s all about the here-and-the-now. “I want it, now find a way for me to get it. If the rate adjusts and my payment goes up I’ll find a way to deal with it.” Unfortunately, they way many of these marginal buyers dealt with the huge increases in their payments was by just not paying any more. And that is partially why we are where we are now.

I know there were legitimate, hard-working buyers who were probably misled by unethical mortgage brokers and they are now paying the price. But there are many buyers who got just what they bargained for. And now we all suffer the repercussions of loosening regulation, opportunistic mortgage people, and borrowers who made bad choices. We will dig out of this mess eventually. In the future I guarantee that banks will make wiser decisions and there will be more oversight into how banks loan money. I can only hope that buyers will also begin to make better choices as well.