Why Diana Olick Is Wrong About Housing

Posted by Howard Flaschen on Tuesday, December 6th, 2011 at 9:24pm.

My Ode to Diana

Jacksonville, FL - What is an ode? I have no idea if this is one but its a soapbox nonetheless and its a microphone directed at Diana.

Oh, Diana. What you fail to realize when you recount your numbers, when you go on TV and duke it out with theolick_bio_standard_250 talking heads opposite you in the quatro-box or Joe's Octo-box is that you, and so many of the analysts, like Core Logic's people, S&P's etc. is that the housing market, does in fact, get local. Super local. Hyper-local if I may be du jour. So local in fact that it boils down to James and Marie (names changed to defend the innocent).

http://www.cnbc.com/id/15837671

See Diana, tonight you wrote about the 2 different housing markets and how they are correlated but you leave out so much and perhaps thats because you hadn't the time to expand. See lets go back to James and Marie. James and Marie are ready to buy their first house, together, and theyre super excited. Even talking about adopting at some point. Its pretty neat and all but its been a tough road thus far.

See they listened to the pundits who told them that they could get a huge discount on a home if the home was in distress so we searched and we found one, a shortsale. In this case the lienholder is, lets call it Thirst Dranklin and the seller's have the kiss of a mortgage insurer on their loan as well. So after 5 months of waiting for thir home to go through the shortsale process the MI company demanded that the sellers sign a BIG note, (0% interest) BIG. So the seller, being scared and all wanted a lawyer to look things over but the lienholder takes their time, drags their feet, and finally, after numerous deadlines have passed James and Marie decide they really can't wait any longer as there's no telling if the home will ever close. (As an aside the home in question hasn't closed 6 months later and the new deal put together asks for a note 75% less than the one demanded 6 months ago {shrug})

So James and Marie begin looking again and there's so many homes out there, right? You recount the numbers and the wave after wave thats coming but James is getting a VA loan so if the home needs a new roof, has WDO, or needs some things repaired, its out. Well guess what distress seems to equal? Work. Typically the shortseller themselves doesnt have the money for it, the lienholder's lackey behind the desk isnt going to pay for it, and the buyer can't or shouldnt pay for it prior to closing (a good Realtor would quikcly shoot that idea down). So alas they pick through a bunch of homes that all need work in the hope of finding one that will work and they find it!!!

Yes, an offer is in (multiple offers beaten) and the waiting game begins again. And they wait.......

.......

.......

..and they get word. The MI company has rejected the shortsale! No rhyme no reason and the agent tells them that the negotiator for the lienholder went on vacation and wont be able to advise for a week. When the negotiator comes back, she's closed the file, and moved on without a word. Is it possible some other attorney's office could get the train back on the tracks? Maybe but James and Marie are in a lurch...Theyve been looking now for a year.

Well now they dont want a shortsale and the idea of getting that discount you talk about, well, they want a home. They want to begin their lives in their house. Paint. Decorate. Cook. What to do, the community has a few that arent distressed but theyre 10% more!

Alas, at this point its an easy decision, make an offer on the more expensive one but ACTUALLY get something they'll love. See the waiting indefinitely for the predictions of price drops to come true doesnt help them now. A miniscule price drop doesnt change their monthly payment enough to stay in their current situation. Now, you mention appraisal problems and they happen but for the most part a short appraisal gets resolved. You talk about financing issues and boy you couldnt be more right (USAA, BAC, WFC, Everbank are horrors) but smaller lenders are making things happen (Bank of England, Prime Lending).

But the moral of the story in contrast to your connecting the markets, is that there are 2 or even more markets and when a buyer finally throws in the towel on trying to buy a steal that they cant live in, many times they prefer to buy the house they can, a totally separate marketplace. Is this all the time? No. (Hi Sarah and Jon - names changed) But you paint with such a broad brush that I think you miss the target........ unless of course you're lobbying for housing help. If you are lobbying for more help for housing than carry on my dear, carry on.

Howard Flaschen

REALTOR / CDPE

904-237-5311

Howard@RoundTableRealty.com

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