Real estate agent & broker Edition
For the serious real estate professional
Issue 010/October 2012
Is activeRain a market leader? An interview with ActiveRain CEO Nikesh Parekh Page 18
The Upside of the Downturn America's best hidden housing markets.
Housing Election - Which Candidate is Better for Homebuyers It's the economy, stupid.
The Role of a Private Money Lender The front end of the transaction is just the tip of the iceberg
Seven Steps to Build and Promote Your Facebook Fan Page
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Franchisee, EXIT Elite Realty, Midlothian, VA
Forget about game changer, let’s talk about life changer. To find out more call Tami Bonnell, C.E.O. today! 1.877.253.3948
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Publishers Robert Pegg firstname.lastname@example.org David Pegg email@example.com MANAGING EDITOR Rick Roque Rick@thenichereport.com
18 Is ActiveRain a Market Leader? An interview with ActiveRain CEO Nikesh Parekh by Jeffrey Chalmers
The Upside of the Downturn
Simple Steps 28 Seven to Build and Promote Your Facebook Fan Page
harrison Stowe America's best hidden housing markets.
Doing Business in Indian Country
Housing Election - Which Candidate is Better for Homebuyers Harrison Stowe It's the economy, stupid.
The Role of a Private Money Lender Martin Goodman The front end of the transaction is just the tip of the iceberg.
Shawna Ingram firstname.lastname@example.org
Advertising Director Jessica Grizzle
Bringing Up the Rear
Hilary Bateman email@example.com
U.S. Attorney General Eric Holder.
nancy appleby Know the rules or suffer the consequences.
Cathy Johnson firstname.lastname@example.org
note from the Editor
Henry Suchman email@example.com
Production Assistant Dawn Exner firstname.lastname@example.org
Cartoonist Martin Bradford
market conditions and analysis
ONLINE LEAD GENERATION
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COLUMNISTS & Contributing Authors Nancy Appleby Martin Andelman Jeffrey Chalmers Martin Goodman Rebekah Radice Harrison Stowe TheNicheReport.com
note from the Editor
Real estate agent & broker Edition
2013: The Next Chapter. The market update reveals an unprecedented action by the Federal Reserve to keep interest rates low, commonly known as the third round of “quantitative easing.” This financial practice is relatively new in modern finance policy, initiated when the Japanese sought to combat their own deflationary pressures in 2001. This attempt, once again, was unsuccessful, and in fact there has been no example of a successful attempt to manage an economy by keeping rates near ‘0%’. So why do it? Why do it three times? Well, it isn’t quite that simple, and the debate is not yet finished as to the effectiveness of the early actions of the Federal Reserve to stabilize an otherwise spiraling U.S. economy in 2008. It clearly, at least in part, successfully ended the economic tailspin – but can it produce growth? That is the question now. How do you take the patient off of the ventilator, one economist asked? This will be the question in the years ahead as we look to normalize rates (gradually), and with such actions there are winners and loser. The winners in this case are depository banks and mortgage banks, and the losers become consumers with a faltering economy. What Is Good for Banks Is Good for Realtors. Too-big-to-fail policies have created greater consolidation in the banking industries and have driven historic profit margins; so how was this good for the economy? Whenever the government supports parts of the economy, there are always clear winners and losers. Sometimes the winners are rural Midwest farmers, something politically popular to support and difficult to criticize; other times it is bankers where the elixir of money and envy is mixed, and it makes good political fodder. In either case, the administration has made the choice to support banks by keeping interest rates low with the indirect hope that this will inspire consumers to buy a home while interest rates are as low as they have ever been. So, in this case what is good for banks is good for Realtors; it makes awkward bedfellow partners, but Realtors are used to this in order to get the deal done. It Is Just Politics. It is just politics. Somehow when a Democrat supports big banks, he escapes the criticism of being a ‘capitalist’; when a Republican candidate formerly ran an (investment) bank, he is criticized for making money on the banks of workers. It is just politics, as many say, but it reflects why many Americans view our elected leaders so poorly and, I believe, why many workers simply do not trust management within their own companies. No one likes ‘politics’, whether it is in the public sphere or in the corporate environment. I think you’ll enjoy this edition of The NicheReport, Real Estate Edition as it aims to provide every Realtor with the substance and foundation as to why the housing market is an exceptional investment for consumers. The most recent move by the Federal Reserve will keep interest rates low through 2015, which will give Realtors across the country a great deal of hope, coupled with the talking points to sell consumers on the American Dream once again that home ownership is not only more cost effective in every metropolitan market in the United States, but it is the best long-term investment for consumers. Speak To Your Company or at Your Conference. My goal for The Niche Report, RealEstate Edition, is to provide useful insights into the real estate economy and how real estate professionals can grow their business in today’s challenging environment. Remember, if you want to learn more about what we are doing, email or call me (408.914.5895) and I’ll jump on a plane and come visit with your real estate team! Thank you and I look forward to your hearing from you!
Rick Roque Managing Editor, email@example.com
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The Upside of the Downturn America’s best hidden housing markets
By harrison stowe
espite the delicacy of it all, it’s hard to ignore the sound of a bubble bursting. With the remaining dam holding back a recession thoroughly broken in 2008, the myriad economic factors waiting to sink the housing market burst through and turned the economy into a much bleaker place for real estate investors. This sort of rising tide, it seems, puts us all underwater equally. However, despite the at-best middling health of the housing market and lackluster investor enthusiasm, some housing markets have either sustained reliability or made a quiet return. For the all-weather investor, here are some regions where property investment might not be an exercise in irrational exuberance: Tennessee – Nashville metro region: According to a recent report compiled by local outlet News Channel 5, the Nashville metro region is showing signs it may emerge as a promising place for realty investments. While not a perfect drop-bounce in terms of investment opportunities, a combination of a recession-induced sink in housing prices combined with increasing interest in home 8
purchases spells a possible opportunity for those who care to make inroads into new investments. Quoting sales statistics as well as remarks from David Klein, CEO of the Greater Nashville Association of Realtors, condominium sales have rebounded with notable strength since the housing bubble burst. While this still indicates a type of hesitancy and frugality on the part of the area’s homebuyers, an uptick in the purchase of conservatively priced units points to a more even-keeled consistency in property acquisitions. The gauged value of certain property holdings in Nashville has dropped to a clear third of their price at during peak evaluation. By contrast, monthly home closings in August were up 27.3% from those recorded during August of last year. This is also the highest number of home closings recorded since 2007. While there’s much to be said about the consequence of fools rushing in, prudent foresight and shrewd investments could yield promising results. Oregon and Southern Washington: According to a new post on the Portland Business Journal’s blog, certain areas of Oregon and Washington are showing promising areas of investment for industrial real estate. The written
analysis, provided by brokerage firm CBRE Inc.’s vice president Stuart Skaug, points to a spread of factors supportive of cautious optimism. Tenants in the region are committing to increasingly long leases, land purchasers are demonstrating a willingness to purchase vacant or undeveloped land, and low interest rates mixed with a high volume of local institutional capital all portend a slow but steady recovery in the area’s housing market. While a local publication’s endorsement of its own region’s economic health and investment promise can understandably invoke skepticism, the greater Portland region could possibly emerge as an otherwise overlooked property region with workably promising returns. Washington, D.C. metro region: While centering on one of America’s most densely populous and affluent regions, and a far cry from the comparative quiet of Portland, Washington, D.C.’s standing demographic factors point to promising trends for the shrewd property investor. Our nation’s capital has long maintained a wellearned reputation for tenant transience, and according to a new release from the Washington Post, a wave of retirement among the region’s wealthier boomers portends migration outward from the city heart towards the more serene local suburbs. Citing Waverly Hills in particular, the report highlights that so-called ‘urban villages’ have long been popular with middle-class government employees, and are becoming even more popular with the current demographic shift. Shrewd investors could well make sound predictions and stay at the crest of a possible
wave of housing migration. Paterson, New Jersey: In line with cautious optimism around a slow housing recovery, and similarly in step with the uptick in seasonal buys experienced this summer in Tennessee, Paterson, New Jersey is seeing new life pour into its housing market. According to reporting from Northjersey.com, the current time a house stays on the open market has fallen substantially since 2008. Another promising sign is the fact that, on average, current home sales return 93.8% of the asking price, a rise from the average return of 88% on the list price recorded in 2008. Similarly, townhomes in the area tend not to demand the exorbitant prices rightfully associated with many of the neighborhoods closer to metro NYC. As is the case with other newly emergent housing neighborhoods, prudent investment could lay the groundwork for healthy returns. Whether speculation around a gently rebounding housing market proves to be either exaggerated or premature, a few preliminary signs point toward opportunities to unfreeze spare capital you may have held back after the bubble burst and to invest it carefully into what would have previously been unremarkable regions.
Harrison Stowe is a writer for NVR Inc. and a homebuilder in Montgomery County, MD. Blogging about a range of real estate topics including investment, mortgages, and new construction, Stowe combines finance knowledge with experience in the current real estate market.
How we see it
Market Conditions and Analysis
market Conditions and Analysis By rick roque
Keeping Rates Low & Why Buying a Home Is Still Better than Renting in Today’s Market. Conflicted Loyalties We all know we generally live in a state of contradiction. We want to be environmentally conscious while we drive our SUVs; we want to conserve electricity, but we leave our AC units on throughout the day; we want to conserve water, but we water our lawns – we live in a constant state where there are certain beliefs and principles we either embrace fully or do so with certain limits, understanding that there will be times when we simply cannot comply with our principles. Politics is the worst or best (depending upon your perspective) illustration of this behavior. We wince at terms such as ‘redistribution’ of wealth; however, we expect our roads to be in good condition, our schools to be the best in the world, and public services such as police, fire, medical services 10
to be responsive, and have the latest technology and best talent available. We are a conflicted populous struggling to reconcile the role of elected governance with the role of personal freedoms, especially financial freedoms. The Republican response to 9-11 was the largest expansion of the Federal government in a generation in order to elevate our nation’s readiness in light of the war on terror. The Democratic Party’s response to the collapse of the housing market was yet another expansion of the federal government in the creation of the Consumer Financial Protection Bureau (CFPB) and the passing and application of the Dodd-Frank Act of 2010. The former controlled the personal security of Americans, and the latter is intended to protect the financial security of Americans. Bankers are generally resistant to government regulation, yet applaud when the Federal Reserve keeps rates low. Real estate agents want to have their financial potential and practices largely unscathed (therefore resisting government regulation in the transaction of purchasing or selling homes), but they applaud government intervention if it keeps units moving,
homes selling and consumers buying. When will we realize that we can’t have it both ways? If the government can intervene in favor of a specific industry (banking), the government can equally intervene against it (ask mortgage lenders). Depending upon your political persuasion, there are very different views in this election regarding how to grow the U.S. economy. It is equally understood that President Obama’s approach favors a ‘public’ society that expands local, state and federal government offices and ‘public’ companies whose commitments aren’t to consumers who have invested in them, but to companies who are represented by unions and have ‘public’ contracts. In this view, the public entity is to be the lead catalyst in the recovery. While many real estate and banking professionals may balk at this approach to our economic recovery, they are silently relying upon the Federal government’s support of the housing markets and hoping for a second term for President Obama. It is commonly asserted that it is more likely for interest rate deductions to be modified and least likely the Federal Reserve would intervene
Market Conditions and Analysis under a Republican administration. And in this case, what may be good for our economic recovery just may be challenging to the housing industry. But will the Federal Reserve’s policies really change with the change of administrations? Who really knows? President Obama didn’t close Guantanamo; Bernanke worked for President Bush and his policies have been advanced under the current administration; and President Obama has been more of a hawk than his predecessor in his use of drones while pursuing our security interests behind the borders of sovereign nations. This is the political paradox of American democratic politics today. We live with a daily list of contradictions; we, as a result, have conflicted loyalties. So, it is bittersweet when Chairman Bernanke announced on September 13th a third round of what is called “quantitative easing,” an unconventional monetary policy tool to designed to stimulate the economy. Well, what really is it? Is it good for our economy? What should every Realtor understand about the impact of this on their business? As much as this feels academic, every real estate professional should be prepared to answer questions from consumers, even on a high level regarding how such actions affect a buyer or seller’s decision whether or not to move forward on their home. Whether you are a loan officer or a real estate broker, you need to be thinking middle to long term for your business. The best way to serve your customers in the short term is to have an understanding of the long term. If you can’t provide that level of reassurance to your clients that now is the right time to refinance your home, or it is the right time to invest in a short sale, or it is the right time to purchase a home as a first-time home-buyer, then you are essentially undermining your own capacity for growth and
success in today’s market. In a market where there are many successful real estate agents, you will be one of those agents wondering why the deals or the referrals don’t come your way. The way to gain traction fast is to stay on top of the market and where it is headed. The more you see the future, the more successful you will be in the present.
Quantitative Easing: The third time is a charm To put it not so simply, quantitative easing (QE) is an unconventional monetary tool used by central banks to stimulate the economy. It is a defibrillator of sorts, in place to regulate the pace of economic growth. During a recession or if the economy lacks “stimulative” growth, the Federal Reserve elects to reduce short-term interest rates in order to motivate lending and spending. You have to remember that our economy revolves around spending money, not saving money. So low interest rates don’t encourage money to sit still; they inspire one to borrow and spend. But at this point, the Federal Reserve has cut interest rates essentially as far as they can go, and yet the economy is still struggling and banks aren’t lending. This is the principal reason why we see capital reserves of corporations and banks at historic highs. They are able to borrow money, increase margins, and replace lost assets from the market crash while increasing the borrowing criteria in order to lend. This in turn enables broader trade margins when securitizing mortgages or other lending products because the risk has been so far minimized by lending to the consumer cream of the crop that investors are willing to pay handsomely for such security pools. As a result, the cycle is repetitive: banks collect historic net income levels while lending to the most qualified borrowers while borrowing money at historic lows for mergers
and acquisitions. This is why we are seeing a consolidation across all industries where larger corporations are becoming larger, and the small and family-owned businesses can’t get loans and are competitively squeezed out of their markets. There is a disappearing middle class all right, but it is the small to midsize businesses that are disappearing at an alarming rate. So the federal government is in a bind; it is left with quantitative easing, which enables the Federal Reserve to print money and purchase longterm treasuries or mortgage-backed securities from commercial banks and other institutions. This continues the monetary flow while reducing longterm interest rates. In theory, when this happens, investors are incentivized to spend money they have.
Been There, Done That This is the third round of quantitative easing. In 2008, after the financial crisis occurred, the Fed started buying mortgage-backed securities and T-bills in order to boost the economy. Roughly $2.1 trillion was purchased by summer of 2010. QE-2 was put in place after the economy began to weaken in 2010. It is hotly debated whether or not such actions help or hinder the economy. Sometimes shortterm gains can only lead to longer-term losses (mortgage crisis anyone?). It is argued that the first round of easing helped prevent the slide into a great depression; if anything it increased investor confidence that the government would function as a safety net for investors. It was effective in slowing down the skid and helping promote some price appreciation on goods. QE-2 is hotly debated, and in the years to come QE-3 will only be even more so as to its impact, positive or negative on the housing economy. While this is keeping rates low for mortgage borrowers, it isn’t actually boosting ‘lending’ or broadening TheNicheReport.com
Market Conditions and Analysis access to mortgages for consumers. If anything, it is simply ‘wrenching the rag’ further by enabling borrowers ‘who quality’ to refinance or purchase a home, leaving out the majority of borrowers who are tenuous at their place of employment at best, and have a marginal credit score (a FICO of 640-690 is considered marginal). QE-3 will keep mortgage interest rates low through 2015, which will settle investors and instill confidence, and by the time this article was written there have been considerable gains in the stock markets. But the unintended but real consequences are more consolidation in the banking segment, larger profits, fewer borrowers, and for those who do qualify, the cost of their loans will only increase in light of further known and unknown regulatory requirements on banks (forms and more forms) due to the passing of Dodd-Frank in 2010. This is a vicious cycle, but there is nothing in place to break it unless provisions on the rates are put in place to establish various lending benchmarks with certain types of borrowers. This however will only lead to greater government intervention. The subprime product was largely created with minority and lower income borrowers in mind to inspire home ownership. We know where that government-induced bubble ended up. As stated in the beginning of this article, be careful what you wish for. More and more voices are dissenting on the efficacy of easing practices.
Economic Outlook: Low Rates, Steady Deal Flow. 2013 Will Look a Lot Like 2012. Questions around inflation, the timing of interest rate hikes and regulatory changes are paralyzing the private sector, leading to an already confusing economic outlook. Try running a business, forecasting 12
production or revenue, staging purchasing decisions or hiring new employees. Remember: you can’t buy a house if you don’t have a job, or if your job is at risk. Unemployment is just over 8% and many economists are pessimistically stating this is the ‘new normal’. It is a lowering of the American expectation, and this is deeply saddening to see from a sociological perspective. With most economies in Europe over 11% (averaged across 17 countries) and a trend that is suggesting it will get worse, not better, the outlook is very grim for economies with governments deeply involved in monetary and economic policy.
Message for 2013: Buying Is Still Better than Renting With price increases in all 100 metropolitan markets, it is still cheaper to own a home than to rent, because of climbing rent pricing and, of course, the aforementioned low mortgage rents. This is important for real estate agents to highlight in your marketing messaging and seminars with consumers. The tax breaks for homeowners also are a vital component to the benefit of buying a home. Remember: buying a home is still a solid investment in the future of every consumer, especially as it pertains to income that could be realized from selling their home later in life. If a borrower is under the age of 50, there is no question they should buy a home – and if they can afford it, with prices and interest rates so low, they should buy two! It is no surprise that the most affordable metropolitan markets are Detroit, Gary (IN) and Oklahoma City (OK), with the costs of homeownership 64% cheaper than renting according to Trulia. The top 10 metros with the highest homeownership affordability are listed below. For real estate agents, in your advisory capacity with
clients, I suggest discussing this list for investment purposes. In many cases, homeowners have children going to college, and they have the financial capacity to purchase a home in lieu of having their child/student live in college dormitories.
U.S. Metropolitan Area
Monthly Cost of Homeownership
Detroit, MI Gary, IN Oklahoma City, OK Lakeland, FL Toledo, OH Memphis, TN Warren, Troy, Farmington, MI Cleveland, OH West Palm, FL Birmingham, AL
$349 $616 $590 $495 $476 $548 $588 $585 $723 $515 Source: Trulia
With the ‘new normal’ holding so much uncertainty, it is difficult to manage a Real Estate Agency or make marketing decisions if you are an agent. From a micro-industry perspective, QE-3 is very good news for mortgage banks and Realtors as it provides a federal commitment to maintaining rates at the lowest in over 100 years, and will maintain modest levels - $1T to $1.3T worth of mortgage originations across the U.S. - which equates to moving units if you are a Realtor. This will enable adequate deal flow for real estate agencies and agents and will sustain the profitable growth of stable banks. Overall, we are looking at much of the same for 2013. What that means for you will depend on how well your year went, size of your business, capitalization, market share and overall expenses as you prepare for 2013. Any questions or feedback on this article, email Rick Roque, Managing Editor of TheNicheReport Real Estate Edition, at firstname.lastname@example.org or call him at 408.914.5895.
Doing Business in Indian Country Know the Rules or Suffer the Consequences
By nancy appleby
here are more than 560 federally recognized Native American tribes in the United States. They are located on what is collectively called â€œIndian countryâ€? â€“ a legal term referring to tribal reservations and federal trust lands situated within the territorial boundaries of one or more states. The legal governance of Indian country is highly complex, encompassing treaties with the U.S. government and the standard legal characterization of tribes as being domestic dependent nations with their own sovereignty. Investors and entrepreneurs are showing unprecedented interest toward commercial development projects in Indian country. Until recently, this economic activity did not reach into the capital markets or commercial real estate. However, Indian country has experienced an economic development awakening, which has created a need for capital to match the commitment by tribes to create 21st
century, sustainable economies. Coupled with federal government incentives for doing business with tribes, this has created potential real estate finance and business opportunities. While opportunities in Indian country abound, prudent investors understand that that there are legal complexities in Indian country that must be addressed when structuring a successful transaction.
Governance Issues Indian nations not only are sovereign entities that have their own governing bodies, they continually interact with the federal government and its primary administrative agency, the Bureau of Indian Affairs (BIA). Pursuing commercial marketplace requires negotiating with these authorities, as well as structuring business contractual agreements and, sometimes, intergovernmental compacts with the state(s) in which tribal land is located. Real estate professionals, investors, developers and contractors for projects in Indian country should be familiar with federal law related to Indian tribes and with TheNicheReport.com
tribal law and custom. Additionally, any gaming-related project involves the Indian Gaming Regulatory Act (IGRA) and the IGRA regulations. Failing to be familiar with the entirety of this body of law invites disaster. In reality, few people are familiar with federal Indian law or tribal law, governments and dispute resolution systems, which reflect each tribe’s sovereign status and unique culture, language, laws, mores and traditions. Developing a real estate or construction project with a tribe or tribal entity, or on tribal land, is not a conventional transaction with conventional terms, conventional financing and conventional collateral. In Indian country there may be no familiar law governing the granting and perfection of security interests. Typical remedies in the event of a default may not be available under applicable federal law and tribal law. Litigation may not be the preferred, or even an acceptable method of dispute resolution. Tribal law may not be codified. There may be no established formal judicial system for hearing disputes. There may be no written rules of court procedure. Court opinions may not be available for review by non-tribal members. These issues are not insurmountable. However, non-Indians are likely to need assistance navigating this system, and will find their way more easily if they are respectful, flexible and tolerant of differences in law, procedure, style and personality.
Sovereignty and Jurisdiction The form and substance of a tribe’s or tribal enterprise’s waiver of its immunity from suit has been, and continues to be, of critical concern for persons doing business with tribes and their businesses. In a recent case, High Desert Recreation, Inc. v. Pyramid Lake Paiute Tribe of Indians, the U.S. Ninth Circuit Court of Appeals stated that “[a] n Indian tribe is subject to suit only where Congress unequivocally authorizes suit, or where the tribe has clearly and expressly waived its immunity.” This black letter law seldom is questioned. Therefore, it is critical that any contractual arrangement with a tribe or a tribal business include an express, written waiver of its sovereign immunity from suit and that the waiver is authorized by all action required by tribal law. 14
Investors often assume that their disputes with tribes or tribal businesses will be heard by a federal court. Often that is not the case. The basic principle in federal and Indian law is that federal courts have jurisdiction only where there is a question of federal law to be decided or where the parties reside in different states and meet the requirements for diversity jurisdiction. While the better practice is for a tribe to expressly, unequivocally and clearly waive its immunity from suit and to consent to jurisdiction and venue, it is not uncommon for waivers of sovereign immunity to be silent respecting jurisdiction, leaving the parties to argue later over jurisdiction. In those cases, the parties are able to resolve their substantive dispute only after they litigate over which court has jurisdiction – not the scenario that the non-Indian party typically will prefer.
Ensuring Due and Proper Authority Questions of dispute resolution are inseparable from the fundamental issue of who has authority to act on the tribe’s behalf. How the tribe is organized will affect how power is distributed, who can act for the tribe as borrower and what, if any, approvals may be necessary to enter into a binding and enforceable transaction. Sections 16 and 17 of the Indian Reorganization Act of 1934 (IRA) address many aspects of tribal governance, including the constitution that will describe the governing body of the tribe and its authority. However, not all tribes are organized under the IRA. In those cases, reviewing the tribe’s custom and common law is critical. In each case, the investor should confirm the actual authority of any persons negotiating and executing documents on behalf of the tribe. Do not assume there is authority or rely on apparent authority. It is prudent to review the underlying organizational documents (e.g., constitution, laws, ordinances, resolutions) of the tribe and of the tribal business (e.g., charter of incorporation, operating agreement) to determine whether they limit the tribe's and/or the entity's ability to waive immunity. Any waiver made in violation of the tribe’s laws and/or organizational documents may be void. The investor’s due diligence also should include a review of
tribal law, including custom, tradition and opinions of its courts. The investor should require the tribe to adopt resolutions specifically authorizing the transaction and granting authority to execute and deliver documents. The investor also should request that legal counsel for the tribe deliver opinions regarding the organization of the tribe, the organization of the tribal business and the respective power and authority of each, and respecting the enforceability of the waiver of immunity.
Land Titles Similar complexities involve the issue of land titles. In many cases, title to Indian land is held in trust by the United States for the tribe’s benefit. The general rules are that tribal trust land may not be sold, taxed or encumbered and that BIA approval is required for leases of trust land. Lease terms typically are limited to 25 years with a 25year renewal, unless otherwise provided by statute. BIA approval is also required for a mortgage on a leasehold interest in tribal land. A leasehold mortgage may permit the lender to exercise dominion and control over leased land in the event of a default, but determining the status of land requires reviewing treaties, acts of Congress, proclamations by the Secretary of the Interior (who has ultimate responsibility for the BIA), BIA title records and other sources. Lenders should thus always use a competent title company with appropriate knowledge to conduct an Indian land title search and to ensure the lender’s leasehold mortgage. Case in Point The issues of immunity, jurisdiction, organization and land title reviewed here merely touch on the complexities involved in financing an Indian country real estate project. Thorough preparation is essential for lenders, and a recent court case illustrates the type of problems that the unwary can face. In Wells Fargo Bank, National Association, as Trustee, v. Lake of the Torches Economic Development Corporation, the U.S. District for the Western District of Wisconsin declared that a bond indenture evidencing a $50 million tribal debt was void, with the ostensible result that the tribe had no obligation to repay the debt. The documents at issue in Lake of the Torches evidenced financing for a tribal casino and were subject to the Indian Gaming Regulatory Act, which requires federal approval for a management contract. In Lake
of the Torches, the bond indenture provided for the appointment of a “management consultant” by the bondholders, restricted the right to remove key personnel without the bondholders’ consent, and required that the bondholders could appoint new management in event of default. Provisions like these are quite common in secured lending transactions; however, because this secured transaction was with a tribal corporation, the court concluded that the indenture was a management contract for which federal approval was required. Sadly for the bondholders, since such approval was not obtained (or, for that matter, even sought), the court concluded that the indenture was void. The Seventh Circuit Court of Appeals confirmed the District Court’s conclusion. This was a very fact-specific case, but its message is clear. It is essential to consult with Indian law counsel to develop any business or credit proposal to ensure that obtaining necessary approvals and other issues that may sidetrack your transaction are addressed appropriately. Your project will have a much better chance of a favorable outcome if you take care of the basics and understand the rules of Indian country at the beginning of your deal.
Nancy J. Appleby, principal of Appleby Law PLLC, has 30-plus years of experience in Indian law and in the real estate, energy, commercial finance and project development business sectors that seek to pursue business opportunities on Native American lands. She has been selected for inclusion in such authoritative lawyer rankings as The Best Lawyers in America and Chambers USA, and may be reached at 703837-0001 or by email at email@example.com.
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Housing Election - Which Candidate Is Better for Homebuyers? To quote a man much wiser than myself – it’s the economy, stupid By harrison stowe
his is an election that has come down, tooth and nail, to pretty primal questions about economic recovery and what is best for the American taxpayer. While the 2004 election centered on questions about defense and national security, this year’s incumbent-versus-challenger dialogue has swung far towards questions of which contender is best equipped to help lift America from this economic quagmire. While I’m not here to advocate for any particular candidate’s economic policies (and elections are not won solely on economic platforms), I feel it is more than sound reasoning for any real estate wonk to dip their toe in the pond typically occupied by policy wonks. Both candidates offer their own economic and tax platforms, and both candidates offer incentives and drawbacks for those keen on home purchases and real estate investments. In no prejudicial order, let’s examine our incumbent candidate: 16
Barack Obama assumed office only shortly after the 2008 recession began snowballing. While his first presidential run was built on a platform of social change and broad reforms diametrically opposed to the policies championed by the preceding Bush administration, lingering debt in the public coffers and private sector stagnancy have forced the national discourse in a radically different direction. President Obama’s economic platform is much more aligned with Keynesian doctrine, which endorses limited but important input from the federal government in shaping economic policy. Keynesians are much more likely to endorse social security and social safety nets, in addition to limited business regulation and public debt relief. Barack Obama’s brand of neo-Keynesianism has won supporters ranging from economist Paul Krugman to veteran economic liberals like Senator Dianne Feinstein, while building resistance from more libertarian advocates like Mark Spitznagel and congressional conservatives like Paul Ryan and Rand Paul.
However, here are breakdowns of the possible pluses that a second Obama term could provide homeowners and real estate investors: • Obama supports extending homebuyer credit to those interested in purchasing their first home. • The Obama administration has consistently vouched for mortgage debt relief. While the evaluations of economic observers remain mixed, the Making Home Affordable Program (MHA) offers support for mortgage payment in addition to relief for those facing foreclosure and underwater mortgages. • The reduction of interest rates under Obama has made borrowing and loans easier to sustain, which could have positive ramifications on those who handle their mortgages with prudence. Mitt Romney had long been expected to emerge as the Republican contender against Barack Obama in the 2012 election, but only recently accepted the party nomination. While his ideological stances have shifted over the course of his political career, his elevating of Paul Ryan as his running mate has affirmed his platform’s allegiance with staunch fiscal conservatism. Paul Ryan has long endorsed public sector austerity measures, and brings an angle to the Romney-Ryan ticket that can be framed as the fiscal opposite to Barack Obama’s neo-Keynesianism. Ryan’s crafting of the Path to Prosperity budget has shown him strongly in favor of loosening government regulation of the private sector, and cutting taxes for the highest-earning income bracket. Congressman Ryan’s major impetus for this position has been the belief that high-earning Americans will invest their capital in various holdings or private enterprise. Ryan has argued that this will stimulate the private sector and encourage job growth that drives away many of the post-recession woes,
including a sagging housing market. However, generalizations about the VP-hopeful’s fiscal leanings aside, here are areas in which Mitt Romney as president could provide boons to homeowners and property investors: • Mitt Romney has frequently been critical of lowered interest rates. Increasing interest rates would prove a blessing for homebuyers with a high volume of personal investments. • Mitt Romney broadly endorses rolling back government programs like MHA and encouraging the capital back into the private sector. Those who advocate this position (like his recently confirmed running mate) point to it as a means of stimulating the economy and curtailing the recession overall. • Those who hold faith in government-exempt solutions to lifting the economic quagmire will likely take heart with Romney’s favoring of cutting targeted programs like debt relief and housing loans, and letting the private sector economic gears turn unaltered. Whether voters usher in a second term for Obama or a Romney presidency, it’s clear that both candidates maintain attention to America’s uneasy real estate market. Whoever ends up occupying the oval office come 2013 will quickly be forced to address our national property concerns.
Harrison Stowe is a writer for NVR Inc. and a homebuilder in Montgomery County, MD. Blogging about a range of real estate topics including investment, mortgages, and new construction, Stowe combines finance knowledge with experience in the current real estate market.
2012 Interview Series
Is ActiveRain a Market Leader? An interview with ActiveRain CEO Nikesh Parekh
By jeff chalmers
hether you are a veteran or novice of the real estate industry, there have been few more recognizable, not to mention Realtor-friendly, services over the last several years than ActiveRain. However, since its inception in 2006, ActiveRain has become more than just a simple blogging platform used by thousands of Realtors to market themselves and their communities. With Market Leader’s 2011 acquisition, ActiveRain will surely benefit from its vast financial, technological and industry resources, which could enable it to morph into a significant asset for today’s ever-increasing tech-savvy Realtors in an ever-changing marketplace. What kind of player? Well, first ask yourself why would Market Leader acquire a simple blogging platform like ActiveRain? What do they hope to gain and how
does ActiveRain strategically figure into Market Leader’s already sizeable web presence including RealEstate.com, HouseValues.com, JustListed.com, Domania.com and SharperAgent? With so many great questions and so few answers, I thought, “How can we get these answers?” Why not just ask their CEO? So, I did. About a month ago, Nikesh Parekh was gracious enough to sit down and chat with me about the company since his promotion to CEO of ActiveRain in 2011. A well-educated, seasoned executive who is all too familiar with the benefits of infusing technology, real estate and finance, Nikesh has been employed by some of this country’s most thought-provoking companies including Dell, Credit Suisse, Second Avenue Partners, HouseValues and, of course, MarketLeader.
Tell me about your ever-winding road to ActiveRain. Nikesh Parekh: After coming out of business school (Harvard), I worked for a VC, CVC Capital Partners, which had invested in HouseValues, Inc. at a time when it was essentially just seven guys. In 2002, I left the VC and joined HouseValues with Market Leader’s current CEO, Ian Morris. Together, we grew the company’s revenue from $10M in 2001 to $100M between the years 2002-2007. At this time, we launched new products like GetListed and entered the hot and highly profitable mortgage business. However, in 2007, with the market showing signs of wear and tear, I helped Ian shut down the mortgage division and stabilize the company. In 2008, I departed and joined Madrona Venture Group as an Entrepreneur in Residence, which was an amazing opportunity and allowed me to gain invaluable expertise and insight. Not long after, in 2008, I was given a great opportunity to actually use my degree in Biochemistry while working for Bio Architecture Lab, where we created an intelligent process for converting seaweed into renewable biofuel. Within only a few years, we grew the company from just one person to over forty and raised $35M in capital. However, because I made frequent trips between our corporate office in San Francisco and Chile, I didn’t get much time to spend with my young family – that is, until a year later when I was offered an Executive VP position with Market Leader. In 2010, Market Leader invested in ActiveRain and then within a short year following, acquired the company and offered me the CEO position where I sit today, while also co-managing RealEstate.com which Market Leader purchased in March 2012 from LendingTree. Long thought as one of the most natural and effective domains of our industry, how do you to plan to effectively utilize RealEstate.com? Nikesh Parekh: Purchased originally by LendingTree in the late 1990’s, the original intent of RealEstate.com was to buy real estate brokerages and partner with others to essentially create a one-stop real estate portal. With natural traffic of 1M unique visitors a month, the original intent of the domain hasn’t changed; it always serves as a real estate referral website that generates considerable new business leads and creates great customer traction. Speaking of “natural,” are there any plans to integrate ML’s suite of services into ActiveRain? Nikesh Parekh: Slowly and carefully. In time, ActiveRain
will have Market Leader’s suite of services in a very light way, and we’ve also discussed options with digital signature and transaction management providers. With the resources of Market Leader, how will ActiveRain change? Nikesh Parekh: Our focus will still be about servicing the wants and needs of real estate professionals, unlike Zillow and Trulia who cater more directly to consumers. This dedication has enabled ActiveRain to generate 2M+ consumer visits a month in part because of our 5M pages of content created by our Realtor network. Moreover, other industry professionals including attorneys and mortgage brokers find we have a fast and easy platform where they can simply collaborate; and now with Market Leader, we possess the effective capabilities of successful lead generation as well as tighter CRM integration with prospect managing and ActiveRain’s blogging. You hear more and more Realtors talking about IDX technology. Do you offer this service? Nikesh Parekh: Yes and, in fact, we are the largest providers of IDX websites with over 400 MLS companies, 100,000 agents and some of the biggest brokerages including Keller Williams and Century 21. I know Market Leader offers website development, but will you be joining Zillow in price? Nikesh Parekh: While they offer cheap websites, our key value includes the aggregating of over 300,000 real estate professionals into a unified blogging platform. To accurately prove our value, we surveyed all our members on services price point, ROI in comparison to income generated and costs incurred on websites and what regions of the country were stabilizing. Take a look at the InfoGraphics and you’ll see some fascinating and effective data. Because of a slowly recouping market, partly due to a serious lack of professional trust, have you ever considered creating an “Agent Review” or Verified Agent service through ActiveRain? Nikesh Parekh: We thought about it, but we find our current point system best demonstrates how engaged our real estate professionals are on the site and discussing their community. A proxy for agent experience. TheNicheReport.com
With 300,000+ agents blogging about their experiences and insight, do you offer coaching? Nikesh Parekh: Actually, ActiveRain doesn’t need to, as the largest community of real estate professionals connecting and bettering content discovery (5M pages), but Market Leader does offer the IMSD (Internet Marketing Specialist Designation) program run by industry leaders Ben Kinney and Geeky Girls. Are you planning any future integrations, and how about adding mobility capabilities? Nikesh Parekh: With 5M pages, our core focus was to create better stability on ActiveRain, and currently we’re redesigning and rebuilding the website integrating HTML5. While our websites are built to recognize mobile phones, mobile access to our CRM and other services will be something on the horizon. Now, for a touchy subject… ”grandfathering.” Can you provide me some insight on what happened?
one public blog. It became apparent that some agents, while busy running their practices, were surprised after not logging in for several months when they were asked to pay for the blog. We quickly corrected the matter and grandfathered members who called in with their free blogs. We certainly wanted to do the right thing for the original bloggers as they invested a lot of time and energy. It ultimately came down to a decision between running a viable business and doing what is right for the members.
Note: Only hours after my insightful meeting with Nikesh, MarketLeader’s marketing executives invited me to schedule an appointment to meet and chat with Ian Morris, CEO of Market Leader. I’d say that was a no-brainer, because before they could even finish the question I had already answered, “Yes!” Unfortunately, due to scheduling conflicts, we missed each other, but in his place I met with the intelligent and extremely capable Sarah Daniels, Market Leader’s Chief Marketing Officer.
Nikesh Parekh: ActiveRain With such a diverse was a free site launched in May background, what brought you to 2006 by Jonathan Washburn. It MarketLeader? grew dramatically and, as such, Sarah Daniels: I spent a raised capital from HouseValues considerable amount of time with in the Fall of 2007. By the Fall technology companies and was of 2008, we went through most of "Take a look at the InfoGraphics and you’ll see some always interested in bettering the the financing and needed to find a fascinating and effective data." experience. In fact, at one point in way to make additional money, so time, I was involved with children’s software and that gave we introduced a premium blog called RainMaker. As a way me a real appreciation for a “Keep It Simple” perspective of showing our appreciation to many of the original bloggers and approach. I found that if clients are taking too long to who joined prior to February 2009, they were grandfathered understand or learn our software, we’re doing something and were given free blogs. wrong. In this industry, if I can’t walk in the shoes of both However, in order to keep their free blog, a member had novice and seasoned Realtors, I’m not doing my job. to blog at least once every three months, and write at least 20
As much as I’d love to try out your CRM, what can you tell me about it? Sarah Daniels: Again, we take a “Keep It Simple” approach. A real estate professional’s job is to be connecting with buyers and sellers and to make the process simple for their clients. Their job is not to learn complicated software, so when we put out software we are trying to walk in our customer’s shoes, no matter whether they’re a younger, out of college digital native or an older Realtor who is getting acclimated to computers and software. To aid our members, we also created a directory of short videos explaining various modules of our software. We found that if our clients were spending more than five minutes learning how to use any part of our software, then we made a mistake. NOTE: At this time, Sarah walked me through different parts of ML’s CRM system, which I found very simple, and I was astounded at the sheer volume of their 4,000-template library. Who do you consider as your competitors? Sarah Daniels: Niche solutions. There are many different
small companies that provide individual products or services, but no one really has created a suite like ours. I think at some point in the future these small companies will disappear. I do think that Zillow and Trulia may be considered a competitor, but again, that’s in the future. Conclusion: As an active SM professional, I am blessed to have many friends who are among the cream of the crop in electronic networking; however, many of these professionals share my unyielding commitment to being what I call, “H.O.T.” (Honest, Open, and Transparent). With that said, I’ve recently noticed a discussion trend relating to ActiveRain, and it’s clearly one of pessimism regarding the website’s ability to market Realtors since its acquisition by MarketLeader. While ActiveRain markets that they have 300,000 registered members, how many of those members are still involved in publishing content or using the platform for current marketing? On the other hand, we must not discount their multi-faceted resources. So, in conclusion, with the recent strategic acquisitions made by Market Leader, will Realtors® finally have a powerful, web-based, one-stop solution to help them build their businesses and market new leads? While I think that they already have a plethora of solutions, competition in our industry is fierce and can change in a New York minute. So, who is the next big player in town? We’ll explore that and more in the next up-and-coming edition of The Niche Report.
Jeff Chalmers is a 20+ year veteran of the real estate industry, Inman Ambassador and Vice President of Mortgage Lending for Guaranteed Rate, Inc., the nation’s fastest growing mortgage company. A serial tech entrepreneur and industry finance and closing expert, Jeff has facilitated over 15,000 residential real estate loans worth about $5B. Additionally, he networks with many of the industry’s most effective and gifted social media leaders and web developers. He can be reached at 774-291-6527 or jeff.chalmers@ guaranteedrate.com. You can also visit him online at www. ClicknFinance.com, and follow him on Facebook or Twitter. All of Jeff’s comments are his own and are not those of Guaranteed Rate, Inc.
online lead generation
Social Media Content Strategy Cheat Sheet We are living in the social media age of instant gratification
verywhere we turn, whether it’s Facebook, Google or our best friend’s blog, answers to our most pressing questions have never been more readily available. The Internet has become our go-to resource for content, but wading through the muck can be a challenge. As a real estate or mortgage professional, being online is now a requirement and no longer a suggestion. However, simply showing up online is not enough. Your social media efforts require that you not only engage an already overstimulated society but increase your bottom line through fresh, relevant content. The problem with many marketers is the theory that you will simply build it and the fans will come. It’s just not realistic within the online world. It takes time, commitment and creativity to cultivate a community. Building a content strategy or even a content calendar is an excellent way to keep you focused on the needs of your subscribers, fans and followers rather than bouncing day to day without direction.
Social Media Content Strategy Multi Media 1. What niche or program can you spotlight? Whether it is you on screen or a screencast of your latest PowerPoint, connecting with your audience through video is imperative. A free program to create and share your screencast is Screenr. Just click “record now” and within seconds you are recording anything you can see on your screen. Then choose where you want to share your video instantly! Choose from Twitter, Facebook, LinkedIn and more! 2. Record an interview with a vendor such as an appraiser, inspector or plumber and talk about homebuyer concerns, challenges, tips and quick fixes. The number of 60-90 second snippets you could create is endless! 3. Create a video where you answer buyer and seller frequently asked questions. 4. Discuss current events and explain what they mean to TheNicheReport.com
online lead generation homebuyers and sellers. 5. Choose locations in your area and pass along fun facts and trivia. Pick a location to video yourself in front of and use it as a “Where’s Waldo” type of trivia question. It should be fun and easy to identify. This idea is an easy way to create a conversation with your Facebook fans and Twitter followers. 6. Record testimonials from your clients and post to your blog as well as your email marketing campaigns as a way to boost credibility.
Step-by-Step Guides: 1. Walk buyers through the 10 Mistakes Homebuyers Must Avoid, or sellers through the Steps to Selling Your Home in a Down Market. Turn your article into a pdf and offer as an opt-in incentive on your website. 2. Take frequently asked questions and offer an instructional guide.
How-to’s and Tip’s 1. Offer insight into the home-buying process and what a buyer can expect. What common issues does our industry deal with? What problems/challenges can we offer tips on? 2. What are the benefits of: • Homeownership • Investment Properties • 2nd Homes • Staging Your Home? 3. Weekly Tips or Tricks 4. Share slides from a recent presentation on slideshare and then within a blog post. 5. Share thoughts, takeaways and your most important clips from conferences, seminars, educational trainings, etc., through slideshows, screencasts and slideshare.
Blog & Social Media Content 1. Discuss highlights and share insights from recent industry events you have attended. 2. Promote your videos by syndicating to 25 video sites at once through TubeMogul and then track your results through their detailed analytics dashboard. 3. Create weekly webinars related to FAQ. 4. Revive past content by reposting videos, articles and 24
trainings to Facebook, Twitter and Social Bookmarking sites. If you are a WordPress user, a great way to revive old blog posts is through Tweet Old Post. 5. Ask via your social networks what the needs of your audience are and do this consistently. It’s an easy way to stay topical and on target with the information your fans and followers are hungry for. Then take this information and write a blog Q&A that responds to their questions or concerns. 6. Explain what a current event or topic means to your audience by either offering a unique perspective or offering the who, what, why and how behind the topic including the impact it will or could have on the industry. 7. Address common RE or mortgage myths and offer facts surrounding common misunderstood topics. 8. Promote company news including changes, events, updates, promotions, new hires, etc., to allow the community to feel connected to the brand. 9. Survey your community through Survey Monkey or a Twtpoll about real estate questions, top concerns, market myths and common misconceptions within the process and then use this information through an informational video or blog post. Share information in a way that solves a challenge, fulfills a need or offers support. 10. Share pictures as often as possible. If there’s an event or conference, I need pictures as often and as soon as they can be sent. We want our audience to become engaged in who we are and where we are at all times. 11. Ask hypothetical questions to identify needs. One last thought I will offer is the importance of tracking your efforts and consistently evaluating the effectiveness of your message through social monitoring tools such as SocialBro, Hootsuite, Twitter Counter and Crowd Booster. What would you add to this list?
Rebekah Radice is the Manager of Industry Engagement for Better Homes and Gardens Real Estate. A self-proclaimed social media junkie and avid blogger, Rebekah has trained thousands of industry professionals on how to build, maintain and grow their online and social media presence.
The Role of a Private Money Lender The front end of the transaction is just the tip of the iceberg
By martin goodman
rivate Money Lenders (PMLs) is a relatively new term that is used to refer to a loan professional specializing in private money loans. Over the years, these individuals have had a multitude of labels, including "private hard money lender," "hard money lender," and "hard money private lender." You will also hear PMLs called by names such as Agents, Brokers, Loan Officers, Loan Brokers, or Mortgage Bankers. Knowing the players and the roles they play is critical to getting the right loan, and getting it funded quickly. If you decide you need a private money loan, you want to be working with a loan professional that specializes in this arena. In traditional lending, the loan officer's primary role is on the front end of the transaction. Taking the application, discussing loan programs and their qualifying criteria, and gathering the income and asset documentation from the borrower makes up the majority of their responsibilities. The loan file is then passed on to processing, underwriting
and closing staff that see it through to settlement. Lenders or funding sources are provided to the loan professional by the company or bank the loan officer works for. For private money lenders, the front end of the transaction is just the tip of the iceberg. These highly skilled entrepreneurs orchestrate the entire transaction from start to finish, and in some cases are funding your loan with their own money. While they may resell your loan quickly to another investor to liquidate their funds or secure the funds for your loan through an outside pool of investors, their skills and relationships with funding sources is vital to providing you with the money you need. Your private money lender manages and often personally performs all of the following processes required to get your loan closed: 1) Creating your loan package, including the application, income, credit, and asset documents you provide. 2) Gathering and reviewing title information as required. 3) Ordering payoff and loan reinstatements as needed. 4) Advising you on the best available loan program they offer that will fill your need. TheNicheReport.com
5) Providing you with all applicable federal and state disclosures. 6) Ordering and reviewing an appraisal or other asset valuation on the property. 7) Coordinating title and escrow services. 8) Underwriting and approving your file. 9) Providing a source of money (investor/lender) to fund your loan. 10) Determining the loan servicer (where you make your monthly payment) of your loan. 11) Creating final loan documents and coordinating loan settlement or closing. Let's take a closer look at what's involved with each step. Creating your loan package - A well-documented and detailed loan package is key to finding a private investor willing to fund your loan. Expect to have the PML run a credit report, and ask you for tax returns for multiple years, financial statements, and bank and investment statements, along with a variety of other documents that provide proof of assets and liabilities. The PML will help you complete a loan application (frequently referred to as the 1003), as well as a document called a Statement of Information (SI). The SI assists the title company as they research the title of the property for liens and judgments. The documents required are unique to the type of loan and to each borrower's personal financial situation. What separates a great private
How we see it
money lender from a novice or a lender inexperienced in private money lending is that they intimately know which documents their investor will need to approve the deal. Gathering and reviewing title information A preliminary title report is an offer to insure your transaction by the title company and includes a summary of the existing liens, judgments, easements and other encumbrances on your property. It may be updated several times, including immediately before closing. Title companies extend an offer to insure your transaction subject to the information in this report. Title insurance is a mandatory requirement of any investor. Filling out the SI form along with the application will give the title company and your PML the information they need to get your loan processed quickly. Your PML reviews this report and will discuss with you any detrimental or unexpected items that may prevent your loan from funding. Ordering payoffs and reinstatements - Ordering payoffs and reinstatements for a loan is trickier than it sounds. A payoff is a document from a lien holder specifying the exact amount to pay off the lien entirely, whereas a reinstatement is a statement from the lien holder (typically a mortgage or trust deed) that gives an exact amount to bring a delinquent loan current. Depending on the type of lien, the payoff may be obtainable in a few days, or it make take several weeks. In a conventional transaction, this function is typically handled by escrow. But a good private money lender knows that last-minute problems often arise because of inaccuracies in these documents, and the PML will often have their office obtain these documents on your behalf to make sure they are accurate. Private money loans are very loan-to-value sensitive and an unexpectedly high payoff can derail the loan at the last moment. Advising you on the loan - Loans available to you will depend upon the PML, their specialty, and their investors available to fund the loan. Don't expect a formal list and brochure of the loan programs like you would see at a bank. Everything is negotiable, and the benefit of a PML is that the loan can be customized to meet the needs of the borrower and the investor. The key is to find the happy medium between the amount of profit required by the PML and the investor (realized through fees, interest rate, loan term, etc.) to get the deal done. Providing disclosures - Federal and state disclosures differ depending on the loan type. These disclosures provide you with key information about the loan you've applied for and are designed to inform and protect the borrower. A first mortgage loan on a residential property requires different
disclosures than a commercial loan against a warehouse. The PML provides the necessary forms within the required time frames and reviews them with you. Ordering and reviewing a property valuation - Property values will make or break a private money deal because the investor relies heavily on the collateral as security for the loan. Value can be determined many different ways, and the PML will know what method their investor(s) prefers. Many private investors prefer to visit the property themselves to determine value. The PML will almost always want an appraisal report performed by a licensed appraiser in addition to any other method preferred by the investor. A few investors will also use a Broker Price Opinion (BPO) to determine value or supplement other valuations. This report is provided by a licensed real estate broker, is substantially less detailed than an appraisal, and gives the investor a sense of what the property would list for in the current market environment. Automated Valuation Models (AVMs) are reports that rely upon public records and special modeling software to arrive at a value. Whatever the method or combination of methods required by an investor, your PML will order the reports, and coordinate access to the property. Coordinating title and escrow - At the same time a PML orders a title report for the purposes of title insurance, escrow services are also engaged. In some states the same company will provide both the escrow and title services. In others, a separate company or possibly an attorney will oversee the process. The escrow services company will obtain any payoffs needed on the subject property, handle the disbursement of funds, conduct the loan closing, and record all applicable deeds and documents with the county. The PML also coordinates the transfer of the loan funds from the investor to the escrow company handling your transaction. Underwriting and loan approval - In many cases the PML underwrites and approves your file based on the criteria requirements of the selected investor. Prudent review and documentation is required to justify a loan approval. The PML’s professional reputation and potential future business with investors will be impacted by the performance of your loan. Some investors may want to personally review the file or have their own designated underwriters review the loan package. Providing the loan funds - The PML establishes relationships with investors or pools of investors that provide the money you need. You are matched with an investor willing to provide funds based on your loan
package, and the PML arranges for those funds to arrive at the escrow company so settlement can be finalized. In some cases PMLs may use their own money to fund a loan and keep the loan for their own account, keep the loan in a mortgage pool they may operate, or sell the loan to another investor. Determining the loan servicer - The loan servicer is the entity or individual that collects your monthly payment, provides periodic loan statements and year-end tax documents, and manages your escrow account for taxes and insurance if that was part of your loan agreement. The PML will typically also service your loan. Servicing loans is how most PMLs earn their living, and cover their office overhead. Servicing a loan also gives the PML the ability to communicate more quickly with their investor about the status of a loan. If the PML is not the servicer, the PML will transfer the loan documents to the designated servicer and make sure that you know where your first payment is made. Final documents and closing - All of the required final deeds/mortgages and loan documents must be prepared by the PML, an attorney, or a designated document preparation company. The actual closing and signing of loan documents process varies by state. Sometimes the PML will have a notary on staff and will supervise the signing of the loan documents, and in other states, an attorney, escrow or title company will coordinate the signing. The signing location and supervising entity will also vary based on the type of transaction. In many cases, the PML will accompany you to make sure everything is in order and there are no questions about the final documents. Martin Goodman has been in the private money and hard money lending industry for the past 20 years. http://www. PrivateMoneyLendingGuide.com http://www.LoanMLS.com.
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seven Simple Steps to Build and Promote Your Facebook Fan Page By rebekah radice
ith nearly 900 million users, Facebook is now used by 1 in every 10 people on earth and of those people; the majority are now spending more time on Facebook than watching TV. With statistics like that, is it any wonder that more than 3 million businesses have moved their marketing dollars to Facebook. If you haven’t created a Facebook Page for your business yet, chances are your competitors have. However, the thought of creating a Facebook page can leave you paralyzed with fear. Where do you start, what do you say and how do you promote your page and find friends or fans?
Things You Need to Know Before Getting Started Your Facebook business page will be attached to your personal page. In other words, you cannot create a page until you have set up a personal Facebook account. 28
Once you’ve done that you are able to create an unlimited number of Facebook pages. Your Facebook page is also public which means fans can easily find your business and so can Google. Your page and posts are indexed giving it the beloved “Google Juice” we’re all looking for.
Facebook in 7 Easy Steps Let’s begin with a brief summary of what Facebook is all about. Facebook is designed to get you and your brand in front of as many eyeballs as possible. The problem with most businesses is that they jump in without a plan. As Realtors®, it may be exciting to hop on the Facebook bandwagon but without clearly defined goals and a system to track your progress; your enthusiasm may quickly fizzle. Your goal should be to create an engaging page that gives your fans a reason to seek you out on a daily basis. Create a Page Your first step is to generate your new page. To begin the design of your new Facebook Page, you will need to add
a business page to your current profile. I’m not going to dive into the step by step instructions, but you can find them under Facebook Page guidelines.
Create a Custom Welcome Page Facebook gives you the ability to create a custom page or mini website within your Facebook Page. You are then able to direct all new fans to this page where you can promote your business, give away a freebie, host a contest or request that they sign up for your free newsletter. This is one area you need to get your creative juices flowing and determine what “item of value” will draw fans in and get them to click the LIKE button. Video is always a BIG draw. Check out the great job my friends Frank and Brian at Think Big Work Small have done with their Facebook Welcome Tab. Important Side Note: Since Facebook discontinued their support of fbml (Facebook’s answer to html), building an iframe site can be a little tricky. But don’t worry; there are simple ways to get your page up and running in a jiffy. Design a FREE Facebook Landing Page • If you have admin rights to your Wordpress blog,
you can add the Facebook Tab Manager plugin which allows you to edit and customize your page within your Wordpress blog. • Wix Facebook Page • Pagemodo • Wildfire Facebook IFrame App
Add Content Before You Promote Your Page This idea is based on the theory that it is better to offer an enormous amount of value and build loyalty within your fans long before you ask for their business. Make sure you have several posts up before making your page public. Not sure where to find content? Here are a few ideas to get you started: • Blogs/Articles You Have Written (you probably have hundreds to rotate through) • News Resources (local and national newspapers with tips, tools and how-to’s for buyers and sellers) • Announce a Sales Event or Promotion • Give Away a FREE E-Book or other item of value • Offer how-to advice that save buyers and sellers time and money
• Talk about local events • Spotlight a local vendor and offer a coupon that they must opt in for on your website • Create Top 10 Lists and break them out into daily posts • Pick an obvious local location to film a video from and invite fans to find you. The first person to comment with your correct location wins a prize.
Add Consistent Content Just like your blog, your Facebook fan page will quickly become obsolete if you’re not constantly offering fresh content. I suggest posting at least once per day and at the high traffic times when your information is most likely to come up on your fans wall. According to a recent study by Buddy Media, there are not only certain days that are optimal but times of the day as well. Interestingly enough, their findings concluded that 60% of businesses were posting during normal business hours but those that posted outside of those hours had a 20% higher engagement rate.
Add the LIKE Button and Box to Your Website and Blog Allow blog followers and website visitors to find your page by adding the Like button or box to your site. Begin by creating your Like Box by adding your Facebook page URL to the plugin. Example: http://www.facebook.com/FreeHelpRealEstate
Find Fans A big misconception is that once you’ve set up your Facebook business page you should immediately start inviting all of your family and friends. This is a no-no and I’ll tell you why. First of all, why invite a large group of people that have no true interest in your page? Generating business is what your page is all about and involving a static group of people brings no intrinsic value. Secondly, how many invites do you have waiting for you right now that you have yet to read? We’ve all become accustomed to the invite “noise,” but spamming your friends is intrusive and just poor manners.
How we see it
Here are a few creative ways to find new fans: • Visit Facebook pages where homebuyers hang out. Spend time engaging with that community and bring awareness to your page. • Add your Facebook page to all of your direct marketing along with an incentive to LIKE your page. • Add to your Email Signature • Create Facebook Ads – Ads allow you to go hyper local giving you the most targeted bang for your marketing buck. For a very small budget, you can use ads to get your message in front of the exact person you want fanning your page. Start creating your Facebook ad and have it up and running in no time. • Host an Event online or offline and drive fans back to your Facebook fan page. Once you’ve hosted the event, make sure there are pictures that can be uploaded and tagged. Encourage your fans to tag themselves in the photos. • Invite fans to join through an SMS Text Message. Your fans will simply send a text message to 32665 (FBOOK) with the words “fan yourusername” in the message. Your page will need a unique username before you can use this feature. You must have 25 fans before you are able to choose a username.
Send a Thank You Message A "Thank You" message might be the most unappreciated, but powerful business tool ever created. Just as we send a quick handwritten note to thank someone for their kindness, doing the same on Facebook extends that level of gratitude. Your message is short and sweet with two purposes. You are thanking them for becoming a fan of your page and pointing out a specific item of value or important information you want them to be aware of.
Rebekah Radice is the Manager of Industry Engagement for Better Homes and Gardens Real Estate. A self-proclaimed social media junkie and avid blogger, Rebekah has trained thousands of industry professionals on how to build, maintain and grow their online and social media presence.
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BRINGING UP THE REAR - continued from page 38
explains a lot. You see, I've been sitting at my desk reading and writing about the financial and foreclosure crises for the last three years, and while I do understand why everyone didn't see what was going on when our economic meltdown began, today anyone who doesn't see this country as a giant crime scene, just doesn't want to look. Our current financial crisis has more than doubled the unemployment rate in this country. It has destroyed roughly $11 trillion in consumer wealth so far, pretty much decimating the middle class, throwing more people into poverty than ever before, and increasing the number of Americans on food stamps from 11 million in 2005 to closing in on 50 million today. And yet, not only have none of the Wall Street executives been criminally prosecuted or gone to jail, but I question whether any have even gotten a stern talking to. Best I can tell, they all got bonuses and a Federal Reserve credit card with no limit, and close to no interest rate. Quite a few people don't even blame the bankers for the crisis... in their eyes, believe it or not, the bankers were somehow victims. The poor bankers, sniff, sniff. I miss Lehman Bros. and Bear Stearns, don't you? Perfectly good investment banks... and now theyâ€™re gone. I'm overcome with... oh, I don't know... what's the word I'm looking for... oh yeah, I've got it... well, ambivalence fits. Or, I suppose I could use... JOY! It's weird too, because after the Savings & Loan crisis of the early 1990s, there were 800+ financial executives that went to jail. This crisis is global. If the S&L crisis was a backyard swimming pool, then the current crisis is the Pacific Ocean... but it's apparently no one's fault? The triple A-rated bonds weren't even close to triple A, and investors including Fannie Mae are suing all over the place, but I suppose the whole thing was just an accident? Ooopsie! Goldman Sachs settled their Abacus suit for something like $550 million. Of course, without admitting any guilt for doing anything wrong, but is it even possible that anyone would ever pay out more than half a billion dollars after doing nothing wrong? Basically, the fraudclosure crisis has created millions of crime scenes in this country. Literally, millions of crime scenes from coast to coast. Jeff Thigpen, who is the Register of Deeds in Guilford County, North Carolina, has recently gone through the recorded documents in his office and so 36
far found roughly 5,000 filed documents that are fraudulent or forgeries. His counterpart in Massachusetts, John O'Brian, has had a similar outcome from an audit of his office. If you or I did that a couple of times, we'd be in jail. If we did it thousands of times, we'd never get out. Bankers, however, get to call the practice "robosigning," which sounds nothing like fraud or forgery. I guarantee you that if you went to prison for that, and someone asked you why you were there, there's no way you're going to answer: â€œRobo-signing." No way... you'd get your butt kicked for sure. You're going to say: "Me? Oh, I'm here on fraud and forgery charges." Now, I have to believe that Eric Holder is reading the lawsuits that have been filed by various attorneys general, and if you haven't yet read one, then you should. I realize that they're just allegations at this point, but they read like something out of a John Grisham novel. Is Holder just thinking that maybe the whole thing will just blow over and go away? And we're only at the beginning of this crisis... yes, the beginning. Sure as shootin', a decade from now we're still going to be talking about the crimes bankers committed that caused our country's downfall. Just consider the residential real estate market five years from now. For prices to rise, demand would have to rise... right? You need demand to make prices rise. So, forget about the fact that there's no securitization market, so the only lender is the federal government... from where would the demand come? Roughly half the mortgages today are underwater, so we can assume those people aren't buyers â€“ because if you can't sell, you can't buy. Then there are quite a few who won't be able to come up with 20 percent down or satisfy the 700+ credit score requirement. College grads coming out of school with tens of thousands in student loans will delay the formation of families and certainly reduce the number of first-time buyers. Aging baby boomers will just naturally move less. And then there are those who will find it hard to buy as prices are still falling. Now, I suppose there will be some investors buying, and some population growth and immigrant buyers, but no matter how you slice it, the size of the future pool of buyers is going to be a whole heck of a lot smaller than in the past, and that means... prices in the aggregate cannot rise. Unless, I suppose, we're expecting aliens to land here carrying suitcases filled with dollars and in search of residential real estate. Or, maybe we'll start advertising in other countries that if you're a doctor or lawyer and you
BRINGING UP THE REAR move here, we'll send your kids to college for free... that might help, although I don't think it'll solve the problem in total. So, if you haven't realized it yet, this crisis is going to be dinner conversation for a long, long time. The biggest difference between this one and the Great Depression is that during the 1930s people robbed banks – and this time around, banks rob people. Two additional differences come to mind... this one isn't being filmed in black & white, and instead of soup lines, we've got food stamps. It's also interesting that in every country that has had a meltdown thus far, they fired their bank CEOs, replacing them with... oh, I don't know... more honest people, one would hope. But, here in the good ole' USA, we haven't changed a thing. So, what's up with Attorney General Holder? Is he simply lifeless? Is he afraid to file charges against anyone worth more than ten million? Is he corrupt? Is his best friend a banking industry lobbyist? Come on... what's the deal here? We're all at least starting to see what's happened, aren't we? I mean, I know we can't expect our regulatory agencies to do anything...
after all, the Office of the Comptroller of the Currency, which regulates the national banks, refers to those it regulates as "clients." The Office of Thrift Supervision hasn't referred a single case of fraud to the Justice Department since... well, since forever. And the SEC... well, fuggetaboutit. Bernie Madoff stole $60 billion and then turned himself in, remember? We don't even have regulators. So, since it all comes down to our intrepid Attorney General, Eric Holder, we're doing nothing about the crimes of the century. The GOP refers to him as Mr. Fast and Furious. Me? I just call him this month's giant rear end.
Martin Andelman is a staff writer for The Niche Report. He also writes an almost daily column on ML-Implode called Mandelman Matters. He also publishes a Monthly Museletter and you can follow “Mandelman” on Twitter. Send your responses to Martin@TheNicheReport.com.
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BRINGING UP THE REAR
Bringing Up the rear U.S. Attorney General Eric Holder BY MARTIN ANDELMAN
epublicans have spent the last three years attacking U.S Attorney General Eric Holder about issues related to national security and civil rights. Lately, it's a screwed-up guntrafficking investigation known as "Operation Fast and Furious." Many in the GOP are now saying he should resign. Recently, something like 75 members of Congress co-sponsored a House resolution that said there was “no confidence” in Holder as AG, and according to the New York Times, no member of the Obama Administration has drawn more partisan criticism than Holder. The Fast and Furious controversy involves agents for the Bureau of Alcohol, Tobacco, Firearms and Explosives, who were investigating an arms-trafficking network working for a Mexican drug cartel. Apparently, these agents didn't move quickly to seize the guns of some low-level suspects. They say they were trying to build a larger case. They misplaced a few hundred weapons and next thing you know, two guns linked to a suspect in the 38
case were found near a Border Patrol agent that had been killed. When Holder was asked how this happened, he basically replied by saying, "Huh?" Now, I don't know whether Holder should resign over "Operation Fast and Furious," but if he did it, it would be irony at its best: if there are two words that don't come to mind when I think of Eric Holder they're "fast" and "furious." Insiders say that Holder has a "low-key demeanor." Apparently he allows lawmakers to talk over him during hearings. Other colleagues say he can be similarly mild in internal administration debates, which causes them to wonder if he's capable of being tough enough for take-no-prisoners bureaucratic or political fights. And Dick Thornburgh, who was AG under the first President George Bush, has said he's concerned that Holder gets steamrolled by adversaries. The New York Times recently quoted Thornburgh as saying: “I have worried from time to time about Eric’s being seemingly rolled by the administration and his political opponents." Well, I don't know about you, but for me... that - continued on page 36
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