Realtor Coaching & Training: real estate broker
Featured HREU Student of the week:
Deirdre Vanko is a Realtor in Middleton, a suburb of Madison, WI. She has been an agent for 5 years. She specializes in home search, home selling, distressed properties, helping people avoid foreclosure, working with banks and asset managers, and REO’s. She is married to her husband, Brian Vanko of over 8 years and has 2 daughters. The older daughter will be attending the UW Madison, younger daughter not school aged. She has been in sales and customer service for 20 years.
Deirdre has been in Madison area for over 13 years. Previously she worked in the finance field in the automotive industry. She lived in Brown Deer, suburb of Milwaukee, WI. Her interests are bowling, and golfing, being outdoors. She likes all music types. Deirdre also enjoys hanging out with Rocky her English Bulldog.
Hometown:
Brown Deer, WI Lowell too
Country:
United States
Occupation:
Real Estate Broker
Companies:
Real Estate Solutions, LLC
Schools:
Brown Deer, WCTC
Popularity: 1% [?]
The HREU featured real estate blog of the week is The Phoenix Real Estate Guy. The blog is owned by Jay and Francy Thompson. We asked Jay’s OK to repost this and he graciously agreed. Read this article and let us know what you think….
The recent “Blogstorm O’ Controversy” surrounding the complaint filed by an Indianapolis real estate broker to MIBOR (Metropolitan Indianapolis Board of Realtors), and the subsequent “clarification” by the NAR (National Association of Realtors) that an agent can not post IDX/MLS listings that can be indexed by search engines has unleashed a flurry of reactions across the blogiverse, in the hallways at the NAR Midyear Conference, and beyond.
I won’t rehash the debate. It’s the reason I was invited to Washington D.C. to address the MLS Committee. You can read the initial post and its 372 comments on Agent Genius if you want all the gory details.
What amazes me the most about this mess are the things I keep hearing from (some) real estate brokers and others “in the business”:
“If I acquire the listing it should be my decision where, when and how it is displayed, and keep some details accessible only through me.”
“If it goes on Google, I want it to be under my company’s name and not that of my competitor.”
“Why should some techy agent outrank me in Google and get my leads from my listing?”
“We’ve let too much information get into consumers hands. We should be the keepers of listing information.”
“My listing shows up with their name on it, and leads I would otherwise be able to get are directed to my competitors site.”
“It’s my listing, everything should point back to my site”.
I could go on and on. To be blunt, talk like this sickens me.
Here’s what I just can’t wrap my mind around.
When I take a listing, the goal is unified and simple – sell the home. Isn’t… that… the… point???
I don’t take a listing to generate leads. I don’t take a listing in the hope that I will “double side” the transaction (a practice known as dual agency – where the agent represents both the buyer and seller in the same transaction). In fact, I abhor dual agency. And I don’t see anything wrong with providing information.
So why, WHY would any real estate broker have a problem with their listing being splayed all across the Internet, and beyond? (assuming of course, all other rules and regulations with regard to advertising are followed. You Arizona types should pay particular attention to Commissioner’s Rules A.A.C. R4-28-502 ).
Well, the only thing that makes sense is some brokers DO want to generate leads from a listing and/or they DO want to double-side the transaction. Or perhaps they want to keep information out of the consumers hands so they can “add value” via data access.
Not this broker. I want to sell my listings. Period.
Standard of Practice 12-4 in the Realtors Code of Ethics states:
Realtors® shall not offer for sale/lease or advertise property without authority.
In other words, no broker can advertise a Thompson’s Realty listing without the authorization of the designated broker (that would be me).
If you’re reading this, consider yourself duly authorized.
You want to put one of our listings on your web site? Run an ad in the Sunday paper? Place a 2 page fully color glossy ad in Homes & Land Magazine? You want to hike up Camelback and sing the praises of our listings from the top of the mountain?
Knock yourself out.
Please advertise our listings. Send out mailings, buy ads, build websites – doesn’t bother me one iota.
And what if your web page / blog post / single property web site outranks me in Google? Will I go crying to my local board that it’s not fair?
Hell no. In fact, if you want help advertising one of my listings on the internet, call me.
I want the listing sold. Period. If you want to advertise that listing and help it get sold, more power to you. And if you get a “lead” from advertising a Thompson’s Realty listing, I hope it’s the strongest lead you ever get that leads to the biggest commission check of your lifetime.
Popularity: 1% [?]
Cruising through the sunny hills of Carlsbad in a massive silver Mercedes-Benz, he looks like any other pitchman of the California dream.
“They’re chicken,” Klinge said.
Or even, Klinge says, highlighting the risks in a shaky market.
But don’t expect other agents to start bad-mouthing one another’s houses and tying up teenagers.
“You do not have to waste your time going around in circles with Jim,” she said. “I really appreciate that honesty.”
Rather than downplay the greed and excess that caused the region’s travails, he revels in exposing them.
He surveys the wreckage with a pocket video camera, shooting footage of vacant, once-pricey houses turned into eyesores, voiced over with his deadpan narration. Then he posts them on his website, at www.bubbleinfo.com.
“Would you spend a million dollars for that house?” he says in one video, showing a two-story, boxy wreck with the rushing sound of a freeway in the background.
Why does he do it? To sell houses.
Klinge is a real estate broker, has been since 1984. He just doesn’t act like one.
In the summer of 2005, Klinge says, he sensed the housing crash coming. He had been through the real estate downturn in the early 1990s and was wary that the red-hot market couldn’t last.
But his real estate industry colleagues continued to declare that home values would keep soaring.
Most agreed with David Lereah, then the chief economist for the National Assn. of Realtors, who finessed the question of the market bubble this way: “I could think of froth as effervescence rather than some popping of bubbles,” he told the San Francisco Chronicle in June 2005.
Klinge heard the same thing from fellow brokers in San Diego. He felt that such talk emboldened buyers to take on more debt than they could afford and prompted sellers to ask too much for their houses, which would cost them time and money as their homes went unsold. He started blogging, his first post questioning the 20% to 30% annual home price appreciation in some neighborhoods, and arguing that “sellers have gotten too optimistic and are pricing their houses WAY too high.”
Nowadays, Klinge said, his blog gets about 2,000 unique visitors per day. About half his clients now come to him from the blog, Klinge said. He closed 43 house deals last year, he said, down from the 61 sales and purchases he brokered in his peak year of 2004, but enough to keep him in business when many agents have quit.
Lately, his videos have been picked up on Calculated Risk, an influential economics blog whose followers include Nobel laureate Paul Krugman. In one clip, the camera pans across the kitchen of a million-dollar fixer near Interstate 5. He pointedly notes the house’s proximity to the freeway, which he calls the “De-troit river.” There’s mold under the sink and a foot-sized hole in the drywall just above the floor.
“December 2006 this house sold for a million dollars,” he says. “Nineteen hundred square feet, built in ‘78, right across the freeway. One million.”
On the off-chance the real estate agent who sold the place is watching, Klinge puts in a request: “I want you to put your mai tai down, go grab your shingle and send it in to the DRE [California Department of Real Estate] right now. You don’t deserve a job,” he says. “Everyone who was on that deal deserves to be fired, even the janitor at the escrow company. This is embarrassing, $1 million. Right now it’s listed at $575,000 and that’s probably optimistic.”
Along with the house wreck videos, the site includes statistics on local home sales totals and price declines. Klinge has skewered brokers on the blog, calling them names like “clown” and “cherry-picking cheerleader” for not admitting that the housing market had tumbled. But he said no one had gotten upset enough to retaliate.
Klinge didn’t start out as the Hunter S. Thompson of real estate. He used to believe. In 1987, just three years into his career, Klinge had set up his own office in La Jolla and was riding the rising real estate market. He was convinced home prices would keep soaring.
“Everybody wants to live in La Jolla,” he said, repeating what he and everyone else were saying then.
He closed his office and became a mortgage broker. Arranging refinances got him through the 1990s real estate slump, and he returned to home-selling in 1995.
He knew the market was headed for a crash, he said, one day in July 2005, when he had just come home from a family trip to Disney World and answered the phone. The woman on the line had seen a house that Klinge was selling.
“Up until that point, the only thing buyers wanted to know was how much over list they needed to offer. All of a sudden this lady was being critical of everything, the property, the price. I hung up the phone and told my wife, ‘It’s over,’ ” he said.
A few weeks later, he started blogging. His wife, Donna, who helps manage the family brokerage, was nervous. “He was really pushing the envelope with the blog, taking people on, naming names,” she said. “I took deep breaths. I didn’t know how it would turn out.”
She said she was shocked one day to see a photo on the blog of two young men sitting on the floor of a house with their wrists bound like prisoners. They had been squatting in a foreclosed house Jim was selling, and he had sneaked up on them as they slept and tied them up with plastic zip ties in a brazen citizen’s arrest.
But Donna, who began dating Jim when they were at Cal State Fullerton in the early 1980s, had after 20 years of marriage grown accustomed to his provocative style. So far, he’s known when to stop pushing, both on the blog and with her and their two daughters, she said.
He also manages to keep things civil with his industry colleagues, a notoriously upbeat lot. Kris Berg, another San Diego County real estate broker who writes a blog as sweet as Klinge’s is sour, says Klinge “is a nice guy, a great guy.”
Does he offend other real estate brokers? Berg said she’s not heard anything directly, but is sure he must, simply because “there’s an inherent danger when you take transparency to that level. You’re going to alienate people,” she said.
Klinge figures that if he alienates some real estate agents but attracts more customers, it’s all worth it.
Marc Needham, 33, was a fan of Klinge’s blog for a year before becoming a client. He and his wife had looked for a house for a few months in 2007 with another agent but became fed up. “We had banks lying to us; our previous real estate agent lied to us,” he said.
Needham said the agent and lenders told him the housing market would soon rebound and pushed him to pursue houses he felt he couldn’t afford, places he said would have required spending 40% to 45% of his income on house payments.
Needham, a Web marketing director for a hospital chain, said he appreciated that Klinge agreed with his view that the housing market was more likely to keep falling than to quickly bounce back.
Represented by Klinge, the Needhams bought a four-bedroom house in Encinitas last year for $580,000. Needham said his house is probably worth less now, but he expected the decline, and Klinge also helped him avoid properties with problems he did not see.
Klinge recently took a reporter along when he visited a house with Christine Liashek, 29, a first-time home buyer. He did more warning than selling. She was drawn to a cozy, 1960s three-bedroom Carlsbad house with a swimming pool. It was just the size she and her husband — they have a dog but no children — were looking for. Standing in the living room, Liashek looked to Klinge for his opinion.
“That was the high school out there,” Klinge said, nodding his head toward the front door, “You’re going to have night football games, people parking here,” Klinge told her. “The baseball field’s out there too. You’ll probably hear the batting practice.”
Liashek still liked the house enough to ask him to show it to her husband later, which Klinge agreed to do. Then she asked him about a new home development nearby.
“I call it Foreclosure Ranch,” Klinge said. “The reputation concerns me. It’s probably the worst place in Carlsbad for foreclosures, and it’ll be hard to shake that,” he warned.
Liashek and her husband passed on the new development and the house near the high school.
But they’re still looking with Klinge. Unlike previous generations of home buyers, who relied on their real estate agents to provide them with lists of homes to view, Liashek finds properties herself on websites such as SDlookup.com, Redfin and ZIP Realty and e-mails Klinge the addresses of houses she’s interested in. Klinge will let her know which ones aren’t worth a visit.
“He’ll say this one’s under power lines, that one’s by the freeway, that one’s in a bad school district,” Liashek said.
Popularity: 1% [?]
Congrats to Harris Real Estate University Student John Brady for his exclusive interview in the New York Times.
You are about to read about how the ultra exclusive real estate markets are now being dramatically effected by the real estate crash/ housing depression. HREU Student John Brady has been warning his Hampton’s housing market for over 2 years that the tides were turning. 12 months ago John was prosecuted in his market for being overly pessimistic. The local real estate brokerages seemed to rally against him.
Now, John is being interviewed by The New York Times and other leading global news outlets because of his knowledge obtained at Harris Real Estate University. Even in this market there are opportunities. As a Realtor, you have to be willing to make the shift…like John did…and embrace what this market has to offer. There never has been and probably never will be another time when caring, competent and SKILLED agents have been so needed.
Remember this, Realtors….SKILLED Realtors are the only true hope for homeowners. Realtors are on the front lines of this housing war (to paraphrase Warren Buffet). We are the ones sitting across from troubled homeowners every day. Realtors must know how to do more than the traditional listing and selling of real estate. Your community needs you to embrace the shift, learn what is required and then get into action and make a difference.
This is a long article…but, worth reading…
ON OSBORNE AVENUE in the village of Southampton, a cozy cedar-sided house peeks out over a modest hedgerow, a coy signifier of means in this storied summer retreat of New York’s moneyed classes. A blue real estate broker’s sign is planted at the foot of the driveway: the house is up for sale for the fourth time in eight years. Its churning transaction history tells the tale of a dizzying decade. In 2001, it sold for $460,000; two years later, it went for $850,000; and in 2006, after a substantial renovation, it turned over again, fetching $1.65 million. The current owners of the house, a young Manhattan couple, moved on to bigger things after a couple of summers, purchasing a $4 million home south of the Montauk Highway, about a mile closer to the shore. They put the house on Osborne Avenue up for sale again, asking nearly $2.2 million — almost five times the property’s market value at the beginning of the decade.
The Osborne Avenue house hit the real estate market at the end of the summer of 2007, a season that can be said, with the benefit of retrospect, to have marked the sweaty height of a speculative fever. That was the summer that the average cost of a home in the Hamptons shattered the $2 million barrier, the one when Ron Baron, a mutual-fund manager, paid a record $103 million for a 40-acre oceanfront estate. At the time, there were already alarming signs of a downturn in the national housing market, as a crisis took shape in the subprime-mortgage sector and economists predicted a coming onslaught of foreclosures. But that didn’t cause much worry in the Hamptons. The bubble might be bursting off in Sun Belt subdivisions, but not in the playground of the Wall Street elite. Prices were propelled upward by a tautological justification: if you were rich enough to buy in the Hamptons, you were, by definition, a superior judge of the market.
Then came the dreary series of events that we can summarize, as Hamptons people do, by reciting a litany of names: Bear Stearns; Fannie and Freddie; Lehman; Madoff. Since the peak, as one horrific episode after another has unfolded, the area’s real estate market has mirrored Wall Street’s plunging fortunes. Average sale prices have declined by about 10 percent, but that only hints at the seriousness of the trouble, because hardly anything is moving. According to data collected by the Suffolk Research Service, a local real estate data company, the number of sales in 2008 fell by 25 percent in East Hampton, 39 percent in Bridgehampton, 45 percent in Southampton and 47 percent in Montauk. Things really collapsed during the fall. Investment bankers lost their jobs, corporate lawyers saw their client base vaporize and hedge-fund managers went from being hailed as geniuses to being hauled in front of Congressional committees. “Until the market improves or their mental state improves, they’re not buying anything,” says Herb Phillips, a veteran real estate agent who is also chairman of the Southampton town zoning board. “It’s dead.”
Winter is always a low time in the Hamptons: the restaurants are empty, the streets are free of cars and a cold wind whips in off the Atlantic. On a chilly Saturday in December, I visited the house on Osborne Avenue, which by that time had been on the market for more than a year. An open house was scheduled for noon, but when I got there shortly before 1 p.m., I found the place locked, its windows dark. After a moment, the sellers’ broker, Maryanne Robinson of Prudential Douglas Elliman, spotted me and popped out of a car idling nearby. She opened the house’s front door, pushing aside a stack of mail that had accumulated on the entryway floor, and showed me around. The décor was nautical, with mermaid posters hanging on the walls and a chandelier of cascading seashells.
“This is sort of like a Hamptons starter home,” Robinson said — just three bedrooms with an additional guest cottage out back. She told me that the owners had reduced their price considerably, to $1.85 million, but felt no urgency. In the Hamptons, she said, “we tend to see people that don’t really need to sell.”
Nonetheless, by the next week, the price of the Osborne Avenue house would be slashed another $50,000 — dropping it close to the owners’ probable break-even point once you figure in taxes, closing costs and accrued mortgage interest. (In a one-sentence e-mail message, the Manhattan couple declined to comment and requested that they not be named in this article.) In January, a plaintive note appeared on the page listing the home on the Elliman Web site: “Owner wants an offer at least $1,700,000 by Feb. 15.” That didn’t happen, so the price was cut again.
Reducing expectations — and even contemplating losses — has become routine for sellers. At the end of last summer, Joseph Gregory, the former president of Lehman Brothers, put his Bridgehampton mansion up for sale for $32.5 million; finding no takers, he is reportedly considering renting it out. Even John Paulson, the hedge-fund manager who made billions by betting against the housing bubble, seems to have timed his Hamptons moves poorly. Last year, after buying himself a new $41.3 million estate, he put his old place in Southampton — advertised as a 6,800-square-foot “cottage” — on the market for $19.5 million. He has since cut more than $5 million from his asking price.
A little later on the same day I visited Osborne Avenue, I went to another open house in the exclusive East Hampton neighborhood of Georgica. A five-bedroom home was selling for a little over $5 million. “Two years ago it was worth 6.5,” the owner, a chatty middle-aged woman, said as she took me through rooms filled with antiques and gilt-framed oil paintings of angels and cherubs. “But two years ago I wasn’t ready to leave my husband.” In fact, the house has been in and out of the foreclosure process — no longer an unknown phenomenon in the Hamptons. The situation hasn’t become as dire for the vast majority of sellers, but brokers say they have seen a distinct rise in the number that they delicately describe as “motivated.” When the rich run into financial trouble, the vacation home is often the first thing they try to unload.
With supply swelling and demand shriveling, those likely to take the hardest hit, industry players say, are the speculative developers who initiated projects at the peak of the boom. A final stop on my home tour took me to Captain’s Neck Lane, a street in Southampton that has been the address in recent summers of many hedge-fund managers, socialites and celebrities. The shingled mansion, hidden behind a wall of 25-foot cypress trees, was priced at $6.5 million after a series of reductions. “Everything in the Hamptons has all the new angles, and this house is full of them,” said Mary Denny, a sales associate then with Corcoran Group Real Estate. We walked up and down two staircases, through bare spacious rooms floored with walnut and a kitchen ablaze with white calacatta marble. Denny pointed out the five fireplaces, the 850-bottle wine cellar, the heated pool and Jacuzzi. “Everything in this house,” she said, “is so high quality, well done and priced to sell.”
BAD TIMING Catherine Lignelli’s first project, in Southampton,went on the market just as the economy began its downward spiral.
LATER ON, looking for another assessment, I called James McLauchlen, who runs a small realty firm a few blocks from the mansion on Captain’s Neck Lane. He told me he thought the house was attractive but wondered whether its hypothetical buyer had vanished like so much paper wealth. “The people who are playing in that league — their numbers have been dramatically reduced,” McLauchlen said. His family has been in Southampton real estate for three generations, and he watched with amazement over the course of the decade as home values increased at a rate of about 20 percent a year. “Everyone was kind of euphoric and happy-happy,” he said. “Some of the old-timers in the business were scratching their heads, thinking, What is going on?”
In years like 2006 and 2007, when Wall Street firms gave out record bonuses, the Hamptons were full of new millionaires. In time-honored fashion, the old guard groused about arrivistes who were filling their quaint villages with pumped-up new mansions. The place on Captain’s Neck Lane — 8,000 square feet configured onto a lot that’s seven-tenths of an acre — was emblematic of the trend. Now, as it sat empty, it looked like the vestige of another season.
Catherine Lignelli, a first-time developer, built the mansion, and if she misjudged the market it wasn’t because she misunderstood the newcomers’ appetites. She was from their world. Her husband, Jeff Lignelli, manages a hedge fund, and their primary residence is a 22nd-floor apartment on Central Park South. In January, she met me at the headquarters of Stonebrook Fund Management, her husband’s company, to talk about her entry into Hamptons real estate. Tall and blond, wearing a stylish tweed blazer, knee-high leather boots and a white cashmere scarf, Lignelli showed me into an office that overlooked Park Avenue. She told me that she had gotten into real estate because it was a career that she could pursue while raising her daughter, Alexa, who is not yet 2.
“My focus was quality and aesthetics for family and friends, and seamless entertaining,” she said. “Without sounding feminist, I think that as a mother, as a wife, I can lend a lot to the details of what it takes for effortless, organized living.”
Lignelli has a degree in fashion design. In previous jobs, she worked as a personal assistant to the jewelry designer David Yurman and the financier Steven Schonfeld, which sometimes required her to make excursions to the Hamptons, but it was only after she met her husband that she really got to know the place. Jeff Lignelli owned a summer home in Water Mill; he proposed to her in the Hamptons in May 2005. Catherine decided that she wanted to start working for herself. “Next to clothing, I think real estate is fascinating — to watch that concept on your napkin sketch become someone’s actual home,” she said. “Jeff was very excited about it. He loves the Hamptons so much.”
Jeff Lignelli, who manages a number of equity-oriented funds, averaged returns of better than 15 percent between 2003 and 2005, and like all hedge-fund managers, he charged high fees. Flush with cash, he and his fiancée drove around and prospected for development sites. Over the course of two months in late 2005 and early 2006, the Lignellis paid $1.9 million for a small ranch house on Captain’s Neck Lane, which was to make way for Catherine’s first project; $2.3 million for a modern five-bedroom in Water Mill, which they’re renting out for now; and $14.2 million for a beachfront mansion on Dune Road in Bridgehampton, which they use themselves.
The Lignellis’ wedding was held in July 2006. Invitations, engraved into shiny metal paperweights shaped liked beach pebbles, instructed guests to join them by the ocean in front of their Bridgehampton place, at sunset, in all-white attire. Meanwhile, construction had started on Captain’s Neck Lane. That summer, the real estate column in the magazine Hamptons Cottages and Gardens described activity along the street, lined with palatial structures for the eight-figure buyer, as “hotter than hot.” Catherine Lignelli appeared poised to reap a big profit. She threw herself into the design-and-construction process. “I’m very, very hands-on — every light, every piece of molding, every appliance,” she said. “My architect took my sketches and turned them into blueprints.”
By the time construction was completed last summer, Lignelli could see that the economy was headed for a downturn. Nonetheless, when asked if any aspect of the building project had surprised her, she replied, “I’m surprised it hasn’t sold.” What she didn’t see coming — what many did not see coming — was the degree to which the crisis in the rest of the country would affect people in her world. The boom’s beneficiaries had been flashing so much money that everyone assumed they were insulated from market swings. But it turned out that overleveraging wasn’t just a vice of subprime borrowers.
Hedge funds have been hard hit by the crash. Lignelli said people in her social circle had been “pulling the reins back.” Her own husband’s success, which created the personal wealth that underwrote her real estate investments, seems not to have been spared the general trend of reversal. (Jeff Lignelli declined to comment for this article.) Various public disclosures, including documents filed with the Securities and Exchange Commission, suggest that Stonebrook’s stock portfolio, historically concentrated in the tourism, home-building and retail sectors, has contracted significantly.
Catherine Lignelli said the fortunes of her husband’s hedge fund would have no effect on her personal enterprise, to which she expressed a deep commitment. “People think I married someone wealthy and, ‘Why not build a pretty house in the Hamptons?’ ” she said. “There is so much more to it than that. This is something that I’d like to do, probably forever.” Since finishing the house on Captain’s Neck Lane, she has lowered her price by $1.5 million but vowed that she wouldn’t budge from there, no matter how bad the market got. She said she simply couldn’t justify it, given the many millions she and her husband had spent to acquire the land and construct the house. “I feel hugely responsible for giving back something to the person that financed me,” she told me. “I would love to give my husband a smidge of a kiss of a profit.”
Lignelli has listed the property with two superstar brokers, Harald Grant of Sotheby’s International Realty and Gary DePersia of Corcoran. But if she doesn’t get that $6.5 million offer, she has a backup plan. “Come a certain point,” she said, “the decision will probably be made to go ahead and rent it.”
That might not be a bad option. Joseph Kazickas of Rosehip Partners, a real estate brokerage specializing in Hamptons rentals, said that as recently as last year, a property like the one on Captain’s Neck Lane might have fetched $300,000 for the summer. Of course, before a property can be rented, it has to be furnished — a considerable expense — and if every other thwarted seller happens to have the same idea, rental rates will be depressed by the abundance of supply. A Web site that Kazickas runs, hamptonsrentals.com, currently lists more than 500 properties available for the summer, a number he predicts will only grow as the turmoil on Wall Street continues.
If rents fall precipitously, a lot of homeowners are going to face unhappy choices. A buyer who took out a $2 million mortgage at the prevailing interest rates during the summer of 2007 would now face a monthly payment of about $13,000 — possible to swing on an investment-bank salary but not on an unemployment check. “It’s going to be very interesting to see what happens next summer,” said John Brady, a broker with Prudential Douglas Elliman. “All of these Wall Street guys who are being let off right now — the effect isn’t going to take place for months.”
Over the last year or so, Brady, an ambitious 31-year-old, has built a reputation for a previously unheard-of specialization: he represents financially distressed Hamptons homeowners. In a field in which brokers often belong to the same social class as those they cater to, or at least affect their manners, he is an anomaly.
Realtors, learn what John has learned and experience the success that John is experiencing. Start now by watching the FREE Agent Short Sale Secrets video and downloading your FREE Agent Short Sale Secrets book.
The son of a cop and a real estate agent, Brady grew up in the insular blue-collar part of the Hamptons that summer residents seldom see. When he was a teenager, his parents divorced, and his mother lost her home in Montauk to foreclosure. “I just remember we had to move, and that was it, end of story,” Brady told me. “Foreclosure, that’s how it works.”
MOST DAYS of the week, Brady drives around the Hamptons, ringing bells at homes that are in danger of foreclosure. He gets the addresses from mortgage-default notices publicly filed by lenders or from banks’ confidential lists of homeowners who are at least 30 days behind on their payments. (Lenders filed around 260 default notices, the first step in the legal process of foreclosure, against Hamptons property owners in 2008, according to PropertyShark.com, a research service. Brady says the bank list is about 1,000 names long.) To people who owe much more on their home than they’re likely to get by selling in today’s market, Brady suggests what’s known as a short sale, in which a bank accepts a sum smaller than the mortgage in lieu of a long and costly foreclosure.
One winter weekend afternoon, I accompanied Brady on his rounds. We met at the Prudential Douglas Elliman office in East Hampton, which was deathly quiet. He often speaks about his profession with contempt, calling other brokers “lazy” and worse. The way he sees it, most of them believed their own top-of-the-boom hype and can’t adjust now. “A lot of agents don’t know the truth of what’s going on,” he said. “They never do.”
Brady donned a heavy peacoat and picked up his “door-knocking kit,” which included a bag of dog treats and a can of pepper spray. (He says he’s never had to use the spray.) As we drove north, he told me that he got into real estate after a stint peddling credit cards door to door in Mexico, an experience he has found surprisingly useful.
Up near Three Mile Harbor, he pulled into a gravel driveway that led to a lodgelike modern home set on a densely wooded lot. “This looks nice,” Brady said as we looked around. “In-ground pool. Volleyball court.” When Brady knocked, no one answered. On our way back down the driveway, we noticed a sign: the house was on the market for $1.3 million. “A lot of people, they hear short selling and they assume it’s low-income, but it’s not true,” he said. “There’s people right now overfinanced in the eight digits.”
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Although the rate of mortgage defaults, about 1 for every 160 households, ran slightly higher in the Hamptons than in New York City last year, according to an analysis compiled by PropertyShark, the percentage of homes that actually entered foreclosure remained considerably lower than that of other regional markets. Many local real estate professionals scoff at the notion that foreclosure could ever become a widespread phenomenon. Last May, Brady was interviewed on the Fox Business Network alongside Lori Barbaria, one of the area’s elite brokers. When Brady described knocking on the doors of imperiled homeowners, her face crinkled with a look of disgust. “I would never do that,” Barbaria told the host. She said she was “not feeling” a serious crash.
The optimists argue that the Hamptons should remain relatively untouched by the housing collapse because most buyers put up substantial equity, and some of the biggest deals were done in cash. However, even fully capitalized buyers often borrowed against their houses for tax purposes or other reasons, real estate professionals say, and those observers with a gloomier outlook suspect that many of those loans are currently in trouble, or will soon be. “It’s the kind of stuff that may not be hitting the public fan,” said James McLauchlen, who often does appraisals for banks.
Something similar happened after the 1987 stock-market crash. “I saw the dark days of ’88 through ’92,” says Dan Gualtieri, chief executive of the Hamptons Mortgage Corporation, “and it impacted a lot of people you wouldn’t have expected.” Reading the darkening forecasts, Elliman — which typically markets itself with glossy photographs of baronial estates — has recently started to advertise John Brady’s short-selling expertise in The East Hampton Star and other local newspapers.
We pulled up to another East Hampton house: an old place, cedar exterior, big front porch, right in the center of the village — a real find. A gray-haired man wearing shorts and a paint-splattered T-shirt answered the door and, after Brady’s introduction, invited us inside a comfortable home filled with books. His name was Patrick Stolmeier, and he was a builder who had hit hard times since construction work dried up. Sitting in the kitchen, he and Brady talked for an hour. Stolmeier was selling the house himself, asking $1.6 million — an open house was scheduled for the next day. Brady laid out his options. Stolmeier said he understood his predicament, but he couldn’t just give away the house. It represented his retirement.
“Eighty cents on the dollar would be great,” Stolmeier said, “if we’re talking about the 2005 price.”
There’s the crux of the problem. No one knows what anything is worth anymore. Herb Phillips, a real estate broker who has been around for almost 30 years, told me he’s using a simple formula to appraise the value of homes, taking their worth before the boom and figuring in a yearly rate of 7 percent appreciation. If you follow his logic, a home that sold for $450,000 in 2001 should be worth about $800,000 today — not a bad investment, unless you happened to pay $1.5 million for it in 2006. It’s quite possible, if Phillips is right, that a large percentage of the people who bought at the top of the market owe their banks more than their houses are worth. Until the market unfreezes, however, it’s impossible to really know any home’s value.
A couple of weeks after Brady visited him, I called Patrick Stolmeier to see how his open house had gone. “Absolutely nobody showed,” he said. Nonetheless, he remained hopeful that he would eventually sell the house and escape foreclosure — this was, after all, the Hamptons. “This still has the cachet of being the playground of the rich and famous,” he said. “It’s when the number of rich and famous dwindle that we’re suffering.”
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Like most homeowners who default, Stolmeier blamed an unfortunate confluence of events for his inability to pay his mortgage. A veteran builder, he specializes in high-end construction, often incorporating ecologically sensitive technologies. He bought his house, on Cooper Lane, in 1988, for $270,000. Later, as a personal project, he started renovating a home in the Northwest Woods area of East Hampton. He refinanced his primary residence, borrowing $523,000, in part to create capital for the second project, but then he caught an unlucky break: he contracted Lyme disease. He started to have trouble paying his mortgages, despite adjustments to his payment plan. He was finally recovering from his health problems when the downturn came with a rush. He returned home from a vacation in August 2007 and discovered that three lucrative jobs had disappeared.
Before long, Stolmeier was unable to make the monthly payment on the mortgage for his Cooper Lane house. He and his mortgage servicer, Ocwen Financial Corporation, entered a long struggle over loan modifications. His life became consumed by a maddening series of phone calls invariably answered at an Ocwen call center in India. After many months of conflicting answers, Stolmeier thought he was close to a new loan modification in November. Then a process server surprised him on his driveway and served him with foreclosure papers filed on behalf of the holders of the mortgage-backed security into which his loan had been bundled. Paul Koches, Ocwen’s general counsel, said that the servicer had been patient but ultimately had to act in the interest of the bondholders. The legal action is delayed for now, but because the Cooper Lane house would be worth a sizable amount on the open market — probably a great deal more than Stolmeier owes — it makes more financial sense for the lender to foreclose than to accept an unfavorable change in payment terms. “It’s a delicate balance,” Koches said, “and not always an easy one to strike.”
Meanwhile, Stolmeier has been having similar problems with his uncompleted Northwest Woods house, where he was hoping to live when he retired. “Both of these houses represent a great percentage of the product of my adult life, and I can’t turn my back on that,” said Stolmeier, who is 60. “It took an awful lot of work for a blue-collar guy to buy these properties.”
John Brady said he thought that, in the end, Stolmeier would probably be able to settle his problems by selling the Cooper Lane house. “Really, all he needs to do is drop the price,” the broker said, “and he gets out.” Of course, this returns us to the case of the missing buyer — no matter how reasonable the price, if no one is making offers, you can’t sell.
Many Hamptons brokers talk optimistically about 2009, predicting a wave of bargain hunters. “Within the last month I’ve been approached by two hedge-fund guys — they asked me to keep on the lookout for advantageous buys,” said Gary DePersia, one broker who is trying to sell Catherine Lignelli’s mansion. If the buyers don’t return soon, however, the implications for the Hamptons market are sobering.
One blustery December morning, I went to the Southampton Town Hall to see what the future might hold if the doomsayers are to be believed. A home with a $1.5 million mortgage, and recently foreclosed, was going up for auction. As I waited for the proceeding to begin, I met the wife of the home’s owner, a real estate broker, who looked on sadly as a referee, Charles D’Onofrio III, read out the terms of the sale and asked, “Are there any bids?” The only other person on the steps, a representative of the bank, offered the token sum of $500.
“Sold,” the referee barked.
Later that morning, I went to see the foreclosed property. It was a classic Hamptons spec house, all shingles and bay windows, and it looked as if it had never been finished. The wind gusted through tall pines as I walked around the lot, which was littered with construction debris. The home was empty inside, except for a couple of chairs. Off the back deck, a swimming pool sat murky and neglected. Summer seemed a long way away.
While you are thinking about it….Watch the FREE Agent Short Sale Secrets video NOW and then Download your FREE Short Sale Book!
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A Debt of Gratitude.
That is what we owe Tim and Julie. They have delivered the best return on my professional growth investments of my 25 year career as a real estate Broker. Believe me I have participated in almost every program out there. Harris Real Estate University is clearly at the top.
Here is just example of how we helped others. A divorced mother of three called me in response to an ad for my co-authored book Should I Short Sale My Home? Because of the economy, she was unemployed after she was forced to close her previously successful business. She received no assistance from her former husband who was employed only part-time. She also lost her entire down payment of $250,000 which was an inheritance from her father. She asked for help to avoid having a foreclosure on her otherwise great credit record.
Tim, Julie, and all the coaches at HREU showed me how to help this woman who had lost everything almost over night. We helped her retain what she valued most, after her children…her dignity. Thank God that we are here to help others.
Jim Kelder
CRS®, GRI®, CPM®, CLHMS®, ABR®, BA, MRE, SRES®, EPRO®, RECS
Associate Broker
Realty Executives
Scottsdale, Arizona
From Tim and Julie: Thanks Jim…Thank God you were there to help her!
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Good Morning Coach Tim Harris!!
My name is Zachary Zeek and I am a HREU Coaching Student living and working in the Salem/Portland, Oregon area….Here’s my story!
The thing was, it was actually an accident.
I have been a real estate broker in the Salem, Oregon area for about seven years…Like many other agents in this area, I had been successful in the extended hot run over the past few years. In August of 2007 my fortunes began to change. Since I had always worked for small companies with very little support, my business really fell off, and quickly—way before most other agents in the area!! The small company I worked for decided to close it’s doors in June of 2007 and I found myself looking for a new place to hang my shingle.
—for the first time in my brokering life, I decided to GET SOME HELP—I WAS TIRED OF FAILING. I had always felt that a downturn in the market would result in big opportunities for good brokers….I never realized that my lack of experience would leave me so unorganized and with little concise direction…
I had negotiated a number of short sales in the past—self taught, using many of the techniques you are now teaching…and with foreclosures & distressed sales on the rise, my broker and I zeroed in on this segment of the market for me to make my “comeback.” Somewhere along the line, I had received an email about HREU—something offering Agent Short Sale Secrets—for free…I decided to log on, for curiosity sake—just wanted to see what other people were doing/talking about…
That’s when it happened….I became a Agent Short Sale Secrets coaching student…
In the weeks to follow, I have made numerous contacts that now refer any short sale activity to me….including brokers at other companies that don’t want/don’t know how to handle the business…my business is now moving again!!
It’s funny how things turn out—all this time, all the financial stress, and all it took was a little mistake on my part to get things moving again….can you imagine the odds???
That’s it, the whole ball of wax, you’ve heard it….
PS—I hope that my story gets considered—I’m on the west coast, I’m sure many other students have already sent in their stories before I began working this morning!!! And, when can I get some personal coaching, I’m ready now… J
Thanks, Zach Zeek
Broker
RealEstate.com
503-551-8836
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Harris Real Estate University Tech coach Chris Johnson found this blog post.
“Would You Judge A Real Estate Broker By His Blog?”
VERY interesting insight into how crucial having a blog is in this market.
Here is the first part of this blog post….
“The Washington Post reports that consumers are starting to judge real estate agents by their blogs. Almost 10% of real estate brokers are apparently blogging, a number that is likely to rise faster than that sketchy “up and coming” neighborhood you’ve heard about for years. READ THE REST HERE“
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