Inside: Meet Kenneth Li, 2011 Chair The Top 10 Social Blunders with Asian Clients How to Market to Different Generations Staging Tips and more...
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The Clarity Commitment® summary is provided as a convenience, does not serve as a substitute for a borrower’s actual loan documents, and is not a commitment to lend. Borrowers should become fully informed by reviewing all of the loan and disclosure documentation provided. THIS INFORMATION IS NOT INTENDED OR AUTHORIZED FOR CONSUMER DISTRIBUTION. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. Bank of America, N.A., Member FDIC. Equal Housing Lender. © 2010 Bank of America Corporation. ARSOG3L2 AD-08-10-0645 08-2010
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FALL 2010 VOLUME 2, ISSUE 3 ON THE COVER: The 2010 AREAA “A” List
Young and Successful
Get to Know: Kenneth Li
Wokking a Fine Line
We’re proud to present the inaugural AREAA “A” List: 12 up-and-coming agents and brokers that represent the future of real estate in the Asian American community
The 2011 AREAA National Chair is a business man that makes the community his business
Avoid these top 10 social blunders with Asian clients By Herman Chan
First Annual AREAA Leadership Summit
A Message from John Fukuda
Looking back on one of the most productive years in AREAA history
A View of the State of the Housing Industry Education will be critical to creating successful homeowners By Glenda Gabriel
Leveraging generational marketing in real estate By Maria Valentin
Recap and photos from the event in San Francisco
Have Times Really Changed?
The EB-5 Visa is creating opportunities in Dallas for real estate professionals and their overseas clients By Matthew G. Soltis
Surefire Tips to Increase the Desirability of Your Property for Sale By Alice T. Chan
Listing Short Sale Properties: Itâ€™s Good for Business But is it Good for the Seller? By Jeffery P. Woo, Esq.
Can Foreign Investors Contribute to Job Growth and Economic Development?
Fair Commission Plans With Equal Opportunity to Earn By John Wong
Overcoming Language Barriers
An industry update on multicultural real estate marketing By Gary Sanders
Letter from the Editor
Ask Dr. AREAA
Around the Association
Is the American Dream of homeownership dead?
Our multi-talented expert answers readersâ€™ questions from around the industry
Summaries and photos from recent events, including the AREAA Tri-Counties Southern California kickoff and the firstever EDGE educational event
FROM THE EDITOR Is Homeownership Dead? For immigrants and minority families, owning a home has been central to their American Dream. Certainly, for immigrants there is a strong desire to belong and establish a permanent foundation in their new homeland -- having left their country, families and friends behind. These immigrants work multiple jobs and forgo many of life’s niceties to achieve their dream of homeownership. This powerful desire has propelled historic increases in minority homeownership rates over the past decade. Yet, the merits of this progress have been questioned by mainstream media and pundits alike in the recent months due to the historic collapse of the real estate market. Should we become a nation of renters rather than homeowners? Is there over-investment in homeownership in America? Has the country incentivized irresponsible homebuyer behaviors? These and other questions are shaping today’s discussions around the merits of homeownership. Time Magazine's Sept. 6, 2010 cover story, "Rethinking Homeownership," takes a direct assault on homeownership. It simply declares “Homeownership has let us down.” After a lengthy case against homeownership, the story ends with a woman trying to sell her home after the housing bust as she reflects, "You know, it's not what we were raised to think it would be." It is difficult to discount the feelings of millions of families who have and are losing their homes or find themselves stuck in an untenable situation of paying a mortgage on a property that has lost almost half of the value. These are sad and unfortunate situations to say the least. But I continue to see the powerful stories of families, immigrants and newlyweds searching for a place called home. Despite the real estate collapse and all the negative news about the economy, people are still seeking homeownership. Unfortunately, that human story is not being told. That American story does not fit nicely into the drama of the current housing collapse. As housing practitioners and consumer advocates, AREAA members must tell the other side of the story. Tell the story of the immigrant who started his business thanks to his home. The story of parents sending kids to college and elderly couples making ends meet thanks to the equity in their homes. These and other powerful stories are happening each and every day. We need to re-engage homeownership. We must bring common sense back to the housing market, and work towards sustainability. It certainly is not the time to abandon homeownership. The fact is: minority families continue to lag the White homeownership rate by a large margin. And, for minority families, the value of their home continues to
represent a significant percentage of their net worth. So the homeownership gap is a real wealth gap to these communities. It is also clear that homeownership in America will be driven in large part by minority homebuyers for years to come. And the minority community has the most to lose by abandoning homeownership as a social and policy goal. For housing and real estate professionals, your business depends on a robust and dynamic housing market. But for Asian American and other minority families, the dream of homeownership is a powerful concept – it represents a dream of a better life and a hope for a better future in their new land. As it has in the past, that dream powers our entrepreneurial spirit and makes our country great. Let’s not have these naysayers turn homeownership into another building with four walls and a roof – homeownership is much more than that.
Jim Park Editor-in-Chief a | r | e Magazine
FALL 2010 VOLUME 2, ISSUE 3 EDITOR-IN-CHIEF Jim J. Park
CREATIVE DIRECTOR Praveen K. Sharma A S S O C I AT E EDITOR Meredith Magee
EDITOR Dan T. Shanyfelt EDITORIAL BOARD Eva Hom Diana Buonincontro John Lee Fred Underwood
is a publication of the Asian Real Estate Association of America (AREAA), a national nonprofit trade organization dedicated to increasing sustainable homeownership in the Asian American community. For more information visit: http://areaa.org. ©2010 by the Asian Real Estate Association of America. Reproduction in whole or part without permission is prohibited. Opinions expressed by individual authors are not necessarily the opinions held by AREAA. Direct article submissions and advertising inquiries to: Praveen Sharma | email@example.com Office: Asian Real Estate Association of America 5963 La Place Court, Suite 312 Carlsbad, California 92008 760-918-9162 Phone 760-918-6924 Fax
The 2010 AREAA Leadership Summit, sponsored by Bank of America and Wells Fargo, was held June 18-19th at the Ritz-Carlton in San Francisco. The invite-only event created a forum for national Board members, Advisory Council members, committees and local chapter leaders to share ideas and plan for the association's continued growth. One key takeaway from the summit was a renewed commitment to provide more value for members, including educational opportunities. The summit was capped by a networking event hosted by theEDGE, AREAA Young Professionals, at Icon Lounge. Photos by Oliver Yu / Aperture Life Photography
1. Jim Park 2. Winnie Chow Davis, Allen Chiang and Grace Chow 3. Kayin Ho, Kenneth Li, Lidia Yun and Mary Jane Cambria 4. John Fukuda 5. theEDGE, AREAA Young Professionals: Caron Ling, Kara Okamoto, Kai Ito, Ryan Asao, Geremy Yamamoto, Ally Powers and Rachel Turner All photos L to R
1. Kai Ito, John Fukuda, Kara Okamoto and Caron Ling (L to R) 2. Allen and Kara Okamoto 3. Kenneth Li, Kevin Chin and Mario Pinedo (L to R) 4. Laila Fields, Marcus Lee, Penny Liu and Christine Kim (L to R) 5. Cindy Lui 6. Joseph Lai
A MESSAGE FROM JOHN FUKUDA
hat an amazing journey this year has been! When I embarked on this incredible adventure as Chairman of the Asian Real Estate Association of America at last year’s AREAA/NAHREP conference, I never dreamed that we could go as far, or do as much, as we have this year. I had a few simple goals when I began: deliver value to our membership and sponsors, reach a broader demographic of practitioners to grow and energize our member base, engage our current and prospective leaders in the strategic planning and execution of that strategic plan, ensure AREAA’s voice and presence were enhanced nationally and locally and have a little fun along the way. I’m happy to say, I believe we accomplished our goals!
Excitingly, our local chapter count has almost doubled this year, with another 200% in various stages of development. This is a testament to the power and resonance of the association’s message and brand. Some of newest chapters in markets like San Jose and Sacramento will be beacons for the association for many years to come. Our new Chapter Development and Membership Committees continue to blaze new trails and grow the association. One of the most exciting developments is the launch and emergence of theEDGE. With three exciting national events under its belt and a following of 800+ members, this young AREAA professional group shines a bright light into our future. It’s where our next generation of leaders is born.
Many new committees have been conceived this year to better serve our association and its membership.
Our Policy committee helps to shape AREAA’s position on key industry challenges while our International Network Alliance continues to strengthen our ties outside of the US to open opportunities for our members abroad.
You’ll see several people running around the conference this year with Flip video cameras and you may even be asked to participate in a Q & A session on camera. These fresh initiatives are all part of the Digital Marketing and Media committee’s brainchild, ANN (AREAA News Network), an innovative way to broadcast special AREAA events happening around the country via Facebook, Twitter and a proprietary website. Even the content in this magazine has been augmented by our new a | r | e magazine committee.
with seller/servicers and outsourcers to ensure that their panels of brokers/agents include culturally diverse practitioners. We have connected our sponsors and local chapters in a meaningful way to reach the end user and ensure that from beginning to end, the communities that we serve are receiving competent and professional guidance throughout the real estate process.
This year flew by! It has been an honor and a privilege to lead this wonderful organization for the past year. None of it would have been possible without the support and understanding of hundreds, if not thousands, of people, including you. AREAA is an organization by the members and for the members, make sure you are an active participant! Special thank yous to the best staff in the world at AREAA, a strong leadership board, the local chapters, and my family, whose patience, understanding and love made my spirit of volunteerism flourish.
In June, AREAA hosted its first-ever Leadership Summit in San Francisco where
Best of luck to Kenneth Li. Your leadership and energy are much anticipated and appreciated.
We have worked diligently to bring new business opportunities to our members. In the REO industry, we teamed
we brought together 110 of the best and brightest AREAA leaders from around the country to mastermind and further develop our brand. What an amazing experience it was to be in a room full of passionate dedicated individuals committed to serving the Asian home buying community. I look forward to this annual event for many years to come.
To address some of the systemic barriers to entry facing the Asian American home seeker, AREAA signed a Memorandum of Understanding with HUD’s Office of Fair Housing and Equal Opportunity to educate our memberpractitioners on the identification and reporting of discrimination in the housing market. AREAA, in concert with HUD, will conduct 10 local and regional seminars to address this important issue.
Thank you all!
AG 8/17/09 Job No:
Job Name: Home to Technology Pub: Asian Real Estate Issue Date: 10/19/09 Prod: bleed page 4c Live:
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DR. AREAA O U R M U LT I -TA L E N T E D EXPERT ANSWERS YOUR R E A L E S TAT E Q U E S T I O N S
IN THIS EDITION: Fixer-uppers, REO properties in rough shape, buyers with little down and trouble with loans for international buyers
I recently tried to purchase a fixer-upper, single family home. I received a pre-approval from my bank as recommended by my Realtor, and proceeded to ratify a contract with the seller. As I went through the appraisal and inspection process our financing was declined due to items called out on the inspections. The bank was not willing to finance this property. We had no other option but to release the contract. Are there any other financing options out there for people like us who want to fix something up?
In today’s market, property conditions are a big issue as regular conventional and FHA loan appraisals are noting any property deficiencies, resulting in the property being declined even though the buyers are qualified. The answer to this dilemma may be the Renovation Loan program (sometimes referred to as the 203(k) program), which allows the property to close "as is" with the needed repairs and/or improvements allowed to be done after closing. With 203(k) you get one loan for both the cost of acquiring the property and the repairs. The repair portion of the loan goes to an impound account that you draw upon as the work progresses. You can get an advance for some of the more expensive items like carpets and cabinetry. There’s usually a small holdback from each draw that’s released when all the work is done.
“Fix It” Frank Detroit, Michigan
A caution. This is a complex program. Most mortgage bankers don’t have much
Dear Dr. AREAA,
experience with it. You should seek out a mortgage lender that has actually worked these loans to completion. They will know the personnel, including HUD staff, inspectors, appraisers and contractors, who have to be part of the team that’s required for your transaction to succeed. Good luck in your search! Dear Dr. AREAA, I just started selling REO properties recently and have found it rather embarrassing to show my REO listings because they are in such bad shape. During the property preservation period we bid for basic cleanings and trash outs per the asset manager’s request. I feel like the property could sell faster if we could spruce it up a little but not sure what the protocol is. Any advice? REO Rookie Scottsdale, Arizona
Dear REO Rookie,
Dear Dr. AREAA,
Curb appeal is still key! There are a lot of REO agents and REO properties, but due to the volume and the losses the lender/owner is taking, there is a perceived reluctance to ask the asset manager for funds to clear, clean and touch up the property. However, for less than $10,000, the property can be made to look really nice from the curb, drawing more buyers and making up for the $10,000 cost of a quickie renovation. REO lenders and assets managers are now more willing to allocate funds for better curb appeal as they are slowly realizing it will pay for itself! Never hurts to ask!
Lately, I have been working with a lot of international clients, mainly from China and Korea. I have run into a lot of problems when we try to obtain a small loan for their purchase. My clients are coming to the table with 80% cash but we still have lenders asking us very personal questions about where the funds are coming from. If we have 80% down, why do the lenders care so much about the funds? We are only asking for a 20% loan.
Dear Dr. AREAA, My clients really want to take advantage of this market and buy a home. Unfortunately they donâ€™t have the 20%-30% down payment that many of the lenders they spoke to have been asking for. Are there any other solutions for my buyers? How can I help them? Agent Alex Pasadena, California Dear Alex, One solution you may want to consider is the FHA loan as it allows as little as 3.5% down for a loan amount of up to $729,750. This program will even allow the down payment to be in the form of a gift. However, for larger deals or buyers wishing not to pay PMI (private mortgage insurance), the 80/10/10 program has returned in certain counties. The 80/10/10 program allows a buyer to put 10% down and obtain a 10% second loan coupled with an 80% first loan. If you do not know of lenders who offer these programs, a good place to start would be your local Association of Realtors for more information. Happy house hunting!
Frustrated with Financing New York, New York Dear FWF, There are many international buyers in the marketplace who have funds coming in from foreign countries, but not enough to cover the price of the property purchased. In this case, when they need to obtain a loan, the international funds must be sourced and traced to protect the banks. In many cases, the funds need to be seasoned for six months in a domestic bank account. It is important for any Realtor and/or the loan officer to educate their buyers prior to entering into contract and prepare for these questions. The only way they can avoid sourcing is when the deal is ALL cash. Best of luck!
ills of th market e you dow got n your qu ? send e stions f o r D r. AREAA to a-r-e@a reaa.or g
A V I E W S TAT E HOUSING INDUSTRY EDUCATION WILL BE CRITICAL TO CREATING SUCCESSFUL HOMEOWNERS BY GLENDA GABRIEL, BANK OF AMERICA NEIGHBORHOOD LENDING EXECUTIVE
he housing market continues to be unlike one many real estate industry insiders have ever seen. While the light at the end of the tunnel appears to be getting closer, consumers, real estate professionals, lenders and investors are forced to acclimate to the current environment to ensure Americans who can afford it are still able to purchase homes. At Bank of America, we place the most importance on ensuring these borrowers are purchasing a home they can comfortably afford, and for the long-term.
Letâ€™s break down some of the statistics from recent months: Existing home sales in July were down 27%, a record month to month drop1 In July, total housing inventory increased 2.5%1 Distressed home sales accounted for 32% of transactions in July1 The national unemployment rate in August 2010 remained flat at 9.6%2 At the end of the second quarter, 23% of all residential properties with mortgages were underwater3
The accumulation of these factors – increased distressed property sales, regulatory reform, steady unemployment, and negative equity – has caused the housing industry to go back to simple, sustainable homeownership. In some cases, this means tightened credit standards, which has become necessary to ensure borrowers have the means to afford their home for years to come. There is no question the home purchase process for both consumers and the industry is much different today than a few years ago, but these stricter guidelines have not curbed lending entirely. In the first half of 2010, Bank of America delivered $146 billion in home lending production, helping nearly 700,000 customers. Of that, $16 billion helped more than 71,000 multicultural customers buy a home. We were able to do this by focusing on education and continuing to offer affordable housing products and programs to help customers with closing costs and down payments.
C R E AT I N G S U C C E S S F U L HOMEOWNERS
As the leading mortgage servicer in the nation, Bank of America is committed to both helping borrowers purchase homes, and helping homeowners keep the home they own. From January 2008 through July 2010, Bank of America completed nearly 665,000 loan modifications, and we are proud to have increased our industry-leading total of completed Home Affordable (HAMP) mortgage modifications to more than 76,300 through that same time period. We also recognize that not every homeowner can find a solution in a cure-related workout. While home retention remains our primary goal, we have enhanced programs that provide customers with a respectful, dignified exit from homeownership when all retention options have been exhausted using streamlined, cooperative short sales or deeds-in-lieu with possible assistance with relocation costs. In the second quarter, we completed 25,000 short sales and have been fully operational in the government’s Home Affordable Foreclosure Alternatives (HAFA) program since April. In addition, Bank of America is the industry
National Association of Realtors’ Existing-home sales for July 2010, release August 24, 2010 2 Bureau of Labor Statistics’ Employment Situation for August 2010, released September 3, 2010 3 CoreLogic negative equity data, released August 26, 2010 1
Bank of America, N.A., Member FDIC Equal Housing Lender © 2010 Bank of America Corporation. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.
leader in the Home Affordable Refinance Program (HARP). Since the inception of the program in April 2009, the bank has helped refinance more than 135,000 customers with LTVs greater than 80 percent, who otherwise might have had difficulty finding financing in today’s tightened credit market. Our relationships with local Realtors are critical to our efforts to help educate homeowners on these alternatives, and guide them through the process.
E D U C AT I O N
Moving forward into 2011, education is going to be paramount in the home buying process. It’s going to require all parties – especially real estate professionals and lenders – taking considerable action to helping potential borrowers understand the full scope of homeownership and where it fits into their long term financial plan. In the last issue of a | r | e Magazine, we introduced Bank of America’s online home loan guide, which is organized into easy-to-understand steps to help educate potential borrowers and ensure they have the information they need to make informed, confident decisions. Our commitment to education and transparency is also evidenced in our Clarity Commitment® home loan summary, an easy-to-understand, one-page summary of key terms of a homebuyer's loan. We encourage you to get in touch with a local Bank of America Mortgage Loan officer to learn more.
We look forward to partnering with AREAA members through the economic recovery to help start and preserve homeownership among Asian American families and communities.
NEIGHBORHOOD LENDING EXECUTIVE, BANK OF AMERICA HOME LOANS As the Neighborhood Lending Executive, Glenda Gabriel is responsible for identifying opportunities to drive homeownership among low-to-moderate income borrowers, minorities, immigrants and underserved communities across the nation.
HAVE TIMES R E A L LY CHANGED? BY M A R I A VA L E N T I N
first obtained my real estate license in 1987 and throughout my 14 years of selling real estate, I just happened to fall into “niche” marketing; specifically that of serving multicultural clients. It was not planned that way, it just happened. In this age of technology, marketing takes on a different look. Those who want to excel in any type of sales must consider that customer service and communication need to be tailored to the different client segments, including those born in different generations. There are various opinions as to the age breakdown and names for the different segments, but for the sake of this article we will classify them as follows:
It is said that we resemble our times and the important things that occurred during our formative years more than we resemble our parents. In other words, we all share with our generation what was around us, including news, events, music, national catastrophes, heroes, etc. When considering the emotional commonalities of each generation, it becomes easier to appeal to their unique characteristics and mindsets. In the sale and purchase of real estate it is essential to understand that the days of “one size fits all” mass marketing are passé. Not only does the message need to be tailored, but the means of reaching each
Seniors/Grey Panthers/Silent Generation Baby Boomers/The ʻMeʼ Generation Generation X Generation Y/Millennials
Born Born Born Born
1920 - 1945 1946 - 1964 1965 - 1979 1980 - 2000
65 - 90 years old 46 - 64 years old 31 - 45 years old 10 - 30 years old
LEVERAGING G E N E R AT I O N A L MARKETING IN REAL ES TATE
generation need to be carefully considered. Will a well-written advertisement, targeting a young family placed in the local newspaper reach the intended Generation X or Y client? This will probably be ineffective unless the paper is available on-line. As a whole this generation does not read print. Let us take a closer look at some of the characteristics that will influence your real estate transaction with each of these segments:
S E N I O R S
Seniors will want to develop a relationship that moves parallel with business. They have a story to tell and are most likely to want to deal with those who are willing to hear it. Generation X and Y may not have the patience to listen. Although these Grey Panthers are now routinely communicating via e-mail, person-to-person contact as well as the good ole’ telephone
are still fundamental in all aspects of the transaction. Keep in mind that due to their high participation in professional associations (Lyons, T H E DAY S O F “ O N E S I Z E Optimists, Knights F I T S A L L” M A S S M A R K E T I N G of Columbus, etc.); A R E PA S S É . . . T H E M E A N S O F this very powerful group is a great REACHING EACH source of referrals. GENERATION NEED TO Messages that speak B E C A R E F U L L Y C O N S I D E R E D . to family, home, patriotism and traditional values are still effective with this traditional consumer. Seniors buy based on emotions!
B A B Y
B O O M E R S
Baby Boomers, those 76 million born between 1946 and 1964 (following World War II), are now facing the grim prospect of retirement in an economy that they probably never anticipated. They have always been confident, independent and self-reliant. They challenged the status quo and are responsible for adding the word
‘workaholic’ to the English dictionary. While real estate meant security and family stability for the previous generation, Boomers have always seen it as a means to wealth. They have leveraged it and have probably been part of at least one or two transactions. Do not, however, disregard the need to keep them involved and informed every step of the way. They are still people-people and they enjoy the personal interaction. Though they planned for early retirement, most are now looking at 70 as a probable age when they will leave the workforce. Messaging should be uplifting and take into consideration the “big” financial picture.
G E N E R A T I O N
In contrast, those 51 million members of Generation X grew up in a very different world. Nearly 50% of their parents’ marriages ended in divorce. They were the first generation within the bounds of a two-income family with joint custody, visitation rights and weekend fathers being the norm. X’ers saw their parents get laid off or face job insecurity. They have little trust in leadership, politics, or the economy. They consider most advertising “lip service”. In other words, they are classified as the ultimate skeptics. They will likely decide on an agent based on the content of their website. Know that they will have already been on-line researching prior to contacting you. Traditional advertising is a turn-off. They consider pictures on business cards “cheesy”. When communicating with Generation X, get to the point quickly. If you are looking for a quick response, text messaging is the only way. Long, drawn out e-mails will be deleted before they are read. Remember, bullet points work best. Always give them the worst case scenario. If you are genuine, direct and knowledgeable they will certainly refer you to their friends.
G E N E R A T I O N
Last but not least, we come to Generation Y, also known as Millenials, those 75
million born between 1980 and 2000. Before you start writing them off as being too young to be part of the real estate market, think again. Although the economy has greatly affected their employment opportunities, and we are seeing more and more of them return to their W H E N C O M M U N I C A T I N G W I T H GENERATION X, GET TO THE parent’s homes until they are able to pay off P O I N T Q U I C K L Y . I F Y O U A R E education and credit LO O K I N G F O R A Q U I C K card debts, they have RESPONSE, TEXT MESSAGING IS grown up within a T H E O N LY WAY. global economy and real estate is not a mystery to them. They have never known a world without the World Wide Web and they are simply waiting for the right opportunity to come along. When attempting to reach Generation Y, social media including blogging is a must. As far as marketing to different generational segments, there is much more that can be said. Many studies have been done and numerous conclusions have been drawn by expert marketers. We know that what worked five years ago does not work today. My advice is to specialize in the segment(s) that you are most comfortable with, find the correct medium to reach them and make sure that the message is tailored to their needs and characteristics.
MARIA Y. VALENTIN is Vice President, Strategic Markets for First American Title Company and has been in the real estate industry for over 20 years. In this capacity, her goal is to educate real estate professionals, and the industry at large, on how to understand, better serve and market to the fastest growing multicultural segments. Recognized for her leadership efforts in the community, she is the 2007 recipient of the Latino Business Leadership Award in San Francisco for the corporate category.
Kenneth Li arrived in Houston--by way of Taiwan and Hong Kong--in the early 1980s, there were only a handful of Asian real estate agents serving the 25,000 Asian Americans in Houston. That ratio has since grown to 3,000 Asian agents serving an Asian American population of 300,000 due in no small part to Li’s ability to serve as a leader in Houston’s real estate market. After completing his studies, Li was helping his family run the successful Diho Market Asian supermarket chain. Through this business, he got involved in commercial and residential real estate, as well as land development. It wasn’t the most opportune time to enter the market, however, as most real estate investments were in trouble due to the market downturn and crash of the savings and loan institutions in the late 1980s.
Li forged ahead as he was forced to manage
some family real estate assets and ended up in real estate sales, leasing and management. Although he is now a veteran of three real estate cycles over his career, Li was not discouraged by the market conditions even then, as a relative newcomer.
In fact, he believes “when there is a crisis, there is an opportunity for change to make it better.” Recognizing a demand for professional real estate agents to serve the growing Asian community, Li formed Texas George Realty in 1988.
Taking advantage of market conditions, Li’s early success stemmed from a
source familiar to most everyone today, liquidation of financial institutions’ assets. Bringing many out of town investors to buy Resolution Trust Corporation (RTC) and foreclosure properties in Houston, Li became one of the top real estate experts in the market. Texas George Realty flourished, it soon became the largest Asian real estate company in Houston and was named one of the top ten outstanding Asian-owned businesses by the Houston Post. In 1997, Li became the first Asian broker to bring an international name brand to serve the community in Houston when he purchased a Century 21 franchise. Li’s business plan to focus on serving new immigrants with residential, commercial and property management services
proved to build bridges between East and West cultures. He played a significant role in the creation and development of New Chinatown in Houston, an emerging area within the city’s Asia Town and International District. “My agents and team helped thousands of families to move to new homes and hundreds of businesses in different shopping centers,” he says, adding that he is fortunate to have had the opportunity to witness and contribute to the growth of the Asian community in Houston.
Li believes that the foundation of good business is giving back to the community. He has chaired numerous
Photo: Oliver Yu
organizations including the Houston Asian Jaycees, the Chinese Chamber of Commerce and the Asian American
Business Council, with a vision to promote economic growth in Houston. “I believe Asian Americans, as minorities, need to work with the mainstream to get our rights,” Li states. As the first Asian Planning Commissioner for the City of Houston, Li helped to create at least three tax reinvestment zones/management districts to generate tax revenues for safety and beautification improvements in the community, which ultimately led to property value enhancement.
Li’s involvement in community organizations eventually expanded to the real
estate industry, and those who served Houston’s Asian population. He was the Founding President of both the Greater Houston Chinese Real Estate Association and the Asian American Real Estate Association (AAREA, not to be confused with the AREAA). Then, in 2003, Fred Underwood of the National Association of REALTORS® invited Li to participate in the annual NAR convention in New Orleans. There he met Allen Okamoto, John Wong, Allen Chiang, Pius Leung and many other prominent Asian leaders from across the country. This group of like-minded, forward thinking practitioners all felt it was the right time to form a national association to represent the interests of Asian Americans in real estate. With help from NAR; the Houston Association of REALTORS®; and well-established real estate organizations from San Francisco, Los Angeles and Houston; AREAA was created and started to evolve within Photo: Choice Photography months. The association has come a long way since the early days in 2003. Li reflects on how far AREAA has come in recent years:
Top: Li addresses the future at the 2010 AREAA Leadership Summit in San Francisco Left: Li and 2009 AREAA Chair Allen Chiang in Washington, D.C. Above: AREAA Chair-Elect Kathy Tsao and Li
I never imagined AREAA would grow so fast and attract so many outstanding Asian leaders to join and make us such a great organization. Whenever you go to conferences, AREAA is mentioned as a professional, organized, and unified group. AREAA also teams up well with other respected associations such as NAR, NAREB and NAHREP to serve our community. I will definitely recognize John Wong, Allen [Continued on page 22]
Okamoto, Emily Moerdomo Fu, Allen Chiang and John Fukuda as chairs, and Jim Park as the President, to lead our board members, chapter leaders, members and staff, who have all worked together to make this growth possible. “Through training and earning various designations, I try to bring knowledge, honesty, and integrity to the highest standard so all of my agents can serve the community better,” Li states. These traits are sure to resonate throughout the association during his term, as the association takes on the personality of its highest ranking officer in many ways.
Li is proud of the progress AREAA has made and is especially grateful
to John Fukuda for his efforts over the last year to expand the association’s chapter base nationwide. He also appreciates Fukuda’s emphasis on reaching the younger demographic of real estate professionals with the formation of theEDGE, AREAA Young Professionals. Inspired by this success, Li is determined to build upon it, and take AREAA to another level in 2011.
Looking towards the future,
the new Chair understands the challenges currently facing Asian homebuyers in available financing and education about the homebuying process. Li will use AREAA as a vehicle to inform more Asian Americans about smart, sustainable homeownership. Particularly, he feels the need to educate the Asian community about government assistance programs, as well as FHA financing. He plans to host educational workshops and work with industry partners and policymakers to improve lending guidelines to better serve the Asian community.
Li is leading by example when it comes to educating the public. Under
the AREAA umbrella, he is already spearheading a multilingual homebuying program in Houston to benefit those seeking more information on how to become educated, well-prepared homeowners. He plans to replicate this series in multiple markets throughout the year.
As for practitioners, he acknowledges that technology has changed the business; however, he maintains that real estate is still a “people” business at the end of the day. He cites networking, teaming up with top agents and mentoring as the keys for success and AREAA will deliver these opportunities to its members under his leadership. He adds, “as real estate professionals, being versatile and putting our egos aside are the real tools that will help us continue to grow.”
(L to R): 2008 AREAA Chair Emily Moerdomo Fu, 2010 AREAA Chair John Fukuda, Representative Mike Honda (D-CA), and Kenneth Li Photo by Choice Photography
WOK K I N G A FI N E LINE : AVOID THESE TOP 10 SOCIAL BLUNDERS WITH ASIAN CLIENTS HERMAN CHAN
DO YOU REMEMBER
the scene from the film The Joy Luck Club when Waverly brings her Caucasian fiancé Rich home for dinner? Her Chinese mom brings out her specialty entrée and modestly self-deprecates, “This dish not salty enough. No flavor. It’s too bad to eat.” After tasting a bite, Rich cluelessly retorts “You know Lindo, all this needs is a little soy sauce,” and then douses her mom’s home cooked dish with a gallon of soy sauce. As funny and awkward as this is, there is indeed an important lesson to be gleaned from this episode. Having dinner with Asian clientele is very similar to representing them in the sale of real estate. If you commit a cultural faux-pas, you can kiss those clients “sayonara”! This is a crash course on how to avoid making social blunders with your Asian prospects. Here are some examples of what not to say:
If a buyer asks, “Is this a topranking high school?”, do not say “Absolutely! The football team is undefeated!” EXPLANATION: Stereotype or not, let’s face it, strong academic performance is highly coveted by Asian clients. If the amount of money my parents spent on me for SAT prep courses, private tutors and college application consultants is any indication of how important schools are, you best familiarize yourself with the test scores and ranking of the local schools to impress your Asian clients. If you do not know, refer them to a website like www.greatschools.org, which ranks schools based on test scores and parent reviews. Unless your clients have a mini Tiger Woods on their hands, do not bore them with the highlights of the high school’s athletic accomplishments.
“Whatʼs with all the tinfoil over the stove? You trying to hide some cracked tiles on the backsplash?”
EXPLANATION: Stir-fry is a common method of cooking in Asian households. Although it makes for some quick and delicious food, it also makes walls sticky from the oil splattering off the sizzling wok. Ergo, the wall of tinfoil (or some variant form) surrounding the stove. It might seem a rather extreme measure to take, but keep in mind that some Asian homes have several generations under the same roof. There is a lot of cooking going on! It is not unreasonable to ask for the tinfoil to be removed during open houses. A year’s worth of Wesson oil smeared over crinkled tinfoil is a turn-off in any culture!
“Must I remove my shoes before entering your house? This is going to be really inconvenient for showings.” EXPLANATION: Your prospect may say it’s ok to leave your shoes on, but it is actually a false courtesy. While you are rambling during your listing presentation, they will smile politely at you, but they will secretly fixate on the trail of dirt you brought into their home from your disgusting shoes. You may be sporting spotless Gucci loafers, but it is a matter of respect. Like taking off one’s hat indoors, taking off shoes is a display of humility from the visitor and a gesture of deference towards the host. It is true some buyers find it bothersome to remove shoes, so a good compromise is to provide a basket of booties (shoe covers) by the front door.
SOCIAL BLUNDER “Letʼs list your house for $444,444!”
EXPLANATION: If you say this, you might as well be telling your clients to drop dead… literally. Many Asians feel the number four is unlucky because in Chinese, Korean and Japanese it phonetically sounds like the word for death. Avoid the number four if possible.
“If this purchase is for yourself, why do you need to bring along your parents, siblings, aunties, cousins and grandpa each time we tour?”
EXPLANATION: Family approval can be a very important factor in a client’s decision to buy. This is especially true if the family is wiring funds from abroad (which they may or may not disclose to you upfront, so be nice to them!). Granted, sometimes there are “too many chefs in the kitchen”, but keep in mind if you win over the family, they will be a great source of referrals when it is their turn to buy or sell.
“Why are there so many fruit trees in your yard? Were your ancestors farmers back in the mother land?”
EXPLANATION: In some Asian cultures, fruit and flowers are often considered symbols of prosperity, health and beauty. Besides, is it a crime to have a green thumb?
When a buyer inquires, “Howʼs the Feng Shui?”, do not answer: “Iʼve never had that dish before. But I do like Kung Pao chicken.”
EXPLANATION: Feng Shui is the ancient Chinese belief that the arrangement of objects and colors in your living spaces can affect your chi – your life energy. In simple terms, adjusting Feng Shui will improve the layout and feel of a property. In recent years, the practice of Feng Shui has become popularized, especially in regards to home improvement projects and staging. Now you know not to order a side of Feng Shui with your chow mein!
You meet with the Yamamotoʼs for the first time and you proudly greet them with “Gung Hay Fat Choy”!
EXPLANATION: Although you get an “A” for effort, you still committed a major gaffe. “Gung Hay Fat Choy” is a Chinese New Year’s salutation. But the Yamamoto’s are from Japan. It is like going up to your new neighbor from Germany and saying “Bonjour, amigo!” Being known as the “Stupid American” is not the way to endear Asian clients to work with you. If you are not familiar with how to say hello in Thai, Vietnamese, Hindi, Korean, or Malay, it’s all right. Sometimes a simple “How do you do? Nice to meet you” will suffice!
“Here are the keys to your new house. By the way, someone died on the property. Congrats!”
EXPLANATION: Some Asians are very superstitious about a death. Find out from the start if a death on a property is a deal breaker for them (most states require this disclosure from the seller). If so, forget about showing the house down the street where “Old Man Peevy” just croaked. Also, avoid driving by cemeteries while showing property, especially if they have a new born baby on board. It is bad luck. And do not show up to your appointment decked out in all white. Besides the fact that white makes people look fatter than they are, white is worn at funerals in some Asian cultures. (It does not matter if Labor Day has not arrived yet!)
“Iʼm so excited! You are my first Oriental client.”
EXPLANATION: The Asian vs. Oriental semantic debate has raged on since the naissance of identity politics in the 1980’s. Whether the label “Oriental” is or is not a derogatory term is a discussion for another forum. (Although my Asian-American Studies professor at UC Berkeley probably just rolled over in his grave…sorry Mr. Wang!). Just be aware that some Asians do find the term antiquated at best and offensive at worst. Err on the side of caution and just stick with “Asian”. THERE YOU HAVE IT! I managed to make broad sweeping generalizations about the cultural behaviors and tendencies of 60% of the world’s population…and all in just 10 points! (Did I miss anything Aunty Lindo?) I hope that my trademark tongue-in-cheek advice is a small step to bridging the cultural divide, so that real estate practitioners can better serve the Asian community.
Herman is a real estate personality, writer, speaker and broker who believes his industry takes itself way too seriously. His flair for satire can be seen on his show HabitatForHermanity.com, where Herman shows viewers that behind the glitz and glam of real estate, it‘s a hot mess…and so is he!
Opinions expressed by individual authors are not necessarily the opinions held by AREAA.
Amy Kong, CRB,CRS,GRI, CDPE
Betty Sun Wong, CRS, PMN
Amy Kong and Betty Sun Wong are two of the Top Producing Realtors across the nation. Fluent in Mandarin, Cantonese, Toisan, and English, this multilingual team has a combined experience of over 40 years and specializes in working with their Buyers and Sellers all across the Bay Area and overseas.
AREad_fall2010_v2.xps8:Layout 1 8/23/10 2:57 PM Page 1
From New York to the World
Kathy Tsao 曹凱西
Dawn Tsien 錢美清
For Expertise In The New York Metropolitan Area Dawn Tsien and Kathy Tsao are leaders in delivering superior service to their clientele. With over 40 years of combined experience, working with buyers and sellers from around the world, they have specialized in the sales, marketing, and property management services of luxury condos, single and multiple family homes. From advising developers and investors, to individual buyers, this bi-lingual team has the managerial and leadership experience to deliver.
Prudential Douglas Elliman 575 Madison Avenue, New York, NY 10022
SUREFIRE TIPS TO INCREASE THE DESIRABILITY OF YOUR PROPERTY FOR SALE A L I C E T. C H A N
When preparing a house to sell, the last thing homeowners want to do is put money into a property in which they will no longer live. Unfortunat el y, in t oda yʼs market, it is extremely important to have a turnkey property that attracts buyers. Considering how difficult it is for most buyers to qualify for loans in this climate, potential borrowers have littleto-no additional monetary resources for major upgrades following a purchase. To ensure t hat buyers will even consider your proper ty, here are some tips to increase your homeʼs d e s i r a b i l i t y.
CURB APPEAL First impressions are important and it literally starts at the curb. If you cannot get buyers to get out of their car, it doesn’t matter how amazing the interior looks if the exterior scares them! Prune trees, plants, and hedges, mow and edge the lawn and, if need be, invest in new sod and flowers. Many times, foliage that has been around for many years have lived past their prime. Freshen up the landscaping with new plantings.
PA I N T This is the one area that you will definitely get the biggest bang for your buck. A fresh coat of paint on the exterior and interior instantly freshens up a property. No amount of power washing can provide you with the same results. My biggest advice here is “color is your friend”. Don’t be afraid to add color to the exterior. For some added punch, coordinate the hues of new plantings with the updated exterior colors. I recommend painting your front door a beautiful shade of red or black, but definitely choose a color that is comple-
mentary to the other colors. As for the interior, please avoid turning it into a boring vanilla box. Neutral does not mean white, off-white or even beige. There are a lot of colors that are neutral, but add warmth and character to your space and when coordinated with the right furnishings and accessories, will make your property memorable.
LIGHT FIXTURES Light fixtures are like your home’s accent jewelry. It’s also the one thing that can date your property. You can usually tell when a property was built or last remodeled by the type of light fixtures in the home. There are many inexpensive options available at your local home improvement store. Upgrading from the builder’s special will increase the perceived value of your property. I recommend choosing a bronze finish over black, nickel or chrome. Bronze tends to go well with most interiors.
KITCHEN This is the biggest selling feature of a property. This is the one room that could literally make or break your sale, so it would pay to invest some resources in this space. According to Remodeling Magazine’s 2010 Cost v. Value report, 78.3% of minor kitchen remodel costs and 72.1% of major kitchen remodel costs are recouped upon resale. My top 3 tips for updating kitchens are: 1) Cabinets – replace (if really bad), reface, paint, refinish or clean (with orange oil to replenish moisture). 2) Add hardware – adding shiny knobs, handles or pulls instantly upgrades the look. 3) Upgrade the appliances – this is where your buyers will see real value. Just because the old appliances still work, does not mean they look good or add any resale value. Invest in a new set of appliances and you will see approval from your buyers.
B AT H R O O M S
Following in the footsteps of the kitchen, bathrooms rank high on the list of top selling features of a property. Since these are generally small spaces, quick updates do not have to be very expensive. Even if you splurge on some higher end flooring options, the minimum material needed makes it so worth it! The easiest way to kick your bathrooms up a notch is to follow the same advice regarding cabinets in a kitchen and upgrade the light fixtures, flooring and the taps. An area of concern is usually the grout in the shower or tub so take care to remove the old grout and add a bead of fresh, clean grout.
I cannot emphasize this enough. Be honest with yourself. If you are not a good housekeeper, leave this to the professionals. It is worth every penny to have someone spit-shine your property. This includes everything from baseboards to light fixtures, windows, screens, window ledges, cabinet doors, cabinet interiors (if the house is vacant), closets, sinks, showers, tubs, inside of appliances, and my personal favorite, light switches. Every nook and cranny needs to sparkle. A professional carpet cleaning service will produce better results than that $30 machine rental at the local marketâ€Śreally!
As you can see, nothing on the list is out-of-t he-ordinar y, but a little effort in each of these areas will produce extraordinar y results. When in doubt, always consult a professional for their unbiased opinion and cost-saving advice. Here始s to your Home Selling Success!
Alice T. Chan is a Professional Home Stager and Home Selling Strategist who has consulted on millions of dollars worth of real estate sales and was the one who provided the creativity to convert them into gold! Alice delivers high-impact, low-cost, customized home selling strategies for turbo-charging properties at all levels to incredible home selling ALICE profits. Having prepared and sold T. C H A N four of her own personal residences, two before becoming a professional home stager, Alice fully understands all perspectives of the home selling process. Her experiences are what inspired her to create the Home Selling Success Formula, which teaches real estate professionals (and their home seller clients) who are willing to do whatever it takes to get their listings SOLD, enjoy massive results. For FREE effective home staging tips, articles and videos, visit www.AliceTChan.com.
A | R | E MAGAZINE IS PROUD TO PRESENT THE I N A U G U R A L A R E A A “A ” L I S T, A C O L L E C T I O N O F UP-AND -COMING REAL ESTATE AGENTS AND BROKERS THAT REPRESENT THE FUTURE OF REAL ESTATE IN THE ASIAN A M E R I C A N C O M M U N I T Y.
CHRISTINE KIM HIGHLIGHTS: Christine Kim is the Founder and Principal Broker of Bridgepointe Group, a full-service real estate firm located in the Silicon Valley of California.
To qualify for the “A” List, each individual was nominated by a national AREAA leader and completed an interview process with the selection committee. Final candidates were chosen based on three principal criteria: sales volume, contribution to AREAA and its mission, and involvement in the community. Honorees will be recognized at the AREAA National Conference in Las Vegas, Nevada on October 11, 2010.
PHI NGUYEN HIGHLIGHTS:
AGE: 29 REALTOR / BRANCH OWNER
LEBON REAL ESTATE, INC.
MODESTO, CALIFORNIA PRODUCTION: 2010: 44 UNITS, $6.9 MILLION 2009: 108 UNITS, $16.6 MILLION
Phi Nguyen is a full-time real estate professional in Modesto, California. Nguyen has been involved in sales since graduating from the University of San Francisco with a Bachelor of Science in Economics and Business Administration in 2003. Over the last few years, Nguyen has focused on the disposition of bank-owned properties and distressed assets. Living in the heart of one of the most impacted areas of the foreclosure crisis (Stanislaus and San Joaquin County), Nguyen is given daily reminders of the importance of facilitating the sales of distressed properties. In addition to distressed assets, Nguyen's team of professionals targets those buyers in the region who, for the first time, can now afford to purchase.
AGE: 34 BROKER/OWNER BRIDGEPOINTE GROUP SAN JOSE, CALIFORNIA PRODUCTION: 2010: 13 UNITS, $7.2 MILLION 2009: 22 UNITS, $13.3 MILLION
Kim has perennially placed in the Top 5% of Realtors in Santa Clara County since 2004. Prior to launching her own boutique real estate firm early this year, Kim earned several prestigious top producer awards at brokerages such as Alain Pinel Realtors and Intero Real Estate Services. In June of 2005, Kim was featured in REALTOR® Magazine's "30 Under 30" cover feature as one of 30 Realtors in the nation under the age of 30 who demonstrate business success, professional leadership, community leadership, and geographic and ethnic diversity.
Kim has served as President of the Korean American Professional Society (KAPS) from 2005-2007 and served various leadership positions there since 2004. She also volunteers her time at AACI (Asian Americans for Community Involvement) the largest community-based organization serving the Asian American community in Santa Clara County. As the Founding Chapter President for AREAA Silicon Valley, Kim strongly believes that Asian Americans have a unique opportunity to thrive in today's real estate market and believes in promoting sustainable homeownership through education and active participation in the local community. She encourages both real estate consumers and industry practitioners to get involved in the association to create a strong united voice.
S O M E T H I N G YO U M AY N OT K N O W: Kim is a classically trained, award-winning pianist. During her high school years she received 1st Place in the Oregon Statewide Young Artist competition and went on to perform Beethoven's Piano Concerto No.2 in B Flat Major with the Rogue Valley Symphony at the Ashland Music Festival in 1992.
S O M E T H I N G YO U M AY N OT K N O W: Nguyen was born on a boat traveling to the Philippines from Vietnam. Although surrounded by water at birth, Nguyen did not learn to swim until high school. Originally a science major in college with plans on becoming a pharmacist, Nguyen chose real estate as he did not like needles and the act of cutting.
THE 2010 AREAA
DIANA BUONINCONTRO HIGHLIGHTS:
With 10-years of corporate sales experience, Buonincontro was a natural when it came to real estate success. After earning the prestigious "Platinum Level" of sales for RE/MAX from 2005 through 2009, this University of Iowa graduate started her own brokerage with her husband in 2009 and has not looked back. Having helped develop an International Sales Division for her former employers, Buonincontro is a pioneer in the multi-cultural business space and currently serves as Vice-President of the Arizona chapter of AREAA. Although highly successfully in the business field, she is adamant that her greatest success in life has been the birth of her son.
DAVID TRAN HIGHLIGHTS: David Tran is the Broker/Owner of Century 21 Landmark Network in Sacramento, CA. His office is recognized as one of the top Century 21 offices in the nation. Tran's office, and its roster of 50 agents, has won numerous awards for sales productivity as well as for civic responsibility and contribution.
AGE: 35 BROKER/OWNER CENTURY 21 LANDMARK NETWORK SACRAMENTO, CALIFORNIA PRODUCTION: 2010: 135 UNITS, $19.1 MILLION 2009: 134 UNITS, $20.3 MILLION
Buonincontro may not be with us today if not for the heroic actions of her grandmother. Towards the end of the Korean War, Buonincontro's grandmother, at the age of 20, left her village with her daughters in tow to escape North Korea during the war. She would never see her family again. After weeks of walking and seeing many in her group shot, her grandmother was one of the few who made it through to start a new life. "Life has a bigger purpose," said Buonincontro. "We are all presented with different opportunities. Make sure you have the right mindset."
S O M E T H I N G YO U M AY N OT K N O W: David Tran was among the thousands of people that hastily left Vietnam after the country was taken over by the communist party. He was part of the mass exodus group known as the "Boat People". At the young age of five, Tran and his family fled Vietnam to the neighboring country of Thailand. Tran is a firm proponent and a great example of the "American Dream". One of the most positive people you will meet, Tran is always encouraging his agents and staff to capitalize on the opportunities that are laid before them. Following in the family footsteps, Tom and Eric, Tran's youngest two brothers, are also successful real estate professionals on his team.
AGE: 38 BROKER/OWNER ELITE REAL ESTATE PHOENIX, ARIZONA PRODUCTION: 2010: 160 UNITS, $20.3 MILLION 2009: 86 UNITS, $13.5 MILLION
In addition to managing an award-winning brokerage, Tran has established himself as one of the top REO brokers in the region. Representing numerous banks and asset management firms, he currently ranks as one of the top-five REO brokers in Sacramento County. The #1 REO broker for Century 21 in the Sierra Nevada region, Tran ranks as the #8 broker nationwide in the Century 21 system.
Tran is one of the Founding Directors of the AREAA Greater Sacramento Chapter. He is passionately devoted to the Associationâ€™s mission to educate not only consumers, but also fellow real estate industry colleagues in an effort to increase the overall level of homeownership among all minority communities.
SOMETHING YOU MAY NOT KNOW:
HIGHLIGHTS: Kayin Ho is one of the top-producing Realtors in the Fresno, California area. She has over eight years of experience selling real estate. Ho is thoroughly experienced in all aspects of real estate, including conventional sales, REO transactions, and short sale properties. She particularly enjoys short sales as they provide her with an opportunity to help save families and their credit. Active in the community, Ho volunteers as an Emergency Response Team member. She also serves as a board member for the Multicultural Committee of the Fresno MLS. AGE: 31 BROKER ASSOCIATE RE/MAX GOLD FRESNO, CALIFORNIA PRODUCTION: 2010: 50 UNITS, $5.5 MILLION 2009: 54 UNITS, $9.7 MILLION
Ho is the founding President of the AREAA Central Valley California chapter. Her leadership, integrity and community networking were instrumental in the formation and early success of the chapter. Ho whole-heartedly believes that the Asian community is not being adequately represented and strives to bring its representation to a higher level.
SOMETHING YOU MAY NOT KNOW: Kayin Ho is a first generation immigrant from Hong Kong. The middle sister of three, she was single-handedly raised by her mother. Ho holds a Fine Arts Degree from San Jose State University. Although her passion is real estate, Ho loves to spend her spare time drawing and painting.
THE 2010 AREAA
PENNY LIU HIGHLIGHTS:
AGE: 32 BROKER ASSOCIATE RE/MAX 2000 REALTY ROWLAND HEIGHTS, CALIFORNIA PRODUCTION: 2010: 18 UNITS, $11.1 MILLION 2009: 35 UNITS, $29.0 MILLION
As a partner in RE/MAX 2000 Realty, Liu manages over 200 agents in Los Angeles County. Her brokerage is one of the largest multicultural firms with a current market share of 4.5%. A third generation real estate practitioner, Liu is one of the top International Brokers in the region having sold over $15 million in cities like Shanghai, Beijing, Nanjing, and Kunshan. Liu, who is fluent in Mandarin Chinese, travels 4-6 times a year to China with her group of investors and buyers. Named a top-30 under 30 by REALTOR® Magazine, Liu earned a Masters Degree in Real Estate Studies from Cornell, and a Bachelors Degree from UCLA. Having learned under the tutelage and guidance from her famous mother, Nancy Liu (a top-25 RE/MAX agent Worldwide), the younger Liu is poised to lead the next generation of Asian real estate professionals. Liu currently serves as the Education Committee Chair for AREAA Greater Los Angeles and sits on the Advisory Board for Cornell University and its Real Estate studies program.
SOMETHING YOU MAY NOT KNOW: From 2005 - 2008, Liu and her family worked very closely with Dave Liniger, founder of RE/MAX, on the expansion of the RE/MAX brand into the Chinese marketplace. Liu was on the verge of signing a Master Franchise Agreement for the entire country of China in early 2008, but declined due to market conditions. Liu was also featured in a 2006 article by Forbes highlighting the new generation of Realtors.
MARK CHU HIGHLIGHTS:
AGE: 32 BROKER/OWNER BIG REALTY SACRAMENTO/FRESNO,
CALIFORNIA PRODUCTION: 2010: 21 UNITS, $4.0 MILLION 2009: 31 UNITS, $7.1 MILLION
Mark Chu is the Founder and Principal Broker of Big Realty. He has earned his Masters Club designation every year since he started his real estate career in 2007. Chu's goal is to restore confidence in the American Dream, particularly for minority and immigrant families. Chu serves as the Technology Committee Chair for the Greater Sacramento Chapter of AREAA and also serves as a committee member of the AREAA National Technology Committee. Chu has a tremendous knowledge of the marketing and media fields and this knowledge has not only helped AREAA, but has helped to make his brokerage a market leader.
SOMETHING YOU MAY NOT KNOW: Chu’s personality is an INTJ in the Myers Briggs personality assessment. INTJ focus their energy on observing the world, and generating ideas and possibilities. Chu's favorite quote is: “Those of us who are prepared for opportunities are called Lucky."
DA N S H A N Y F E LT HIGHLIGHTS: Dan T. Shanyfelt is the Broker/CEO of three leading real estate firms with offices throughout Central California and Las Vegas. Shanyfelt manages close to 100 agents, associates and staff. His flagship office in Bakersfield ranks as one of the largest independent and minority-owned firms in Central California. As an agent, Shanyfelt's personal production has placed him in the top-3 agents (out of 1500) in his region for 2009 and 2010. A former New Vista Network Broker of the Year, Shanyfelt is a regular presenter and featured speaker on REO and real estate systems management and metric performance. A graduate with honors with a Bachelor of Science in Business, Shanyfelt is currently finishing his MBA and has aspirations of law school. An eight-year real estate veteran, Shanyfelt attributes his success to his dedicated and passionate team of professionals.
AGE: 34 BROKER/CEO
NEW VISTA REALTY, LAS VEGAS, NEVADA NEW VISTA REALTY, FRESNO, CALIFORNIA MIRAMAR INTERNATIONAL, BAKERSFIELD, CALIFORNIA
PRODUCTION: 2010: 253 UNITS, $30.4 MILLION 2009: 217 UNITS, $27.1 MILLION
An avid supporter of multi-cultural real estate professionals, Shanyfelt was the founding President of the Bakersfield Chapter of NAHREP. Shanyfelt currently serves on the NAHREP/AREAA Marketing Conference Committee. This ambassador of AREAA also chairs the national Technology Committee and serves as a contributing editor for a | r | e Magazine.
S O M E T H I N G YO U M AY N OT K N O W: Prior to real estate, Shanyfelt worked as a business and marketing manager in professional and collegiate sports. A former award-winning sportswriter and published author, Shanyfelt has worked for the San Francisco Giants and San Diego Padres Baseball Clubs while performing statistical work for the NCAA Basketball Tournament. Shanyfelt resides in Bakersfield, CA with his beautiful wife, Cece, and his two children, Zachary and Lillian. 37
THE 2010 AREAA
CARON LING HIGHLIGHTS: Caron Ling is a Realtor at Coldwell Banker Pacific Properties, and has been practicing real estate in Honolulu, Hawaii for over six years. In 2009, she won Honolulu's Board of Realtors prestigious Aloha Aina Realtor Award - for Realtors who have demonstrated exceptional service and follow-up with their clients. Ling achieved Coldwell Banker's International Diamond Society status during her first full year at Coldwell Banker.
ROB MEHTA HIGHLIGHTS: Rob Mehta is an Associate Broker for RE/MAX Results in Minneapolis, Minnesota, one of the largest RE/MAX organizations in the country. Prior to RE/MAX Results, Mehta was the Broker/Owner of RE/MAX Real Estate Group from 2000 - 2007. Experienced in real estate sales abroad as well as locally, in 2006 Mehta led the launching of the International Properties Division created to assist clientele interested in purchasing properties overseas. The group currently markets projects in Costa Rica and Thailand, and has offices and staff in those respective countries to provide service and support to its clients and developers. Committed to education and knowledge, this 13-year real estate veteran regularly completes over 45 average class hours a year in real estate - three times the required annual coursework.
AGE: 33 BROKER ASSOCIATE RE/MAX RESULTS MINNEAPOLIS, MINNESOTA
A Certified International Property Specialist (CIPS), Mehta is a continuing education instructor PRODUCTION: for the National Association of REALTORS (NAR) 2010: 17 UNITS, $4.3 MILLION as well as for the Minnesota Association of REALTORS and the Minneapolis Area Association 2009: 26 UNITS, $9.8 MILLION of REALTORS. Mehta is the current Immediate Past President of the Minnesota Association of Realtors and serves on the Government Affairs and Executive Committees. At 28 years of age, he was the youngest executive officer of any state REALTOR association. A graduate of the REALTOR Leadership Academy, Mehta also serves on the CIPS Advisory and Risk Committees for NAR where he is Vice President of the Technology Group. He has previously served as the Treasurer on the Executive Board of AREAA.
S O M E T H I N G YO U M AY N OT K N O W: With the opening of his first RE/MAX office at the tender age of 22, Mehta became the youngest Broker/Owner ever in the RE/MAX system. He has been a licensed private pilot for 18 years and will be in the air every chance he gets. Mehta is a native of the Twin Cities and has resided there his entire life. Both of Mehta's parents emigrated from Bombay before settling in Minnesota. If he is not flying, you can find Mehta riding his motorcycle or playing with this daughter Robyn.
AGE: 31 REALTOR / BROKER ASSOCIATE COLDWELL BANKER PACIFIC PROPERTIES HONOLULU, HAWAII
Ling is deeply involved in the real estate industry as well as her community. She currently serves as the youngest board member for Catholic Charities Hawaii, PRODUCTION: co-founder and co-chair for 2010: 22 UNITS, Hawaii's Young Professionals $5.5 MILLION Network, and the Hawaii League 2009: 17 UNITS, of Young Real Estate Professionals. $7.5 MILLION Ling was also an instrumental founder and one of the original members of theEDGE, AREAA Young Professionals. The Hawaii Association of Realtors has selected her to enroll in their 2010 Leadership Academy. Ling volunteers regularly for committees and groups for the Hawaii Association of Realtors as well as the Honolulu Board of Realtors and Certified Residential Specialists (CRS). As one of the founding committee members for theEDGE, Ling believes that in order to build a better future for the organization, we need to enhance what AREAA already has in place. By merging the two worlds of old and new, we will be able to achieve our common vision. Ling believes that working together in the Asian community, even in Hawaii, can only give us a better understanding of the world and how we can make it a better place.
S O M E T H I N G YO U M AY N OT K N O W: Ling's great grandfather came to Hawaii from China as a contract worker for a sugar plantation and sailed during the time when Queen Liliuokalani was being dethroned. His boat was shipwrecked on the ride over and he did not know how to swim. Luckily, a boat from Japan picked up Ling and his family, took them to Japan, and from there, they sailed to Hawaii where they took up residence. Ling's grandfather was not happy working for the sugar plantation and was able to lease 10 acres of farmland to work for himself. All of Ling's grandmother's family worked the farm, and she remembers one of her great uncles telling a story about how they would have to sneak to eat a mango because their family was so poor that they had to sell everything they farmed. Lingâ€™s family may not have had the easiest journey and start in Hawaii, however, she wouldnâ€™t have it any other way as she believes everything happens for a reason.
ALEX H. WANG HIGHLIGHTS:
AGE: 32 BROKER / OWNER RAINMAKER PROPERTIES PALO ALTO, CALIFORNIA
Alex Wang is the founder and principal broker of Palo Alto-based Rainmaker Properties, one of Silicon Valley’s leading independent residential real estate brokerages. Founded in 2007, Rainmaker Properties quickly rose to prominence as a client-focused and referral-based residential brokerage. In 2009, Rainmaker Properties was ranked one of the “Top 24 Residential Real Estate Firms” in Silicon Valley by the Silicon Valley Business Journal. An avid supporter of local non-profits and charities, Rainmaker Properties has donated over $30,000 to various causes since 2009.
Among his real estate accomplishments, Wang was featured in the 2006 edition of REALTOR® Magazine's "30 Under 30" cover story as one of the top 30 rising PRODUCTION: young Realtors in the nation. He has also 2010: 27 UNITS, been featured in various national and $17.6 MILLION local news media outlets, including Silicon Valley Business Journal, Califor2009: 54 UNITS, nia Real Estate, Business Week, Forbes, $29.8 MILLION Palo Alto Weekly, and KRON Channel 4 News. Wang keeps a strong Internet presence through the use of popular social media Websites and as the author of a Silicon Valley real estate blog, which was selected in 2010 by Zillow.com for the “People's Choice Best Real Estate Blog Award.” Wang is one of the founding members and currently serves as Vice President for the AREAA Silicon Valley chapter. As a secondgeneration Chinese-American who lived in Taiwan as a youth and is able to speak fluent Mandarin Chinese, he has been able to combine his professional and personal background to better serve and understand the real estate goals of the local Chinese community. He currently lives with his wife, Lily, and their daughter in Sunnyvale, California.
MAX KIM HIGHLIGHTS:
AGE: 36 BROKER/CEO METROPOINTE GROUP NEWPORT BEACH, CALIFORNIA PRODUCTION: 2010: 42 UNITS, $10.1 MILLION 2009: 126 UNITS, $17.5 MILLION
S O M E T H I N G YO U M AY N OT K N O W: One of Wang’s hobbies and passions is acting and improvisation, which has landed him small gigs as a movie extra and in commercials for Cisco, Acura, and Franklin Templeton Investments. Fortunately, he is not planning on moving to Hollywood.
THE 2010 AREAA
Applications for the 2011 AREAA “A” List will be accepted at the Multicultural Real Estate and Policy Conference in Washington, D.C. in March 2011. Check www.areaa.org for event details. We all know real estate agents can’t do it alone; our next list will feature top loan officers, escrow officers and title representatives. To be considered for an upcoming feature, or for more information, write to firstname.lastname@example.org.
Max Kim is CEO and principal shareholder of MetroPointe Group, Inc., a conglomerate of commercial, residential and investment real estate divisions along with residential lending. After graduating from the University of California, Irvine with a Bachelor of Science, Kim joined Northwestern Mutual as a Senior Financial Advisor. Four years later, Kim transitioned into the real estate industry by co-founding Silverstone Holdings, LLC, a real estate investment company specializing in multi-family investments in growing real estate markets. While serving as President, Kim led the creation and implementation of all sales and marketing strategies. In 2004, Kim founded Metro Pointe Premier Realty Inc., an independent brokerage, where he managed more than 220 residential and commercial sales agents, leasing agents, and a property management team. With a strong knowledge of both cash and accrual accounting systems, Kim was able to create and manage multi-fund budgets ranging from $5 million to $20 million. Kim has participated in raising over $10 million in venture capital to finance various start-ups and real estate joint ventures. In 2010, Kim led an AREAA committee dedicated to streamlining the local chapter development process. His committee has successfully created a 24-month roadmap and chapter launch guideline that will foster and facilitate the chapter growth within AREAA for the next generation. Kim has 25 local chapters in various stages of development since taking over as committee chair. Prior to his service on the national level, Max served as a director on the board of the Orange County chapter of AREAA.
S O M E T H I N G YO U M AY N OT K N O W: A former Jazz and Ballet dancer and a Southern California native, Kim currently resides in Corona, California with his wife Cindy and their two sons.
e l a S t r o h S g n i t Lis r o f d o o G s ’ t I : s e i t r e p Pro d o o G t i s i t u b , s s e n i s u B . q s E , o o W . P ry e f f e J ? r e l l e S e h t for
s buyers of starter homes, trade-up homes, second homes, vacation homes, and investment properties struggle to make mortgage payments on their underwater1 properties, a natural opportunity for real estate professionals is created to list and sell these “short sale” properties as an alternative to foreclosure. But is a short sale a “better” alternative to foreclosure for these defaulting or soon to be defaulting owners? Whether the property is transferred through a short sale or a foreclosure, in most cases the owner will be losing their property and getting nothing in return. Often, such owners are presented with the fact that a short sale has a much less detrimental effect on their credit than a foreclosure. But is that true? There are a number of considerations that a property owner should consider in deciding whether a short sale is appropriate for their circumstances. For the real estate
professional the question is: Are we giving accurate advice?
What is a Short Sale?
A “short sale” is defined as the sale of a property that is encumbered by a loan whose amount cannot be satisfied by the proceeds of the sale. A short sale can only be completed if the lender agrees to either forgive or defer the unpaid balance of the loan to allow escrow to close. It should be noted that currently there is no obligation for a lender to agree to a short sale. It is completely voluntary on the part of the lender. However, financial logic may compel a lender to agree to a short sale. A lender is likely to agree if a lender determines that the amount it will receive in the short sale is greater than the net amount it might receive if it were to foreclose and then sell it itself as an REO property. If a lender does agree to a short sale, it will require that all of the net
proceeds of the sale be used to pay off the mortgage. The seller will receive no proceeds from the sale. The lender will either forgive the deficiency in the repayment of the entire loan or seek to have its borrower sign a new note for the short fall. In the latter case, the seller’s obligation remains with the lender, but the obligation is unsecured, much like credit card debt.
If there is more than one loan on the property, these lenders will all have to agree to the short sale and will negotiate among themselves on how the short fall will be allocated. Should any lender disagree with the allocation, a short sale cannot be completed. Typically, a proposed short sale can take many weeks or months to get approval from the lender or lenders. For that reason, many buyers are resistant to making offers on short sale properties. In the mean time, either the owner is in default and moving closer towards a foreclosure, or is making the payments on the
Most common method of foreclosure
Less common method of foreclosure
Lender records and serves Notice of Default and Notice of Sale
Requires a lawsuit and judgment for foreclosure
Process is much more expensive and time consuming than non-judicial foreclosure
Borrower has a “right of redemption” to pay off loan and recover property
A “deficiency” judgment may be entered against the borrower equal to amount of loan less proceeds from auction
Auction conducted under Power of Sale set forth in the Deed of Trust
Trustee’s Deed issued to winner of auction
Under “One Action” rule, lender has no further recourse against the borrower and borrower has no rights to get the property back
mortgage and is spending significant out-of-pocket money to remain current.
Understanding the Foreclosure Alternative
For many, foreclosure creates a stigma that signifies financial failure and loss. So it is not surprising that many have sought to fight falling into foreclosure even when it no longer makes economic sense to keep a property. Short sale is marketed as the alternative to foreclosure; as a more honorable way out of the financial inversion an owner finds himself. But beyond the connotations that the word “foreclosure” evokes, the process and consequences should be realistically analyzed. Foreclosure is a legal process that allows a lender to recover the property that has secured the now defaulted loan it made. A foreclosure can be done in one of two ways. A non-judicial foreclosure is by far the most common method. It is the more familiar process by which a
lender records and serves a Notice of Default and eventually a Notice of Sale on the property. At the end of the process, an auction is conducted under what is called a Power of Sale which is set forth in the Deed of Trust the borrower signed at the time of the loan funding. The lender will generally bid the loan amount. If there are no other bidders, the bank will be the winner and a Trustee’s Deed will be issued transferring title to the property. Under a rule adopted by most, if not all, states known as the “One Action” rule, if a non-judicial foreclosure is completed, the lender will have no further recourse against the borrower. Furthermore, the borrower will have no rights to get the property back even if they are later able to make good on the loan. Less typical is the judicial foreclosure. This process requires that a lawsuit be filed and a court to enter a judgment for foreclosure. This process is much more expensive and time consuming than a non-judicial foreclosure. Additionally, when a judicial
foreclosure is done, the borrower has a “right of redemption” which is a right during the next year to pay off the loan and recover the property. The right of redemption makes the property very difficult, if not impossible, for the lender to sell during the first year. For this reason, it is rarely employed. However, if a judicial foreclosure is used, and the property is sold at the foreclosure auction for an amount less than the amount due on the defaulted loan, a “deficiency” judgment may be entered against the borrower equal to the amount of the loan less the proceeds of the foreclosure auction. For example, if the defaulted loan equaled $1,000,000 and the property sold at judicial foreclosure sale for $800,000, the lender may be able, in addition to recovering the property, to obtain a deficiency judgment for $200,000. So why doesn’t the bank always do a judicial foreclosure? Firstly, many states have limitations that prevent a bank from using judicial foreclosure. In California, for instance, purchase money mortgages on owner occupied properties of four units or less can only be foreclosed upon non-judicially.2 This is known as a “non-recourse” loan. Secondly, the time to do a judicial foreclosure is probably twice as long as a non-judicial foreclosure. Additionally, the cost of a judicial foreclosure is probably ten times more expensive. Non-judicial foreclosures do not require attorneys to perform the work whereas judicial foreclosures involve attorneys, the courts, and the attendant costs and delays. Lastly, in most cases, a lender does not see, given the extra cost and expense, the benefit of obtaining a deficiency judgment. Such a judgment is not likely to be collectable anytime soon, if ever. Given the right of redemption described above, many lenders figure the faster, cheaper non-judicial route
for foreclosure provides a surer way to recover as much of the loan amount as possible.
Tax Consequences of Foreclosure and Short Sale
The issue of tax liability is complex. Whether, and how much, tax liability will be incurred as a result of a foreclosure or short sale will depend on a number of facts. The following attempts to provide a very basic explanation of the tax issues. However, it is not comprehensive and a taxpayer is advised to consult their tax advisor.
EXCLUSIONS FOR TAX LIABILITY ON DEBT CANCELLATION There are some exclusions for tax liability on debt cancellation. Under the Federal Mortgage Forgiveness Debt Relief Act of 20074, a taxpayer will not be taxed upon cancellation of debt income if:
At a very basic level, an owner of a property that is either lost through foreclosure or sold as a short sale may be subject to ordinary income tax, capital gains tax, or both. Whether such taxes will be incurred will depend upon the amount of the loan, the fair market value of the property, the adjusted basis of the property, whether the debt was non-recourse, and whether the property is being used as the owner’s principal place of residence. Ordinary income tax liability can be accrued if there is any debt forgiveness or cancellation.3 In a foreclosure, you would look at the price the foreclosed property sold at auction and then subtract that number from the amount of the loan due. If there is any difference, that amount is considered debt cancellation. For example, if a property has a $200,000 mortgage remaining when it was foreclosed upon and sold at auction, and the auction produced a sales price of $150,000, the debt cancellation would be $50,000. This amount would be considered ordinary income to the owner. In a short sale, debt cancellation is simply calculated as the amount the transaction was “short”.
1. The property sold in the short sale was the taxpayer’s principal residence; or 2. The debt cancelled is “Qualified Principal Residence Indebtedness5; or 3. In a foreclosure action, if the debt was, under state law, a non-recourse loan6; or 4. Taxpayer is insolvent; or 5. The debt is discharged as part of a bankruptcy.
However, the discussion about debt cancellation tax liability is wholly distinct from the potential capital gains liability that may be incurred as a result of a foreclosure or short sale. Capital gains can be incurred if the fair market value (FMV) of a property foreclosed or sold in a short sale is greater than the adjusted basis of the property.7 Taking the last example above, let’s say the foreclosed property that sold for $150,000 was originally purchased for $50,000 many years ago. The seller would have a capital gain of $100,000 unless some provision of the IRS code deferred it. The capital gain liability would be wholly independent of whether there was any debt cancellation tax liability.
The Effect on Credit Rating as a Result of Foreclosure or Short Sale The most common reason given to owners of underwater property to sell the property as a short sale is that the foreclosure alternative would have a much greater negative effect on their credit. But is that true? If we use the
effect on a person’s FICO score, foreclosure and short sale produce the same results.8 However, under Fannie Mae’s Credit Guidelines (Guidelines), there is a substantial difference on a consumer’s ability to qualify for a future Fannie Mae loan depending upon whether a foreclosure or short sale occurred. Under the Guidelines, a consumer is only eligible to obtain credit to purchase a home five years after a foreclosure sale was completed.9 Additionally, the following additional requirements apply after five years and up to seven years following the foreclosure sale10: -
Minimum 10% down and minimum 689 credit score Purchase of second home or investment property not permitted.
By comparison, in what Fannie Mae describes as a “preforeclosure sale”, a consumer is eligible to obtain credit in just 2 years.11 While the term “preforeclosure sale” is often used interchangeably with “short sale”, there is a difference. A “preforeclosure sale” is defined as involving a sale of property for less than the amount owed to satisfy a delinquent mortgage. Thus, a consumer who did a short sale, but was never delinquent
If we use the effect on a person’s FICO score, foreclosure and short sale produce the same results.8
on the mortgage may be entitled to credit without any waiting period if the borrower’s previous mortgage history complies with Fannie Mae’s excessive prior mortgage delinquency policy.12
As with most advice, one size rarely fits all. This is particularly true regarding the question of whether a foreclosure or short sale is “better” for a particular property owner. The question involves issues of tax, future ability to borrow and the unique characteristics of the particular property in question. The advice one might give a struggling first time home buyer who has lost their job, has no savings, and bought a house which they never could afford in the
first place should be different than the advice given to the property owner who purchased multiple properties for investment and substantial non-real estate assets. For the property owner who has a realistic financial prospect of buying a home in the near future, the short sale option will make a lot of sense. For the property owner who is on the verge of bankruptcy, foreclosure may be a better outcome. As real estate professionals seeking to serve our clients, it is important that we provide our clients with complete information, even if that information drives our clients to a decision that does not benefit us in the short run.
“Underwater” meaning a property whose mortgage exceeds the current value of the property. 2 Calif. Civil Code Sec. 580b. It is of note that California has pending legislation (S.B.1178) which would extend the protections of this law to refinance loans as well to the extent that no money was “cashed out” which was not put back into the home. 3 26 U.S.C. Sections 1001 – 1016; 26 U.S.C. Sections 61, 108, and 1001-1016. 4 These rules apply to indebtedness discharged from January 1, 2007 to December 31, 2013. 5 IRC Section 163(g)(3)(B) 6 A non-recourse loan is a defined as a loan in which the lender’s sole remedy when a loan is in default is to seek to recover the property which secures the loan and the lender has right to seek a deficiency judgment. See FN 2 referencing California’s Statute defining a non-recourse loan. Each state will have its own statutes defining the requirements for a non-recourse loan. 7 This applies to short sales and foreclosures of properties with recourse debt. If a foreclosed property has non-recourse debt, the Capital Gains is calculated as the Greater of the FMV or the Outstanding Debt less the Adjusted Basis. The Adjusted Basis is defined as the original purchase price less allowable depreciation, if any. Generally on a residence, there will be no depreciation. 8 See http://www.myfico.com/CreditEducation/Questions/foreclosurealternatives-fico-score.aspx 9 FNMA Announcement 08-16, 6-25-08) 10 Id. These additional requirements stop after 7 years because Fannie Mae only requires a 7 year credit and public record history. FNMA Selling Guide, Part X, Section 103, 4-01-09) 11 FNMA Announcement 08-16, 6-25-08) 12 FNMA Announcement 8-16 Q&A, 8-13-08; FNMA Selling Guide, Part X, Chapter 3, Sec 302.09) 1
Jeffery Woo is a Realtor and an attorney who heads the Complex Rental Property Group for the law firm Sedgwick, Detert, Moran & Arnold, LLP. He is a past director for AREAA and currently co-chairs AREAA’s Policy Committee. His is also the past president of the Chinese Real Estate Association of America. He currently serves as a director of the San Francisco Association of REALTORS® and of the San Francisco Apartment Association. He has published over two dozen articles on the subject of Real Estate, Property Rights and Rent Control. For the past four years, Mr. Woo has been recognized as a Super Lawyer for Northern California by his peers. He invites your comments via email at email@example.com. His website can be found at www.mypropertyrights.com.
Copyright 2010 – Jeffery Woo
CAN FOREIGN INVESTORS CONTRIBUTE TO JOB GROWTH AND ECONOMIC D E V E LO P M E N T ? The EB-5 Visa is creating opportunities in Dallas for real estate professionals and their overseas clients
BY MATTHEW G. SOLTIS
In these crazy economic times, many real estate practitioners and other industry servicers have begun to suffer from spiraling business that so often plunges them into that great abyss called “frustrated panic”.
A ray of sunshine can now be seen and offered to those of you who may be fighting this “menacing monster”. You may not yet have the “Silver Visa”, as reported by H. Ronald Klasko in the Spring issue of a | r | e , but you may be able to load a “Silver Bullet” to help ward off the demons and dragons poised to harm your business. One solution for real estate practitioners is the Foreign Investment Visa Program. This
plan is most likely the option in which your foreign clientinvestor will be most comfortable. It includes fully vetted and approved community economic improvement projects; armslength compliance oversight by the plan creator, and a thirdparty management team. The most comforting to the foreign investor is the fact that the initial introduction was made by a friend or family member. No matter where your business is located you can participate. The City of Dallas, Texas has been authorized as a Regional Center for the EB-5 Foreign Investment Visa Program. Your marketing skills as a real estate practitioner are vital to the advancement of a program
initiated by the Dallas Economic Development Committee to provide development and construction funding for revenue producing projects in the city. The last two years have been exceptionally bad for commercial real estate projects. The bailout did not reach down far enough to allow developers to continue or even finish closing on some of their projects. Banking skidded to a halt as well as the financing of the projects. Construction was dead in the water affecting critical economic development projects in most cities. The City of Dallas recognized the slowdown and was greatly affected by the sudden and complete lack of tax revenue
flowing from potential sources forecasted in its annual budget. Without this tax-based new revenue, the city was heading for a multi-million dollar shortfall. The Economic Development Committee, led by Councilman Ron Natinski, began a series of very productive meetings with the U.S. Citizenship and Immigration Service (USCIS) and in particular discussed the EB-5 Foreign Investor Visa program and how the city could qualify and become identified as a Regional Center under this program. In October of 2009, the city received its designation as the City of Dallas Regional Center (CDRC). Following the guidelines required by USCIS and adding a third-party management company, Civitas Capital Management LLC, to administer the program, the City of Dallas has begun their Foreign Investment Program.
THE FOREIGN INVESTMENT PROGRAM The basic points of the program can be described as follows: 1. Any approved project within the city limits of Dallas and within the boundaries of the Regional Center, will be eligible under the foreign investment program. 2. Any approved foreign investor and their approved funds to be invested are eligible for this program. 3. After meeting all specifications and requirements for an investment, the investors qualified by the USCIS will be eligible to receive a temporary, resident visa for themselves, their spouse, and all children under the age of 21. 4. The worldwide marketing process for this program has been set up to include individuals and marketing groups approved by the project management organization. Any real estate practitioner can be approved to assist Civitas in its marketing to your friends and family members living abroad.
T H E A DVA N TAG E S TO T H E F O R E I G N INVESTORS YOU REFER INDEPENDENT PROJECT MANAGEMENT
THE PROJECTS ALL HAVE BEEN VETTED
This management team is a third-party facilitator for these transactions.
Before a project can be presented to an investor it must be fully vetted and fulfill all requirements of the USCIS. This mitigates risk concerns.
The management company also has a book of resources, typically lawyers, bankers and other advisors both in the U.S. and in the country of origin. All of which are qualified to discuss the EB-5 program.
IN-COUNTRY C O N S U LTA N T S These consultants have local government approval as contractors to counsel with the foreign investor prospect. They present all materials developed in appropriate languages so that the investor can make determinations as necessary.
[ Continued on Page 46 ]
T H E A DVA N TAG E S TO T H E C I T Y Some of the benefits we see in this program for the city are exactly what may help our country during these times:
Additional revenue without government investment
Job creation without stimulus funds
OUT H T I W ENT M N R GOVE DING SPEN
The practitioner benefits from the resulting relocation and becoming a concierge to a new Asian-American family seeking the American Dream. While this may not be the end-all for your practice, it may keep you busy enough to slow the current downward spiral while giving you time to reload with more silver bullets.
Nurturing community banking opportunities in local projects
BUSINESS GROWTH Providing incentive for the development or relocation of businesses to the city
Additional detail on this program is available from AREAA, including the City of Dallas provided presentations. Please feel free to direct specific questions to the author or request detailed information on this program from any chapters on www.areaa.org. Matthew G. Soltis is the Executive Director of the Dallas/Fort-Worth Chapter of AREAA and can be reached at firstname.lastname@example.org.
Fair Commission Plans with Equal
Opportunity to Earn By John Wong
You own a real estate company and life should be simple. You work
hard developing business opportunities for your agents. You spend time providing your agents with the best training available. You put your wallet where your mouth is spending money to make money. All you want in return is to just make a profit and a modest profit at that. Sounds reasonable, doesn’t it? Should be easy, shouldn’t it? Then why is it so hard to do? Over the past decade as a consultant with Compensation Master, I have reviewed the financial dynamics of dozens of companies and hundreds of offices. A majority do not achieve their desired profitability. In fact, many are losing money because their business relationships (commission plans) with their primary revenue source (agents) are broken. The following paragraphs
will provide insight on how to fix this situation, so that your real estate operation can build the solid foundation needed for planned sustained profitability.
businesses. I believe that it serves the client best when they isolate the expenses of their core operation, so that the financial health of this core business can be evaluated.
The design of the right commission plans for your company would involve a broad series of calculations specific to your company, but in general the calculations fall under four general steps.
The next step is to separate the “fixed expenses” from the “variable expenses.” Fixed expenses such as rent or administrative staff salaries must be paid regardless of whether the company generates income. Variable expenses such as open house advertisements or flyer stationery are those that only materialize with revenue generating events. At a minimum, each of your agents must cover their share of the fixed expenses. These are costs you must pay even when there is no production.
Identify true expenses Build profit into calculations Calculate the right fair share agent’s contribution to expenses Design your plans around this fair share contribution.
IDENTIFYING TRUE EXPENSES
The first step is to accurately determine your real expenses from company operations. Some companies choose to include income and expenses from ancillary
BUILD PROFIT IN CALCULATIONS
Include a planned profit in the design process. Consider profit as a required variable expense so that your plans capture that profit amount for each commission dollar
your company generates. Without this critical step, your company can fall into the trap that many real estate companies find themselves in. They go through the year hoping that there will be some money left over for profit at the end of the year. Plan your profit from the beginning and build that profit into the design of your business relationships with your agents.
CALCULATE THE RIGHT FAIR SHARE AGENT’S CONTRIBUTION TO EXPENSES The next step in the process is to bring fairness into your commission plans. “Fairness” means that everyone in your company is expected to carry the same load. In companies at risk, agents feel that they are carrying more expense weight than they should. Agents understand that there is a cost to operating a real estate company. What they despise is the feeling that they are shouldering the load for some other agent.
Most companies calculate each agent’s expense share by dividing the expenses by the number of agents in the company or the number of desks in the offices. For example, in an office of 10 agents with an annual expense of $200,000, the office divides the $200,000 by its 10 agents and each agent is expected to contribute $20,000 toward the cost of operations. These calculation methods do not work. They assume that every agent produces sufficient revenue that coupled with their commission plan leave enough dollars to cover their share of expenses. This usually does not happen. In the above example,
an agent with $80,000 in gross commission income (GCI) on an 80% split would only contribute $16,000 toward the $20,000. The remaining $4,000 will have to come from reduced profit or the owner’s pocket. The appropriate divisor to use is the “Fully Productive Equivalent©” or “FPE©”. See figure 1.
Fully Productive Equivalent
If two agents had each only earned enough GCI to contribute half of their share of the fixed expense per agent, then together, they would only add up to the equivalent of one agent when calculating the FPE. (10 agents)
1 1 1 1 1
Figure 1 In this example Office has 10 agents Five agents (blue bars) generate GCI that coupled with their commission plans cover their 1/10th share of expenses. Three agents (yellow bars) generate GCI that coupled with their commission plans cover ½ of their 1/10th share of expenses. Two agents (red bars) generate GCI that coupled with their commission plans cover ¼ of their 1/10th share of expenses.
The correct number to divide the $200,000 expense by is seven (see figure 2). This company has ten agents, but for expense recovery, it actually has only seven true revenue generating units, or “fully productive equivalents.” Treat each of the five blue bar agents as individual “fully productive equivalents,” combine two yellow bar agents into a blended “fully productive equivalent,” and combine the remaining yellow bar agent with two red bar agents into another blended “fully productive equivalent.” Add these FPEs 5+1+1 to yield a total FPE of seven for this company. This correct Fully Productive Equivalent number can now be used to determine the same fair share expense recovery expectation from each one of your agents whether they are seasoned veterans or brand new licensees.
DESIGN YOUR PLANS AROUND THIS FAIR SHARE CONTRIBUTION The next step is to design exciting commission plans that coupled with an agent’s income generation allow each agent to contribute their fair share of the operating cost of the company, and that this fair share amount is the same for everyone in the company. These plans must also incentivize agents into higher production by having reachable substantial financial rewards when they have contributed their fair share expense recovery. Each agent must have the equal opportunity to earn the maximum dollars for their performance. More information about
Fully Productive Equivalent
If two agents had each only earned enough GCI to contribute half of their share of the fixed expense per agent, then together, they would only add up to the equivalent of one agent when calculating the FPE. (10 agents = 7 FPE - 7/10 = 70%)
1 1 1 1 1
Figure 2 styles of plans can be learned from the book, “Compensation Planning: The Key to Profitability” by Dave Cocks. It is available as a free download from www.compensationmaster.com choose the “learn more” tab and select “book”. Note that this treatise is not a determination of which style of company business model works the best. It does not matter whether yours is a franchised company or an independent; whether yours is a REO shop or a high end luxury international brokerage. It does not matter whether yours is a 100% shop or a traditional split company; whether you pay your agents solely by commission or whether your agents have a base salary with performance bonuses.
its members and for the communities we serve. I also know that the antithesis of these two principles, “Unfairness” and “Inequity” elicit strong emotions and drive people to action. In the context of a real estate company, unfairness and inequity within your company will drive your agents and the GCI they generate to another company. The right commission plans enable an owner of real estate companies to have fair operations that recover the cost of operations and earn sustainable profits. They also enable agents with the equal opportunity to earn all that they can for their efforts.
What does matter is that there be fairness and equal opportunity in your company. “Fairness” and “Equal Opportunity” are familiar concepts in the AREAA space. They are core to what AREAA is about for
OVERCOMING L ANGUAGE BARRIERS In past issues of a | r | e , summaries of noteworthy laws and regulations protecting the rights of homebuyers who do not speak English were presented. The tidal wave of laws, lawsuits and regulations continues to emerge and there are no signs of reduced governmental oversight in the real estate industry. However, many companies in the industry are far ahead of the requirements of the laws, implementing exciting ways to attract “limited English proficient” homebuyer clients. This article will provide an updated glimpse into the legal side of LEP citizen rights and examples of how industry leaders are demonstrating their ability to operate far beyond the legal tidal waves in these turbulent times. For the newest news on these updates, contact the contributors to this article who are listed below.
According to Adria Cheng, Real Estate attorney/partner at Manatt, Phelps, and Phillips LLP in San Francisco, there are several examples of state and federal laws in which a strong protection is provided for non-English speakers during consumer finance transactions. Two noteworthy trends have emerged – more states are enacting laws and those laws are being used as the basis for lawsuits, especially by homebuyers who claim they did not fully understand their real estate purchase transaction. Under such cases, no single part of the real estate industry is consistently the defendant, nor is any group immune from the lawsuits whether it’s lenders, Realtors, title companies or loan servicers.
CALIFORNIA - §1632 of the Civil Code covering Truth-in-Lending requires companies entering into credit agreements to deliver to consumers a translated copy of a contract if a lender “negotiates” the terms of the loan in Spanish, Chinese, Tagalog, Vietnamese or Korean. An amendment to the law became effective in 2010 which directs the California Department of Corporations and Department of Financial Institutions to create model forms for “supervised financial organizations” to summarize the terms of a mortgage loan in the same five languages mentioned above. Over the past 18 months, dozens of lawsuits have been filed by homeowners claiming various forms of relief because they did not understand their transaction and were not provided a translated copy of their mortgage documents. OREGON – The statute dealing with Translations of Mortgage disclosures (HB 2188) took effect in 2010. Mortgage brokers, bankers and originators that advertise, negotiate or receive applications in a language other than English must provide the GFE, TIL disclosures and a notice advising the borrower to find a translator in English and the other language. Oregon’s Division of Finance and Corporate Securities has copies of these documents posted at its website in Vietnamese, Russian and Spanish. FLORIDA – advertisements in languages other than in English must also have limitations and/or disclosures required to be contained in the advertisement, made in the language of the advertisement.
An important impact on the real estate market, which is also a consistent element in the lawsuits – if a transaction involves a buyer who doesn’t speak English, offer a translated copy of the mortgage documents.
TEXAS, NEVADA, KANSAS AND ARIZONA require Spanish language versions of loan documents for certain, limited products such as second-lien loans and high interest loans.
T H E L E GA L P E R S P E C T I V E
The states whose laws should be noted:
AN INDUS TRY UPDATE ON M U LT I C U LT U R A L R E A L ES TATE MARKETIN G B Y
G A R Y
S A N D E R S
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Another area of government regulations to note is at the federal level. Take your time to ensure your organization is compliant with the revised RESPA guidelines which became effective in 2010. Enforcement of various parts of the guidelines was delayed by HUD early in the year and the situation continues to be the subject of widespread attention. Most importantly, be aware of how the guidelines dealing with the HUD-1 Settlement Statement and the Good Faith Estimate documents affect your daily transactions. There’s an abundance of examples illustrating how Realtors, lenders and servicers are delivering programs effectively for LEP real estate buyers across the country. While regulations and laws provide guidelines of what to do or not do, these samples of stories reflect the best of all practices - plan for contingencies and overcome communications barriers to close business.
C E N T U R Y 21 Silicon Valley in California is home to some of the world’s best known corporations – Apple, Intel and HP. The county “Santa Clara” population is one of the most culturally diverse in America – 45% of the citizens speak another language than English at home (the national average is 19% and in CA, it is 39%). The area is also home to the #1 ranked Century 21 franchise in the world – M&M Associates. Vice President Alan Aoyama enthusiastically describes some of the reasons why his organization continues to grow and to generate strong results – “We operate 24 offices across Northern California and our 1,200 agents and brokers communicate with clients in over 21 languages – primarily Asian. Addressing the diversity of the clients’ potential language barriers is not accomplished through formal programs, it’s just the way we conduct business routinely on a day-to-day basis.”
Here are some details: A significant number of agents are hired who are foreign born and they are especially helpful in overcoming language barriers with US born people who don’t speak fluent English The agents and brokers insist on using professional interpreters at closings to ensure the buyer and seller fully understand the transaction Marketing collateral is produced in 20+ languages and bilingual agents edit the documents to ensure they are accurate linguistically and culturally No surprise, Aoyama proudly boasts that one of M&M’s agents is the #3 producing agent in the US, though she was born and raised in Beijing and endured many political hardships prior to immigrating to America.
FIRST AMERICAN TITLE I N S U R A N C E C O M PA N Y No single event during the course of purchasing a home may generate more consternation and confusion than the closing – signing appointment…and that’s when all parties speak English! Imagine not speaking fluent English and being asked to understand, and then sign dozens of documents. First American understands such concerns and their Strategic Markets division has instituted several programs across the country. According to Maria Valentin, VP for their Western Division, a few of the highlights: Cultural Competency training for branch employees, taking into account the demographics that surround the individual branches. They understand that cultural nuances affect the service process as much, if not more, than
language competency. Understanding what is proper and what constitutes “good” service in other cultures is vital to making the client feel respected and understood. They currently provide training to address the Chinese, Korean, Vietnamese, Filipino, African American, Hispanic, Asian Indian and Russian cultures. The Simply Stated Summary Closing Document – A document that is given to the client at the beginning of the signing appointment (in-language: Chinese, Vietnamese, Tagalog, Japanese, Korean, Russian and Spanish) stating the most important points covered in the loan documents and/or closing in an easy to understand format. They’ve found that once the client is comfortable with the payment amount, interest, terms, HOA dues, taxes, etc., their anxiety level diminishes and they are able to be more engaged in the actual signing of the documents. This document is offered in every state where they have escrow operations. Marketing materials are published in 11 languages (Chinese, Korean, Vietnamese, Tagalog, Armenian, Punjabi, Hindi, Japanese, Spanish, Japanese and Russian). Two examples of collateral – “Prepare & Avoid: 70 Ways to Lose Your Home” – a description of 70+ defects for which a title insurance policy can offer protection “The Life of an Escrow” – a visual flow-chart look at the steps in the escrow process
WELLS FARGO HOME MORTGAGE Home Preservation and Retention Programs have been developed to support homebuyers, many of which may not be fluent English speakers. [Continued on page 52]
Wells Fargo’s Leading the Way Home® community outreach program is designed to help communities understand and act on efforts to stabilize their current housing situation while advancing homeownership to build a strong community for the future. The program focuses on helping communities recover, rebuild and sustain homeownership by: Using responsible lending and servicing practices, and nationally advocating them for all mortgage lenders. Educating borrowers about credit management, their mortgage products and the ongoing responsibilities of homeownership. Working with customers on home retention options when they can’t make their mortgage payments to avoid preventable foreclosures. When home retention is not possible, managing REO properties (foreclosed homes, also known as Real Estate Owned) for sale, and working with municipalities to accelerate the sale of REO properties to stabilize communities. Leading the Way Home is a three-point program designed to: Prep: Property Management – focus on rebuilding. Escalate the preservation of properties in distress. Wells Fargo will work with local municipalities in their neighborhood stabilization and development efforts. Sell: Home Purchase Recovery – focus on neighborhood recovery. The program can help consumers and nonprofits purchase REO properties in order to
advance neighborhood stabilization. It also will offer assistance and guidance to our communities to plan for use of available Housing Economic Recovery Act dollars. Sustain: Homeownership Sustainability – focus on the future. Wells Fargo will continue to provide people, products, information, and education for communities and consumers to provide responsible and sustainable homeownership across America. Through in-house programs and affiliations with outside counselors, Wells Fargo Home Mortgage helped many customers with financial literacy and managing their credit. In 2009, the bank participated in more than 700 events, including more than 200 home preservation workshops focused on sustaining homeownership. Wells Fargo continues to expand its face-to-face customer contact initiatives to reach more struggling borrowers. In the past year, the company sponsored 13 large-scale Home Preservation Workshops for its customers in Atlanta, Baltimore, Chicago, Cleveland, Las Vegas, Los Angeles, Memphis, Miami, Minneapolis, Oakland, Philadelphia, Phoenix, and St. Paul. At these events, company representatives met with nearly 14,000 customers and many Wells Fargo and Wachovia customers received modifications on the spot or within a short period after the event. In addition, the company conducted one-onone meetings with customers invited to our Home Preservation Centers in 27 hard-hit markets. The company also has participated in more than 300 industry-led local
outreach events focused on delivering assistance to struggling borrowers since the beginning of 2009. Since the beginning of 2009, Wells Fargo grew its home preservation staff by more than 140 percent, hiring 10,600 people for a total of more than 18,000 U.S.-based home preservation jobs dedicated to these efforts. The rapid growth required developing new processes to effectively onboard, train and retrain people to manage the evolving, complex guidelines inherent to home retention programs. In June 2010, the company completed the process of assigning one person to manage a loan modification from beginning to end, with a back-up who continues the work when the primary contact is out. In other words, their customers will have contact consistency as to who they are working with from start to finish.
LOOKING AHEAD If your client is not fluent in English, their rights and expectations to understand their real estate transaction are well supported by the law. Further, the demographic trends across the country underscore the need for the legal mandates. However, today’s climate is not so much a legal minefield to carefully navigate, but a vibrant area of opportunity for new sales, not just in Silicon Valley, but everywhere. Companies and public agencies today are zealous about providing assistance to LEP homebuyers – be an advocate for your client, find the right resources and your efforts will be rewarded with loyal, satisfied clients.
LEGAL Adria Cheng email@example.com Manatt, Phelps, Philips LLP www.manatt.com
MORTGAGE LENDING Wells Fargo Home Mortgage www.wellsfargo.com
TITLE AND ESCROW SERVICES Maria Valentin, Vice President First American Title Insurance Company firstname.lastname@example.org www.firstam.com
R E A LTO R S Century 21 M&M Associates Alan Aoyama Vice President email@example.com www.c21mm.com
M U LT I C U LT U R A L P RO G R A M PLANNING AND EXECUTION Gary Sanders The Language Factor firstname.lastname@example.org www.thelanguagefactor.com
TRANSL ATIONS COURTESY OF: thebigwordGroup www.thebigword.com Translate Central www.translatecentral.com
AROUND THE FHA, HAFA and Asian American Market Education in Chicago On July 8th, 2010 AREAA Greater Chicago held a seminar on the new 2010 FHA/HAFA guidelines with AREAA’s course: “Effectively Serving the Asian Pacific American Housing Markets”. The educational segment was introduced by Ms. Nancy Suvarnamani, President of AREAA Greater Chicago and owner of Century 21 S.G.R., Inc. The course was conducted by John Wong, Founding Chair of AREAA. Over 130 real estate professionals attended the event, which was held at the Hyatt Regency Hotel. A panel of experts was introduced by Ms. Allyson Powers of Chase. The panel included Bonnie Boards, V.P. and Esther Phillips, V.P. from Chase; Jeannine Prumbo, CEO of Avid Solutions; and Joe Nery, attorney-at-law and current President of NAHREP Chicago. A lively keynote speech by Maria Pappas, Cook County Treasurer, was introduced by Mabel Guzman, President Elect of the Chicago Association of REALTORS®.
House Speaker Nancy Pelosi (D-California) with Aaron Yu, President of AREAA Orange County, and Congresswoman Judy Chu (D-California) at a fundraiser this summer. AREAA Arizona President Michelle Chang was 1 of 15 individuals representing the state’s Asian community in a meeting with Senator John McCain (R-Arizona).
Technology-Driven Top Young Producers In early September, theEDGE, AREAA Young Professionals, hosted a panel discussion featuring three real estate professionals who have made it to the top by leveraging new technology and media. Alex Wang, a top producer and award-winning real estate blogger, discussed how to create engaging web content; Herman Chan, of habitatforhermanity.com fame, shared secrets and clips from his successful online show; and James Dwiggins, Chief Strategy Officer of Realty World Northern California, introduced a variety of mobile apps and services that are saving real estate professionals time and helping them to be more productive. The Las Vegas audience was educated and entertained, as theEDGE pulled off a memorable first educational event.
For information on upcoming events, visit theEDGE online at http://areaa.org/EDGE and find them on Facebook or Twitter as “areaaEDGE”
A S S O C I AT I O N AREAA Tri-Counties Southern California Kickoff Led by Heather Chong of the AREAA National Chapter Development Committee, the highly anticipated new AREAA Tri-Counties Southern California opened up with strong support from local community leaders and the Tri-Counties Association of REALTORS速. The kickoff event focused on HUD and what Realtors should know about fair housing and selling HUD properties. The highlights included special guest speakers: John Trasvi単a, Assistant Secretary for Fair Housing and Equal Opportunity for HUD; Charles Ludlam, Senior Single Family Housing Specialist for HUD; and John Fukuda, AREAA National Chair. Building on this strong foundation, the new chapter will provide much needed resources for the real estate professionals who serve the Asian communities in the Los Angeles, Riverside and San Bernardino tri-county region. Photos by John Photography www.johnphotography.net
ADVERTISERS Amy Kong, REALTOR www.amykong.com
Inside Back Cover
Bank of America
Inside Front Cover
Betty Sun Wong, REALTOR
Dawn Tsien, REALTOR
First American Title Insurance Company, Strategic Markets Division www.firstam.com
The HOPE Awards
Kathy Tsao, REALTOR
LSI - A Lender Processing Services Company http://www.LSI-LPS.com/
Multicultural Real Estate & Policy Conference http://areaa.org
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Published on Oct 18, 2010