Archive for February, 2010

By Valerie Fitzgerald

Everyone’s got a story.  And when people hear mine, they become inspired.  America’s story is written by people who have reinvented themselves after encountering adversity and facing it head on.  I’m no different.

How I went from a chicken farm in South Dakota to a professional model in Manhattan, from an abused, single mother to a billion dollar agent to celebrities in Beverly Hills, has become a journey that encourages others.  I’ve reinvented my life many times, and I eventually carved out my best niche.

When people ask me what are the keys to my personal and professional success, I think to myself “trial and error and a lot of hard work.”  However, people want a concrete blueprint to follow, something tangible they can grasp and implement on their own.

To create a sustainable and rewarding life in both the personal and professional realms, I believe these three steps are paramount:

1.   Be Consistent - Have clear goals and work toward you goals everyday.  Let’s say you are working toward a successful career in real estate.  Everyday you need to do something to: further your education of the current market you work in; contact prospective clients; return calls and emails from existing clients; research finance options for impending sales; review marketing campaign and personal website…and that’s just the beginning.   There are 100’s of things you can do to further your productivity, and you need to do some of those 100’s of things each and every day, keeping your focus on the most important tasks that will lead you to your goals the fastest.

2.    Be Diligent – Be diligent about the things you do and things you say you are going to do.  You are only as good as your word. When you tell a client that you’ll research their question…research their question and get back to them quickly.  If you say you are going to call a client on a particular day…call that client on that particular day.  If you fail to keep your word, others will be inclined to take you less seriously – as a result…you’ll have less opportunities to keep you word.  Conversely, whatever you are doing…do it well.  Do your best.  Clients recognize haphazard or ‘lazy’ work.

3.   Be Serious – Yes, take your job seriously…have fun with it, and remember the reasons for why you’re doing what you’re doing.  Perhaps you want to make more money, contribute your time to charity or create more family customs and traditions – by reminding yourself of the “why?” you give your efforts meaning.

In my book, Heart and Sold: How to Survive and Build a Recession-Proof Business, I talk about the awakening of the self.  At first that feeling is fleeting and unfamiliar; but as you nurture it, you grow more powerful by the day.  Two events in my own life profoundly awoke my inner self — the end of my marriage and the birth of my daughter.  Both experiences created 180-degree shifts in my life and who I thought I was.  Like a diamond in the rough, thousands of pounds of pressure beat away at me until my new self could emerge shiny, beautiful and strong.

Until people started asking me to speak at conferences and events or I was appearing in Top 10 real estate lists nationwide, I really didn’t think about my success. People would say, “Wow, you are amazing!” But I really didn’t know what being amazing meant. I worked hard. I sold houses. I figured out my business. And I put a lot of effort into it.

Remember: success doesn’t happen overnight. The passion that it takes to reach your goals feels like a strong inner drive. There is something inside everyone that triggers that drive and makes people go above and beyond the status quo breaking through mediocrity. That’s what makes their visions come true.

Given the current economic crisis, many people are struggling financially and otherwise.  I overcame tremendous personal and financial adversities to create a life I desired most, and so can you.  I truly believe that desiring success is a very powerful step to take along the road to achieving it.  To live the new possibilities of your imagination is exciting.  The possibilities and choices are endless.

About Valerie Fitzgerald

Valerie Fitzgerald is the president of The Valerie Fitzgerald Group and specializes in luxury residential real estate in West Los Angeles in neighborhoods like Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu.  She is the author of Heart and Sold: How to Survive and Build a Recession-Proof Business (Simon and Schuster).  She has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles real estate community and her celebrity clientele.   She is on The Wall Street Journal’s “The Real Estate Top 200 list” and is one of Coldwell Banker’s Top 10 Agents nationwide.  She is the exclusive sales agent for Latitude 33, a new Marina del Rey luxury residential community.  Learn more http://valeriefitzgerald.com.

Reporting from Washington – With all the bad news about underwater homeowners and strategic walkaways, you might think that U.S. homeowners’ equity holdings are continuing to slide. But a little-publicized recent statistic on real estate is that home equity is again on the rise.

Is that some piece of rosy propaganda put out by housing lobbyists to stimulate more home buying? Not unless you consider Federal Reserve economists to be shills for the real estate industry. The Fed conducts massive ongoing research into mortgage balances and home-value changes in hundreds of local markets around the country, and reports its findings quarterly.

According to the Fed’s most recent “flow of funds” survey, homeowners’ net equity grew by nearly $1 trillion from the recession’s nadir in the first quarter of 2009 through the third quarter. From June 30 through Sept. 30, equity rose by $418 billion.

That’s not impressive compared with the quarterly increases registered during the hyperinflationary housing boom years, but it could signal something important: After three years of unprecedented shrinkage in home equity — and three years of rapid expansion in the number of underwater borrowers with negative equity — there are signs the down cycle may be shifting.

Last week, online real estate valuation researcher Zillow.com released its latest quarterly numbers on negative equity in major markets. The findings were sobering, but the study also offered some hints of improvement. The overall negative equity rate among U.S. homeowners remained flat in the fourth quarter at 21.4%. But like the Fed’s numbers, that represented a decrease from the first two quarters of last year, when 22% and 23% of owners owed more on their mortgages than the estimated market value of their real estate.

Zillow’s study found that in dozens of housing markets — including Washington, Los Angeles, San Francisco, Detroit, Miami, San Jose, Seattle and Tampa-St. Petersburg — the percentage of homeowners with negative equity appears to be on the decline.

Some of the largest declines occurred in cities hardest hit by the recession and the housing bust — Ann Arbor, Mich. (down 9 percentage points), Riverside (down 5.7 points) and Phoenix (down 2 points). Florida markets that have struggled with major devaluations also saw significant improvement in negative equity ratios in the fourth quarter.

On the other hand, Zillow’s study found historically high rates of negative equity continuing to prevail in key cities. In Las Vegas, for example, 81.3% of homeowners — 256,000 households — were still underwater on their mortgages in the fourth quarter. This number is down from 82.5% in early 2009, but that’s no consolation to the affected owners.

In Phoenix, 61.5% of borrowers were in negative territory — 2 points lower than in the previous quarter, yet still high.

Which major markets have the lowest underwater rates? As you might guess, they tend to be areas where the equity boom never quite boomed, and where toxic mortgages and fog-the-mirror underwriting by lenders were never the rage: Tulsa, Okla. (4.2%), Harrisburg, Pa. (5.7%), Binghamton, N.Y. (5.6%), and Peoria, Ill. (8%).

Negative equity rates are crucial barometers of local housing markets’ propensity to experience high rates of default, foreclosure and strategic walkaways. Communities with single-digit negative equity rates tend to have lower rates of walkaways and foreclosures.

The reverse is the case in areas where large numbers of underwater homeowners see no economic rationale for continuing to send in their monthly mortgage payments on properties worth tens or even hundreds of thousands of dollars less than the principal balance owed to the bank. They believe they are throwing away money on albatross real estate.

Mortgage market analyst Laurie Goodman, senior managing director of Amherst Securities, recently warned lenders to be especially vigilant about borrowers in markets where negative equity ratios are high. Once underwater borrowers miss just one payment on their mortgage, according to Goodman, there is a 75% to 80% probability that they will chuck the whole deal.

Borrowers with even minimal positive equity, on the other hand, are far less likely to do the same.

kenharney@earthlink.net.

Distributed by the Washington Post Writers Group.

Valerie Fitzgerald specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of the book published by Simon and Schuster Heart and Sold: How to Survive and Build a Recession-Proof Business. Buy it here.

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Reporting from Washington – Thinking of cashing out some equity when you refinance your mortgage? Sure, that used to be what millions of homeowners did when they needed extra money.

But now get ready for the post-boom, post-crash trend: “cash-in” refis — the opposite of cash-outs.

“It almost sounds un-American,” quipped Frank Nothaft, chief economist for mortgage giant Freddie Mac. After all, Americans have grown accustomed over much of the last two decades to tapping into their equity — pulling out a chunk of cash and adding to their debt load — when they refinanced their mortgages. “Almost nobody thought of putting money back in.”

Cash-outs hit their highest level of popularity during the wild appreciation streaks in the early and middle years of the last decade. In mid-2006, just before home values began deflating across the country, the rate of cash-outs hit 88%, according to Freddie Mac, which monitors refinancings quarterly.

This meant that nearly 9 out of 10 refinancers whose loan files were sampled by Freddie Mac increased the size of their mortgage balance by at least 5% in the process. It was the heyday of the pile-on-more-debt mind-set — cash me out, I can’t lose on my real estate — that came crumbling down in 2007 and 2008, when home equity holdings shrank drastically and painfully.

From 2005 to the third quarter of 2009, according to Federal Reserve estimates, American homeowners lost $7 trillion in equity — an unprecedented evaporation of household wealth. Almost nobody was spared.

Now the pendulum in consumer psychology appears to be swinging toward reduction of household debt — whether on credit cards or mortgages.

In Freddie Mac’s latest quarterly survey of refinancings, 33% of homeowners put cash into the deal to lower their mortgage balances, the highest percentage ever. By contrast, only 27% of refinancers took cash out — the lowest percentage on record.

Why shift money from savings into your house? Nothaft says a small percentage of refinancers — including himself and his wife — traditionally have preferred to lower their mortgage balances whenever possible.

There are at least two key rationales for doing so, Nothaft says. No. 1: If interest rates are low and you’re getting minuscule returns on your bank savings or money market funds, paying down your home loan may well provide you a better return on your investment.

For example, in early 2009, Nothaft and his wife chose to lower their mortgage balance at the same time they were refinancing. “We thought, hey, this is a no-brainer,” Nothaft recalls. “We can get a 4 3/4 % return instead of close to zero” on checking accounts and bank deposits.

A second reason to consider a cash-in refi would be to qualify for a better interest rate and terms on the replacement mortgage.

Say you have a loan-to-value ratio above 80% and any refi of the current balance will require payment of private mortgage insurance premiums and possibly come with a higher rate.

But if you have some money that you could devote to lowering the principal balance — cashing in — you might be able to cut your LTV to 75% or less and get a more favorable interest rate and avoid mortgage insurance premiums.

Cash-ins, in effect, are a disciplined form of saving — one that in today’s depressed rates for competing types of savings might be an astute financial move.

Nothaft isn’t sure whether the recent jump in cash-in refis is the start of a long-term societal shift. But there has been a steady rise since the fourth quarter of 2007, when cash-ins hit 9%, up from just 5% of all refis earlier that year.

By early 2009, they accounted for 13% of refinancings, then grew to 18% in the third quarter. After that, cash-ins jumped to 33% in the final three months of 2009.

“It may well be a reaction to higher credit standards by lenders” — making cash-outs and refis in general tougher to get — or “some decision on the part of many people to be a little more conservative in uncertain times,” Nothaft said.

A cash-in refi is hardly an option for everyone. But with mortgage rates widely predicted to rise from 5% at present for a 30-year fixed-rate loan to the mid- to upper-5s as the year progresses, the numbers just might work for you if you have the resources.

Los Angeles Times

The Valerie Fitzgerald Group specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of the book published by Simon and Schuster Heart and Sold: How to Survive and Build a Recession-Proof Business. Buy it here.

Subscribe to this blog: Valerie Fitzgerald Group Blog

Follow me on Twitter: http://twitter.com/ValreFitzgerald

Follow me on Facebook:http://www.facebook.com/ValerieFitzgeraldRealEstate