BILL CHERRY'S GREATEST DALLAS PARK CITIES REAL ESTATE BLOG: July 2008

Let me admit right up front that I am not a Dot Com kind of guy, especially when it comes to financial things.

I want to see a building with the bank's name on it.  I want to walk into a lobby where there are people transacting business.  Most of all, I want to sit at a bank officer's desk and look him in the eye.  

So the idea of going to some web site, filling out an abbreviated loan application, then punching SEND without so much as knowing where it's going, much less to whom, has serious flaws for me.  

Recently, my clients -- a settled married couple about 60 -- wanted to buy a home.  They had been married for nearly fifteen years, were in jobs that they had been in for a long time, and in spite of some minor blips, had saved sufficient funds to qualify for a loan.   

I confidently sent them to two fellows I know and really like, one of them with a big bricks and mortar bank; the other with a well-known mortgage company.  For whatever the reason, they offered us no encouragement.  

On a whim, my client went to the web site of www.Texaslending.com, filled out their on-line application, and by the grace of God was assigned to Senior Mortgage Consultant, Stephen Brady. 

He looked at the history, pulled credit, and within a few hours emailed back that Texas Lending could make them a loan.   Then Stephen called me, and he assured me that all we had to do was find them a home, and he'd take care of the financing. 

<<===STEPHEN BRADY, SENIOR MORTGAGE CONSULTANT

Today, he lived up to his promise.  My clients closed on their home.  

So I told Stephen that I wanted to write a piece for the Active Rain readers about him and www.Texaslending.com.  And I wanted to give the readers his direct phone number.  This guy is a pro.

But before I do that, here's a bit of a bio for Stephen.  

He has a degree from University of Texas in communications, and he has been in the mortgage loan industry for five years, and has closed more than 325 transactions.  He and his wife have been married for seven years and they have a three year old daughter, Kaplan.   And Stephen's kind of a sports nut.  He plays golf and tennis and is a certified scuba diver.  But on top of all of that, he's also been One of Us.  He worked in sales for a home builder before he joined Texaslending.com.  

So here's how you get in touch with Stephen:  

Office: 214.550.5195

Mobile: 214.394.5264
sbrady@texaslending.com

Update Aug. 20: Yesterday Stephen and I met in person for the first time.  We had lunch at BJ's in Addison, an upscale suburb of Dallas, and near his office.  My evaluation is that this guy's got his feet firmly on the ground and excels at his business.

BILL CHERRY, REALTORS

DALLAS

1 800 314-7110

Our 43rd Year Brokering Texas

Oft times I wonder what was going on in someone's mind that preceded and caused their decision and actions.

In Dallas, we have a handful of real estate companies that primarily list and sell estates, and most of those estates are in an area called the Park Cities. 

Frequently, one of these companies will list an outdated home that is on a valuable lot.  Rather than give prospective buyers a chance to decide for themselves, the MLS listing will not show a photo of the home, but will give the dimensions of the rooms, etc., then announce that the "value is in the lot," and further refuse to allow potential buyers to even see the inside of the home.

I notice that many of these fail to find a buyer.  The listings are renewed, then renewed again and again.  Nothing changes.  In my view it's a true example of the Pollyanna; Pollyanna of the agency and Pollyanna of the owner.

Recently I came across a listing on such a piece that had expired several months back and had not been renewed.  I had a client who I thought would buy it, so I dropped a note to the owners asking for the listing.

The following day the phone rang.  It was the woman who, with her husband, owned the property.  Very obtusely, she told me to take them off of my mailing list.  "Sure, I said.  Be glad to. What's your name and address?"

"Darned," she had to have thought.  It hadn't ocurred to her that she was going to have to tell me who she was.  She had gone to great efforts to make sure her phone number was blocked from Caller ID.  But without telling me who she was and what her address was, she realized there would be no way for me to remove her from my mailing list.  So she told me, then slammed the phone down.

There isn't a list.  There was only going to be one letter pertinent to her particular property, and she had already gotten it. 

So I won't be the one who sells it.  I won't even try, even if she relists it.  And we already know the company it had previously been listed with couldn't sell it. 

What's the property look like?  I'd love for you to see it, but like I said, they've decided it's a tear down so there is no picture. 

Where does my caller live these days?  You guessed it.  She and her husband live in the tear down.

There are a number of common sense provisions that retail landlords should have in their leases.  And interestingly they protect not only the landlord, but the sanctity of the center. 

One, and a very important one, is a provision which disallows going-out-of-business and close-out sales.  Without going into great detail, it should be obvious how these can infect shoppers' feelings about the mall, in general.

That's terribly important to the remaining tenants.

Frequently, I write about Dallas' most famous retail mall, NorthPark.  The genius of Raymond Nasher and his wife Patsy, NorthPark opened in 1964.  The look and feel were so perfect then that there has never been any serious reason to alter or modernize any of its physical design.

But I notice that in the past several months, NorthPark has had several stores announce that they were closing up shop, and then liquidating their merchandise on site.  The most recent was The Sharper Image.

And then there is an accompanying "good judgment."   Every lease should provide for an upfront deposit in form and amount that would allow the landlord to totally repair and reface those parts of the building's exterior that carried the tenant's signage.

Once the tenant is gone, a good memory should be the only factor that reminds the public what was once there.  One store of about 25,000 square feet that's near Patty and me has had two failed businesses in it during the past five years.  The most recent was Fred's.  Before it was a national drug chain.  Both signs removed, you can easily see the imprint of both on the facade of the space.

How long will the strip center management allow that look to announce those failures?

The International Council of Shopping Centers (ICSC) has many resources.  One of them addresses leases.  Landlords and leasing-management companies should be as rabid about membership and participation as vendors and mechants are.

BILL CHERRY, REALTORS

DALLAS

OUR 43RD YEAR SERVING TEXAS

1 800-314-7110

If one were to go back in time and review the sequence of events that caused the Federal Deposit Insurance Corporation and the Federal Savings & Loan Insurance Corporation to be formed, it might be eye-opening.

But you'd have to also consider the various bank and savings and loan association problems that caused it to evolve to what it is today.

Nevertheless, from almost the beginning, for a financial institution to be a member of the appropriate insurer, the institution had to be a member and pay dues based on its risk to the insurer.

If you owned a member bank that made lousy loans, you paid more in premium percentage than did the conservative bank of the same size.

So in essence what this meant was to be able to borrow Fed funds and insure the accounts of clients, each bank had to participate in the losses of the whole.

Perhaps the lack of membership by mortgage brokers in the federally-backed loans they broker is the fly in the ointment.  Perhaps mortgage brokers should be required to be members of an insurance corporation that guarantee mortgage lending losses.

And perhaps that premium would be calculated and assessed on the default ratio of the mortgage broker.

After all, it's not very smart to allow mortgage brokers to generate income for themselves all the while knowing that they will not be held financially responsible for the loans they made that turn out to be burdens to the rest of the nation.

BILL CHERRY, REALTORS

DALLAS

1-800-314-7110

Copyright 2008 - William S. Cherry

All Rights Reserved

WASHINGTON (Associated Press) - The Federal Reserve has adopted a new plan intended to curb shady lending practices that sent home foreclosure rates to record highs.

The plan will:

• prevent loans made without documentation of borrower's income;
• require lenders to escrow money to pay taxes and insurance for risky borrowers;
• limit - and, in some cases, ban - prepayment penalties;
• prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value;
• require mortgage advertising to contain information about rates, monthly payments and other features of the loan;
• require that lenders credit a mortgage payment to a homeowner's account on the day it is received; and
• forbid brokers and others from "coercing or encouraging" an appraiser to misrepresent the value of a home.

Most of the rules take effect Oct. 1. Escrow requirements will take effect April 1, 2010.

I began my business career as a real estate loan officer.  It was 1962.  This is essentially how we were required to underwrite loans back then.  We also required the borrowers to have an equity position of their own -- not 0%, not 3%, not 5%, not 10%, but at least 20%!

I can't believe these people have finally admitted we knew what we were doing --- that our way was better than theirs.  Will real equity be next?

WHAT NOW?

Texas real property taxpayers appear to have little understanding of the logic behind our Central Appraisal District system.  And I've concluded that at least some of the Chief Appraisers of CADs don't understand them either.

I wrote a voluminous piece on this some time back.  Here it is for review.

That piece has brought any number of telephone calls and emails from taxpayers who went before the Appraisal Review Board at their Central Appraisal District to protest the new appraisal of their home.  Each lost as a result of the smoke and mirrors presentation of the CAD's appraiser that he/she presented to the ARB.

The taxpayer didn't know how to argue against it, and the ARB members, interestingly, rabidly showed they had no understanding of how the Texas Central Appraisal system works.

In each case, the appraisal district's appraiser used as his/her evidence for raising the value of the protester's property, a handful of current sales in the neighborhood.  Current sales are only evidence if every other like property's value was likewise raised equally.  

More often than not, the district will try to use current sales to show why the protesting taxpayer's argument is invalid.  Most of the time, this "evidence" isn't applicable because the neighbors' appraisals were not also raised.  This is the smoke and mirror's presentation I mentioned.

NOTE THIS:  The appraisal district has only one function, and it has two parts.  Part one is to, through research, determine the fair value of every piece of property in the county, and then to assign them.  Part two is to make sure that the value assigned to each taxpayer's property follows the logic of the values assigned to the property of his neighbors.

EXAMPLE: So if everyone on your block lives in a similar home, and those homes are all on the tax rolls at $100,000, then one of your neighbors sells his for $135,000, the Central Appraisal District cannot raise the value of yours to $135,000 without raising the value of the homes of everyone of your neighbors'.

And further, and interestingly, it is illegal for the CAD to immediately raise the value of the home that just sold for $135,000 to $135,000.  That violation is known as "chasing the sale."  Our state doesn't allow that.

So what should you do if you protest and the appraiser brings out current sales as his evidence?  You point out that it is immaterial to the issue.  Your protest is that your house has been assigned a value that cannot be justified when compared to those assigned your neighbors.  Then you give your reasons.

If the ARB rules against you, you have a great course of appeal.  The state Comptroller's office has trained and appointed several hundred Arbitrators.  You can find the list and their qualifications on the Comptroller's web site.  You do not need an attorney; in fact the arbitration process was specifically established so that most property owners would have a place to appeal a decision without the need for attorney and court costs.

You can file for Arbitration.  The fee cannot exceed $500.  The arbitrator will hear your case and rule.  The arbitrator's ruling is final and cannot be challenged.  If you, the taxpayer, win, the CAD must pay the entire fee.

I am one of those originally appointed arbitrators. Prior to that, I served two terms on an ARB.  That's why I have a pretty good knowledge of the ins and outs of appraisal district mechanics.  But my purpose here is not to solicit arbitrations.  My purpose is to give readers a dependable piece on how the CAD system works.

If you are going before one of the ARBs to protest your appraisal, print this out and hand it to the chairman before you begin your presentation.  If there is disagreement to methodology, stay to complete your hearing, but be prepared to file for arbitration.

Copyright 2008 - William S. Cherry

All rights reserved.

WILLIAM S. CHERRY, REALTORS

DALLAS

1 800-314-7110

I blame it on Donald Trump and his personal how-to books.  Actually not him, but the public's interpretation of his how-to books. 

And I do because it seemed to have started about six months after The Art of the Deal hit the bookstores and was a run-away success.

While most Gentiles probably intuitively know it, most don't know that proper business dealings follow a Jewish mitzvah which paraphrased means, "Make certain there is something on the table for everyone."

The idea is that even if you have the upper hand in a negotiation, it is your moral obligation to make sure that the terms are fair and fair to all concerned.  When you don't, to Jews it is similar to having broken one of the Ten Commandments. 

I think I must have been about fifty when The Art of the Deal made amateur negotiators into pseudo-Donald Trumps.  I remember how appalled I was that one of my clients of many years started unfairly beating up --- making impossible demands --- on a poor fellow who was trying to sell his property to him for a fair price.

I stopped the meeting, and asked my client if I could speak with him in the hall.  When we went out of earshot of the others, I all but yelled at him, "What in God's name are you doing?"  He told me that he was doing what he had learned Donald Trump did.

Well, I told him, "That's not real, and even if it is, you're too honorable of a man to take those ideas into your bag of tricks."  Then I said, "There is a Jewish mitzvah that says 'Make certain there is something on the table for everyone.'  We're going to continue doing our business together that way, or you need a new Realtor."  He knew I meant it, and we'd had too many successful dealings together for him to let me go on my way.

Then I learned he wasn't an anomaly.  Lots of people began thinking they were Donald Trump.  Even those guys on TV who push the books that tell you how to buy million dollar mansions with a buck and no risk to your credit.

Saturday, I presented a clean and full-price contract to a listing agent.  In the old days, the seller would have signed his name and been thrilled.  Not this time.  The contract was sent back to me countered with about twelve ridiculous Donald Trump Demands.  And, in reality, they didn't mean a darned thing to the seller except he didn't want my client to have them.  He wanted everything on the table for himself.

So what is my point?  It is that real estate agents and attorneys have a professional obligation to all parties.  They must do their very best to restrain their clients from being Donald Trump The Art of the Deal interpreters.

BILL CHERRY, REALTORS

DALLAS

1-800 314-7110

OUR 43RD YEAR SELLING TEXAS

All of us at one time or another are blind sided.  Someone accuses us of something; they ask us to do something; we find ourselves in a trap.  We'd rather not answer the question, but we do.  For some reason, we believe "time is of the essence" is a required obeyance.

And we've been taught, I guess, or perhaps its intuitive, that we must provide a response.  It's expected.  It's good manners.  And so we say something stupid, and we bury ourselves forever.  We may even answer the question when 1) we don't have to and/or 2) it's none of the other party's business.

I frequently read the Question and Answers that are asked and provided within the Active Rain system.  And often times the problem being laid out before us by the questioner is in essence, "How do I get out of this trap?" 

And many of those times there should be more to the sentence.  In fact it should read, "How do I get out of the this trap I've gotten myself in."

There are several answer statements everyone should learn:

"I don't know, I'll take it under advisement."

"Let me think about it and I'll get back to you with an answer."

"Before I answer, I want to get input from  == my husband, my wife, my lawyer, my boss, my business partner, my daddy, my mother."

And then there's how you should construct the actual answer.  Succinctly.  With only a "yes" or a "no" when possible.  Don't emblish your answer.  Just answer the question, or don't answer it at all if you don't want to.

Finally, don't write letters and memos if there's any chance your disagreement may end up in court.  Copies of what you write, email, fax, etc. can be asked for in the discovery process, and you must provide them.  Now the other side has empirical data that can hurt you.

Phil Noah was a famous live insurance executive.  He told everyone who would listen to never write a disagreement.  Instead, call and disagree.  It was the perfect advice.

Lenders are foreclosing homes right and left, and the ownership of many of those pass to FHA or one of the other governmental secondary market lenders for them to dispose of. 

That's because the loans were sold to them by the originating lender or mortgage broker. 

As a result, an opportunist industry has developed.  You see, rather than dole out the listings of these properties to licensed real estate brokers and agents on a lottery system, through some magic, only certain agents have gotten the majority of the listings.

This is yet another case where the National Association of Realtors didn't bother to step in and assist the governmental lenders and underwriters in developing an honorable, fair system.

There are any numbers of those specially treated agents in Dallas; the ones whose primary business is listing foreclosed homes.

I am familiar with three companies that have "teams" (a euphemism for a business within a business) composed of about six people, each whose major part of the real estate business is listing and managing foreclosed properties for the government. 

One has so many of these listings that they don't bother to answer or return the phone calls of buyers.  The signs in the front yards with the agent's rider and number at the bottom are of no value to obtaining and handling buyer inquiries. 

The listing agent does not answer or return calls.

The agent expects the buyer to make inquiries and issue contracts on his listings through one of the other agents in the city.  The problem is that the client has no way to know that's the rules he's expected to play by.

Just think, when some 14,000 agents in the Dallas and Ft. Worth area and where many are scratching to make a living, our government is consciously making a select few rich. 

And there's no way to lose one of those listings because it will eventually sell at some price.

And if that isn't bad enough, it is obvious that the government has no audit procedure in place to see that these listings and sales are handled on the up and up.  Many aren't.   

I was involved as a co-op broker in one such listing.  My client's contract was not accepted even though my client offered full price and immediate closing.

Why?  It was obvious to me that before the listing hit the MLS, the listing agent had already cut a side deal as to whose contract would be accepted.

Real estate brokerage has had a propensity for dishonest dealings since the beginning of time.  It's most certainly been going on since I entered the business forty-three years ago.

(Remind me to tell you about the time, representing a buyer, as trustee I bought a $3 million building for $711,000. It was because of the total incompetence of the government's selection of a real estate broker to represernt them in that sale.)

And as it has so many times in the past, the government is once again fanning the flames of deceit.  

BILL CHERRY, REALTORS DALLAS

1 800 314-7110

www.billcherryrealtors.com