Ask Pete, Chapter 2: Your questions, answered

You folks asked some good questions. As is my custom, I'll answer the easy ones:

1) Mike at 12:55 pm asked, " why do you sometimes post in 5 minutes and sometimes in 3 hours??"
Thanks, Mike. If I am sitting at the computer at work and doing nothing else, I post comments very quickly. If it is 7 p.m. and my 4-year-old son yells at me, "DADDY! Turn OFF the computer, let's play baseball!" Then I turn off the computer and play tee-ball in the back yard. Seriously, it's just me moderating comments. I have other duties at The Times, and in life.

2) Uncle Billy at 12:56 p.m. asked, "Did you have an inkling of how different our real estate market would become when you started this blog?"
Thanks, U.B. I thought the market would weaken, but not this quickly, and not this unevenly. I did not see the collapse in the mortgage industry coming. I would have guessed prices in better neighborhoods would be lower right now.

3) mark g at 1:04 pm asked, "Are lender Short Sales impossible to bid for at this point? I saw a property that I was interested in and would like to make an offer, but the offer would be tailored to descend in value with the lengthy time frame that it would take to approve by their loss mitigation."

Thanks, mark. Banks are really slow to approve short sales these days. My guess is, if your offer has strings attached, or an expiration date, it's doomed.

4) Cal at 1:08 p.m. asked, "How do appearances like your appearance on CNN on Saturday happen? Producer calls up and says we need someone to talk about foreclosures?"

(Click below for the answer to that and many more questions)

Thanks, Cal. I'm pretty sure the CNN interview came about because CNN folks -- like just about everyone in the news business -- read The Drudge Report, and Drudge had a link to one of my posts last week. What usually happens is the producer will email me and ask if I'm available for an interview. Then they'll call and do a "pre-interview" to get an idea what my thoughts are. Sometimes producers go through the p.r. department here, sometimes they just email me directly.

5) Chuck W at 1:22 pm asked, "What would have to happen to the LA housing market to convince you to pull the trigger and buy?"
Thanks, Chuck. Short answer: some combination of higher income, better job security and lower prices.

6) xtine at 1:27 pm asked, "What do you think is the best web resource to find out about foreclosed houses?"
Thanks, xtine, good question. I don't know a good free resource. I've been using Property Shark lately, but I'm wide open to suggestions. Anybody?

7) Carter at 1:40 p.m. asked, "what chances do you give for the Frank-Dodd plan to go thru?"
Thanks, carter. I think odds are decent -- 60-40 maybe -- that Congress will pass a watered-down version of the Frank plan, maybe daring the president to veto it. Politically, a veto might help the Democrats -- making the White House appear to be defending the status quo.

8) MyLessThanPrimeBeef at 1:47 pm asked, " Pete, is it possible to invite a flipper or two here?"
Thanks, MyLess. Yes, it's possible: Come on all you flippers, come on in and tell your stories. You made a ton of money and stopped flipping just in time? Tell us about it. You stayed too long at the party and now you're stuck and bleeding cash? Tell us about it.

9) TakeFive, at 1:54 pm asked, " What do you look for in a story to consider posting it on this blog?"
Thanks, Take. If it comes in email from a regular reader like you, I usually trust your judgment and post it. Otherwise, I'm looking for a story that makes a point, has a strong piece of news, or a single quote or an anecdote that begs to be highlighted and opened up for comment.  There's a ton of great stuff out there and I feel like I scratch the surface every day. I generally don't like long, even-handed stories about issues -- "thumb-suckers."

10) Mike G at 2:01 p.m. asked, "Often, the discussion in this blog trends worryingly toward racism, in my personal opinion. Do you feel that some of the more colorful comments on the blog are, in fact, racist?"
Thanks, Mike, excellent question.  I wrestle with this.  It happens almost every time I post about a low-income community. Someone will soon post a comment arguing that illegal immigrants have ruined the neighborhood, or they'll write about cars parked on the lawns, or gang-bangers, taggers, etc., and then the comments fly fast and furious. I generally post the comments. These are realities in Los Angeles: illegal immigrants, gangs, poverty, street crime. These are big issues when homeowners choose a neighborhood. Racist? I don't know. I can't get inside someone's head or heart. If a comment goes over the line, I don't post it. In every long thread there's one or two really objectionable comments that don't get published.

11) Arroyogrande at 2:05 p.m. asked, "A question on "the media" in general ... (In stories about foreclosure) ... why do your fellow reporters insist in casting the borrowers as victims?"
Thanks arroyo, great question. I don't know but I have a few theories. There's a widespread belief in newsrooms that stories about big issues are boring, and to make them accessible and give them life, reporters should tell them through the experience of one person, to "humanize" the story. So we get journalism by anecdote. Character-driven journalism. The search for victims is a broad trend. We live in a great age of victimization. Everyone is a victim of something, or so it seems.  Lastly, journalists seem to embrace and defend homeownership as a time-honored American ideal -- kind of like the family farm. The American Dream. Well and good, but that view fails to recognize recent changes in what it means to buy and own a house: for many recent homebuyers, buying a house involved no saving, no downpayment, no equity, no financial sacrifice, and no real ownership. It was a mirage of sorts.

12) Last question. Wilson at 2:38 pm asked, "With a letter grade of A-F, how do you grade the credibility of real estate agents? Month after month, they say, "It's a great time to buy." But prices have fallen like a rock and they've been saying that for the past year!"
Thanks, Wilson. I don't think that's the best way to grade agents. You, the buyer, decide whether it's a good time to buy and how much you can afford to spend. Then you get an agent and tell them what you're willing to spend and what you want for it. If it's findable, a good agent finds that for you. If it's not, a good agent explains why you can't have what you want.

Photo Credit: A Beverly Hills-area contemporary home designed by Hal Levitt, and now listed for $7.895 million, by Josh White.

Comments

[LeftLA]

Excellent answer to 12, Pete. Blaming Realtors for not finding you a sweet deal is the same as blaming a broker for the bad loan you signed. The Realtor works for you, not the other way around. If you're not getting properties you like, then you haven't given the Realtor the correct instructions -- or more likely, your criteria are way out of line. Every Realtor I dealt with in LA (6 at last count) was honest to a fault and knew what they could and couldn't do.

[Peter I]

Peter, Whose house is in the photograph? Do you know the architect? It's fantastic. It looks like it might have been in a Hockney painting. Was it?

[Trevor]

Regarding questions 12: Remember that realtors only get paid by closing deals. Real estate agents are not unbiased sources of information nor are they good judges of the future of the market. To a seller an agent will say that the sky is about to fall and they need to sell now. Then they'll turn around to a buyer and say "it's a great time to buy". That's their job. It's not a terrible thing- actually it tends to add value to homes. But don't trust a word they say. They don't get paid if you dont buy. Period.
If you asked a Ford car salesman if you should buy a Chevy, would you trust his answer? No. Don't bother asking your broker if its a good time to buy.

[Valley Observer]

"...journalists seem to embrace and defend homeownership as a time-honored American ideal -- kind of like the family farm. The American Dream. Well and good, but that view fails to recognize recent changes in what it means to buy and own a house: for many recent homebuyers, buying a house involved no saving, no downpayment, no equity, no financial sacrifice, and no real ownership. It was a mirage of sorts."

The bubble also meant hundreds of millions (maybe even more!) for hedge fund managers and the sharks at the top of the RE food chain, even down to the guy in India in loan servicing who is supposed to make some sort of deal with this recent homebuyer who's behind in payments (within very restricted parameters, one assumes). What are the odds the sharks will give some of theirs back to the rubes who were the late arrivals in the ponzi scheme? There are many stories here. For human interest, along with the stories that include folks pictured looking forlorn with their four kids in front of the For Sale Forclosure sign, how about some about the guys and their new Porsches?

[JL]

C'mon, that's letting realtors off way too easy. I understand that realtors advertise in your paper- nevertheless, you could have said that they played the cheerleader role too enthusiatically.

[tarbubble]

I've worked with three realtors so far in my life. Realtor #1 continually showed us properties that were more expensive than we were interested in and repeatedly tried to steer us away from the neighborhoods we expressed interest in. We stopped working with him. Realtor #2 was a delightful fluke, a completely non-slick and almost nerdy gal - wonderful. We bought using her. Realtor #3 was a big bad wolf sniffing at our door in 2006, when the bubble was at its height. We could have easily sold our place for $250k more than we bought it for and he knew it, was hungry for that money, tried to talk us into selling and using "creative financing" so we could buy that dream $1m house in Ladera Ranch. The problem was, he failed to understand that we didn't want the Stepford lifestyle (and by then we had already figured out that housing prices were unsustainable). Last time i checked his website, he had posted an angry diatribe about how the mainstream media was creating the housing slump. in hindsight, we should have sold the place and just rented for a few years. oh, well.

so my anecdotal experience is that only 33% of realtors are any good.

[shockg]

"I would have guessed prices in better neighborhoods would be lower right now."

BINGO!!! At this point in the correction (the end) it doesnt look like the deep discounts will spread to the better areas.

[shockg]

Trevor said: "Real estate agents are not unbiased sources of information nor are they good judges of the future of the market."

It's not a real esate agents job to foretell the future of the market. The buyers and sellers determine if they are ready to buy and sell. It's that simple. This is a typical market timer comment.

[Laker]

shockg, so you are saying now is the end of the correction??
I guess you are very hungry for sales...been pretty dry winter as far as home sales and escrow closings, right?
I'll give you the benefit of the doubt and let's check that next month and the one after and see...
OK?
BTW, if you have the time, why don't you spend it by researching Option ARMs....

[DaJudge]

shockg,

Wake up. We're only in the 4th inning of the housing bubble and there's going to be a pitching change soon. The new pitcher is not resonsible for the bases being loaded (at least, that's what he/she will say) and they'll let the runners score if it helps them in the long run. Hint, just wait for the new president's comments like, "the economy is in worse shape than we thought", "we need to fight inflation"...

As far as market timing is concerned, a surprisingly large percentage of real estate sales people in the "better areas" are market timers themselves. At least they are in my "better area" and prices are starting to drop more rapidly as deal after deal are getting torpedoed by the lenders.

[left the biz because of this]

Realtor #2 was a delightful fluke, a completely non-slick and almost nerdy gal - wonderful. We bought using her. Realtor #3 was a big bad wolf sniffing at our door in 2006, when the bubble was at its height.
Tarbubble, what happened between your successful experience with realtor #2 and getting sold an unhappy bill of goods by #3? I might have been your #2 realtor and one of the reasons I left, pre-crash, was the unexplainable lack of loyalty by people who sang my praises to their friends but then felt a discount broker could do as well. It was only mildly satisfying when they'd call again 6 months later wondering if I could help them.

[tarbubble]

left the biz - realtor #2 moved to central CA. we loved her and if she was still here we would be in touch with her once house prices fall back to where we want them at. realtor #3 was a semi-unsolicited deal. he was the buyer's agent for another unit in our complex, saw that we were remodeling the kitchen, and i think he smelled opportunity. we humored him, let him evaluate our situation (we had two kids and completely outgrew our starter condo, desperately wanted a house but couldn't pay $800k for one) - but once we realized he didn't care a fig about what we really wanted we stopped dealing with him.

[left the biz]

Tarbubble, thanks for explaining the sitch. Next time you are in the market call realtor #2 in central CA anyway and she will refer you to a competent trusted local colleague so you won't have to take your chances with a shark. She'll also appreciate the referral and will be sure your new realtor (#4) does everything right too. There are too many #3's out there.