Calling All Homebuyers - The Future is Bright...or is it?

The recent acquisition of Countrywide Financial Corp. by Bank of America is a controversial one. On one hand, this is a very popular acquisition, being supported by shareholders and government entities who realize just how serious the subprime catastrophe has become. On the other hand, the issue of insider trading must be examined. Lastly, in the final analysis, I conclude that Bank of America's acquisition of Countrywide is the latest attempt to revitalize and bring stability to the economy that has been affected so greatly by the subprime industry and its counter parts.

One reason for my belief that Bank of America has the support of the government and its shareholders is based on the economic and financial implications. For one thing, Ben Bernacke, Chairman of the Federal Reserve, has tried many times to cut rates to no apparent avail. Ben and his team are surely applauding Bank of America because it makes their jobs easier. For another, Bank of America has its shareholders support because the stock price is rising. In other words, the shareholders are making money.

Before jumping on the Bank of American bandwagon, the issue of insider trading must be examined. For instance, did Bank of America start purchasing large quantities of Countrywide stock before this acquisition.? If so, how soon before did Bank of America make these purchases? It is no coincidence that Countrywide's stock jumped 51% over speculation of a deal. To examine this issue to a greater extent, it is beneficial to look at the large investment banks who performed the acts described above (ex: JP Morgan Chase & Co purchased large quantities of Rural Cellular before representing Rural Cel.)

Perhaps the most optimistic reason for Bank of America's recent acquisition is because it is just plain good for the economy. The value of property is decreasing at a rate of 15-20% per 12 months throughout the Metropolitan area. The economy could not take much more bad news without collapsing completely. With a need for stabilization and certainty, Bank of America has stepped up and taken a risk. Albeit, they have acquired Countrywide on the cheap and doing so immediately transforms them as the largest lender in the country.

2008 - Year of Change

It is difficult to argue against the matter that 2008 will be a year of change and uncertainty. For one thing, we have yet to determine who our political candidates will be, competing to serve as the next president of the United States. For another, it is uncertain how the United States will respond to the credit crisis. Lastly, it is unclear how the U.S. will respond to the slumping real estate market and the marginal returns on domestic stock indexes such as the S&P 500. Without being able to predict the future, the issues of change and uncertainty in the United States are prevalent.

How To Be A Player

There's a place in lower Manhattan where the movers and shakers and financial big shots gather each and every day as their home away from home. It's a place where 100 hour work weeks are routine and the weak are separated from the strong. For those who end up here and hold on tight, the rewards are endless. If you haven't figured it out by now, here's another clue: it runs east on Broadway downhill to South Street on the East River. Yes, I am talking about Wall Street.

I'm not an investment banker. I do not work for a private equity firm. In fact, I do not sell stocks, bonds or any other security instrument for that matter. I am a real estate professional.

I do, however, take pleasure in the daily musings of Wall Street. In school, I studied finance and I will always hold that close to my heart. I do believe that if you're going to do something, do it best. Be on top. Therefore, as a real estate professional, I strive to treat my business like it's Wall Street...and more.

Here's how I do it:

1. Customer Service
2. Attitude
3. Be fair, fearless and not to be messed with
4. Reliability
5. Work harder and smarter
6. Knowing the market - micro and macro

-Joey

Any questions, shoot me an email - jsilverstein@cbmove.com

Calling Out to K-Mart, Walmart Shoppers

Is the credit crisis over and done with? Simple answer: NO!

Just over a week ago, American Home Mortgage faced elimination as the latest casualty of the credit crisis. This is the same company that closed over $58 billion dollars in home loans one year ago. This leaves home owners, real estate agents, lenders and investors scratching their heads wondering how much longer will the subprime crisis continue.

In my opinion, due to the subprime catastrophe, economic conditions are in a turmoil beyond real estate. Think about the stock market - the Dow Jones and S&P 500 indexes aren't what they once were. Look at Chairman Ben Bernacke, for example. He scrambles around with his team, cutting interest rate after interest rate for only a short fix. Will the situation get better? Probably, but it takes time.

Investors and home buyers should not be discouraged. Interest rates are low and inventory is at an all time high. Let me ask: When as a home buyer could you demand closing help, a home warranty and a sales price way less than the listed price and...be heard?

As I break into the foreclosure market, I'm realizing that there's even more options for buyers and investors alike. Some properties need work, some don't. The point is you can get a discount if you know the right Realtor who has access to foreclosed properties. In the past two weeks, I have seen a different world of real estate. I keep my family and friends in mind as I come across newly listed foreclosed properties. Foreclosed properties are out there, do not forget. You may be able to get a deal of a lifetime if you play your cards right.

Agency

Imagine this: A married couple walks into an Open House, no agent in sight. Agent A, hosting the Open House, greets them, shows them around and engages them into a deep conversation. During the conversation, Agent A discovers the couple's buying criteria. Before leaving the Open House, the couple gives Agent A their contact information, so Agent A can send them active property listings that fits their buying criteria.

...This sounds like a harmless situation, right?

Well...Imagine this: Agent A follows up with the husband and wife through email, attaching two listings. Both the husband and wife like the listings so much (because it fits their buying criteria as they explained to the Agent at the Open House) that they want to make an offer on one of two. So the couple calls up Agent B - their lifelong Realtor - they make an offer. Two days later, the Seller accepts their offer.

Agent A, unaware of the situation, finds out about Agent B while searching through the tax records and feels cheated. Does Agent A have any stake in the deal?

The Result:
In the situation described above, Agent A has "procuring cause" and could be entitled to a full commission, since Agent A did find the property that was ultimately purchased. Agent B's failure to inform his clients of the rules and regulations involved in their agency relationship could wind up costing them their hard earned money.

Let me explain...when working with a buyer, a good agent will explain to the buyer that they must contact him whenever there is a question, concern or interest in any property. Doing so, will avoid problems in the long run. Additionally, the buyer should always disclose whenever they are being represented by another agent, so there is no confusion as to who represents whom. I see this situation as a mishap on the part of Agent B (not the buyers) because Agent B should have educated his clients and prepared them better.

Joseph Silverstein
Coldwell Banker -Chevy Chase Branch
5028 Wisconsin Ave
Washington DC
www.cbmove.com/joseph.silverstein

Ethics

There is a thin line between right and wrong, moral and immoral, legal and illegal...especially when practicing real estate. The notion of ethics is prevalent in today's real estate marketplace and must not be taken lightly. Predatory lending has turned a healthy marketplace into a subprime nightmare. As a result, buyers who were granted loans by lenders who used creative financing methods have been defaulting on their mortgage payments. If you look around, the effects are everywhere (...seen any For Sale signs recently?!?!). Yet, there are still plenty of investors looking to capitalize on foreclosures and short sales.

So, here's a question: who is to blame?

Lenders: Should lenders have granted loans to buyers whose credit score did not justify the loan amount?
Buyers: Were they misled by lenders or did they borrow beyond their means knowingly and take advantage of lenders who eased up their lending standards?
Real Estate Agents: We benefited by assisting buyers and sellers in the process. Were our commissions justified? After all, aren't we suppose to get our buyers prequalified by lenders prior to showing property?

There is no easy answer to these questions. Often not one action alone causes an epidemic. The subprime epidemic definitely conflicts with ethical behavior. For the mean time, we can hope that we've learned our lesson and that the worst is over with. We will not know the final outcome until years down the road. Nevertheless, it is important for each one of us to act in an ethical manner to avoid more horrific epidemics.

Joseph Silverstein
Coldwell Banker - Chevy Chase
5028 Wisconsin Ave
Washington DC
Website: www.cbmove.com/joseph.silverstein

Appearance on YouTube

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Thanks for checking in...

Website: www.cbmove.com/joseph.silverstein