The Double Comma Club

The numbers are stacked against us yet we keep charging forward. Real estate agents celebrated last night when Governor Polis announced they could do showings starting on Monday the 27th. Is it back to business as usual? Not even close. Take a look at these numbers

• Fannie Mae's Home Purchase Sentiments is down 11.7% to its lowest level since December 2016 - University of Michigan's Consumer Confidence Index was 101 in February, 89.1 in March and 71 in April.. down to its lowest level since 2009

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This will cost servicers $2.3 billion a month! High forbearance numbers are pushing bank and non-bank lenders to tighten their credit box, hurting first-time homebuyers, move-up buyers and jumbo buyers alike! We all heard what Chase did. But did you know other banks are doing the same.. just a little more quietly?

Wells Fargo, USBank, and BB&T all raised their FICO minimum to 680; Flagstar raised it to 640; Navy Federal stopped doing FHA loans hoping to bring them back in 2021 and Better.com stopped doing FHA loans and raised their minimum FICOs. Meanwhile, virtual showings are up 400%!

WOW! This is your opportunity to engage in a whole new way because the way we did things won't be the way we work going forward. This is also the time when we all have to be more creative than ever. Supporting our clients with solutions that help them in their journey to build wealth through real estate.

Your partner,

Nicole Rueth

303-214-6393

www.TheRuethTeam.com

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Colorado and US agents, it's time to reignite your real estate business with sincerity, genuine concern, expert advice that many of the iBuyer platforms cannot offer. YOU need to become the hyper-local, niche expert. Set yourself apart from the online, data-driven services. Be THEIR expert. This month's Agent Ignite session featured Real Estate trainer, speaker, author, Denver's own - Bruce Gardner. Tips are sprinkled throughout this session. You'll want to take notes.

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We're at a tipping point from the way it used to be to the way the future will be and we are entering the digital age of real estate. This is where technology merging with the traditional real estate, it's just going to look different as we go forward because of that impact. The other thing that's happening is that our industry is being faced with a number of disruptors that are coming into the industry. They want to change it fundamentally and they have stacks of cash. So this money is going to have an effect on our industry. This is the kind of challenge we're up against. And when you start looking at the amount of money that's coming into the industry and the people that are behind it and what their goals are, it's a little scary.

You also are seeing a complete end to end agent transaction platforms. So there are a number of companies that are working on this right now. Compass, RE/MAX, Keller Williams are really working on building end to end transactions, ecosystems that include the CRM, automated consumer engagement programs, and transaction management services that also integrate with the mortgage and closing services. So I think as we continue to go forward every year, we're going to see more of this integration through the entire ecosystem of real estate and that could affect a lot of things.

RE/MAX has theirs off the ground and Keller Williams has launched the command platform. So these things are realities that are going to start to affect us. All right, the big social and technology trends, some of these are going to make sense to you. Number one, we all see cell phone addiction. I think we all would agree with that. Many of us have a social media addiction. A lot of us have that, especially in the last month. And everybody wants everything right now. We are a right now society. So Amazon is responding by saying that they can deliver things the next day or in some cases the same day. We can get rides in a car with almost no notice. We can have all of our fast food delivered directly to our house and we can stream almost anything that we want to watch On Demand.

And while you're doing all of this, you're being watched. So if you want to have some fun, if you have a little extra time on your hands, just Google surveillance capitalism and spend a little time reading about that. That'll blow your hair back. And then we also have big data which is accumulating at a massive rate. It's being stored in the cloud. We have artificial intelligence that promises to remake many of the ways that we do things in our lives. 5G is going to create this interconnected world. We're going to have digital cars or self-driving cars. We're going to have 3D printed homes. And in the middle of this, we have this generation. This is the newest generation that's been born since 2011. They are called the Alphas and this is the first generation of humans that will spend their entire lives in a digital world. And they are with us now.

So that has really caused the rise of the iBuyer and there's a number of these different models. Most of us are going to be familiar with some of them; Opendoor, Offerpad, Redfin, HomeGo, Orchard, Knock, Zillow is in the game, so we're only going to talk a little bit about Opendoor. We don't have time to dig into all of these, but Opendoor is the one that really is the industry leader right now and this is Eric Wu. He's the CEO of Opendoor. He is not your friend. It's his vision for real estate going forward. He wants to automate the home buying and selling process.

you want to educate your sphere of influence about what these companies are, what they offer, but you also want to educate your sphere of influence on one other thing, you want them to contact you before they actually make a decision. Train them to reach out to you if they're considering looking at these different options so that you can help them evaluate them and offer to help them interpret any offers that they get. And then also help them compare and contrast iBuyer option with the traditional way of selling.

So that's all the negative. Let's talk about opportunities. I want to talk about a couple of different things, focusing on your relationships. Let's get back to that clarity. Let's reconnect with our people and then attract great prospects by becoming an expert and get a little edge with technology.

if you want to know the actual economic value, your relationships really fall into three categories. A's, B's, and C's. A's are the people that you can probably predict are probably going to work with you and they move. Bs are people you know relatively well, but you're not sure exactly what they would do. And I would classify Cs really in that acquaintance level of relationship. But if you have 100 A's, that should be 10 closings a year, five deals, five referrals, average sales price on the average single-family home in Denver, $5.3 million in gross volume, average commissions, you're looking at about $150,000 in annual income.

Your goal should be to meet new people from the tribe, people that you're really connected with and you turn Cs into Bs and Bs into As. That should be our goal. Then some real estate content, regular communication about real estate reminds them that you're a pro. 

Bruce went through a list of ideas in this episode. Take notes! There are some simple, actionable ideas that will convert to sales for you if you are the pro he's assuming you are! His biggest call to action: Call your people, reach out to them, just connect. See what's going on with them, see if there's any way you can help them. 

About Bruce in his own words:

Many of you may have been to some of my classes. I really enjoy doing those. Hopefully, we can get back to that at some point. I do a lot of coaching. I speak at events around the country. I've written a couple of books, Seven Styles: How to Design Your Real Estate Career of Success and Significance, which is about the lead generation models of work in real estate. And then a book called Words: What To Say When You Don't Know What To Say, which is a sales training manual and reference guide for realtors out in the field. But everything that I do really is focus on helping agents succeed at a high level. And my focus really starts with skills. Working in the business strategy, which is your lead generation piece and then structure, which is how to build your business at the back office. So I focus on all of that, but in order to do that, I do a ton of research.

AgentIgnite is a monthly seminar hosted by Nicole Rueth. Currently, it is an online gathering. Learn more and see how you can participate in the next session in May.

Nicole Rueth

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Let's kick off this episode's theme with a quote from Andy Andrews, author of, Bottom of the Pool.  "You have the power to choose every moment of every day, what YOU do with your time is entirely up to you.  You can invest it wisely or waste it foolishly. 

By choosing how to invest your time, it follows that you are also choosing what you learn, how much you learn, how deeply you understand what you’ve learned, what your imagination makes of it——and in what fashion you act upon whatever that might be."

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Somewhere along the line, the decisions that were made by the government in their haste to solve the consumer need, we got broken along the way. When they solved one problem, what happened is we had three to four new problems that surfaced. The very first problem was all the money that the federal reserve was pushing out in the market buying mortgage-backed securities. They were creating inequality of supply and demand and they were flooding the market with money. Now that money was creating instability and now we have ups and downs, this 2.5% coupon is just the 30-year coupon that we watched similarly to the 10-year treasury. So forget about the specific bond that I'm tracking, but this is the one that we track when we associate what is our 30 year fixed loans doing, our mortgage loans. So you'd have ups and downs, but within each day, you had very little volatility. Then the fed started pushing out all this money and every single day was a massive swing.

Think of a property manager. Property managers don't own assets and they don't have savings accounts specific to that property. They're managing your property. So that rent check comes in every month from that, they take their cut, their 10%, they pay all the bills for any maintenance that needed to happen that week or that month. They might take care of any other expenses and then they cut you a net check. So they don't have a massive piggy bank to take care of what happens if the rents don't still come in, but I'm still required to pay my owners. It doesn't work that way.

FHA said, "You know what? We're just going to wait and see." Meanwhile, Treasury Secretary Mnuchin is saying, "No, we need the stability of the mortgage market to create stability in the real estate market. It was stable coming in. We needed to be stable going out and this is how we do it."

He's leaning in on FHA to make that happen and he's reassuring that it will happen. Now the treasury doesn't have the ability to do it on their own, but he's certainly behind it. So is Federal Chair Powell. Powell Absolutely gets it, he sees it. And interestingly enough, Mnuchin and Powell have become allies in all of this and they're going against the FHA director, Mark Calabria.

Housing is going to get worse before it gets better, but it is going to get better. And it's a timing thing. Remember we didn't start this until mid-March. We're only now in mid-April. It feels like forever. It feels like forever because we're trapped in our homes. But when it comes to financial positioning, we don't quite know where it is yet. Because remember all of the statistics for March were only half right. And now April is not over yet. So what does April's number's going to look like? But it is going to get worse before it gets better. But it will be much better when we come out of this.

One of the things that I know is true is because the housing market was so strong coming into it right up until March, the pending home sales were still strong. They still had people that we're buying. I mean, we had a phenomenal January, February, and March. Even April is off the charts and it's because everybody that we had in the pipeline, what's May to look like? But we came into this very strong. Inventory was our problem. Any of the numbers that were weak, sales numbers that were weaker than they should have been was because of inventory. But January and February were phenomenal. We had a 6.25% growth in median sales price just in January and February alone. Again, because of the lack of supply, but the demand was off the charts.

Remember that yes, manufacturing was down, but consumer spending was like phenomenal and consumer spending is 70% of the GDP. People's wages were up, spending was up, savings were up, they were feeling good. Colorado was the number two wage growth. We had consistent job growth week over week, and we had a really strong mortgage and financial environment as well. So if there was a time, and that's the silver lining I'm hanging on to, it's the time that we came into this being strong, we're going to come out of it strong.

In this episode of the DoubleCommaClub, Nicole asks you, "Are you binging, or are you building?" She covers the DMAR market for the month with a detailed dive into the status of lenders, including nonbanks, unemployment immediate and longer-term effect on demand, and whether you should be guiding your borrowers to take action now. 

Listen to this full episode to get all of Nicole's insights and results from her research for the week.

Nicole Rueth

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We're back with another edition of Agent Talks, and I'm excited to bring Lindsey Benton, who is not only a dear friend. We've known each other for over five years, watching each other's businesses grow. What you have today with Live. Laugh. Denver is a tribe. You have this amazing group of people that have come around and you're all growing together, sharing together and learning together. And I want to share that with everybody else because you're one of the most positive, realistic people I know. You look at everything you dissect, you determine what's important and critical to today. And then what can I do to inspire my team moving forward? And I've watched you grow this team up and just brilliant. Lindsey, I want to start out with you know what the what? You have 15 people on your team licensed. How are you keeping them and yourself motivated and positive during all this change that we're working through?

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In this episode, Lindsey tells us, "I've gone back to the mantra of you cannot feel both gratitude and entitlement at the same time. Or you can fill in different words for entitlement but staying focused on gratitude. We still have the ability to work, although we have limitations. We all have our health right now and continuing to be grateful for those things and those relationships. The other thing I'm trying to do is sift through a lot of the information for them and make sure that we're really passing on the information that's important. So as they juggle everything with work and home and a lot of them are homeschooling for the kiddos or eLearning. I'm just making sure that I'm keeping the information filtered for them and concise. As well as focusing on facts. And when you focus on facts there is not as much fear involved."

Listen to the rest of this 7-minute episode of The Double Comma Club.

Get to know Lindsey better here https://livelaughdenver.com/author/lindseybenton/

Obviously, as people go through the pipeline and their closings happening, we're not getting as many new people in the pipeline, so that will wane, but closings are still happening. Business, with respect to what you can and can't do, is still happening. Then, I want to kind of wrap this up, and then we'll open up for Q&A is, "What can you keep doing? How do you continue to stay engaged?" Keep learning new technologies, whether that's joining the class on Tuesday or doing a different technology, whatever suits you. This is the second half of the Coffee Talk session from April 1 - 

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In this episode, the questions included:

Clients looking to buy - should they sell their home or rent - what are the risks?

Landlords are dealing with renters having the same options that homeowners have with forbearance. What does that mean for them?

How can you be in compliance with state laws and policies, but still serve those who HAVE to sell, who HAVE to buy?

Will there be incentives for first time home buyers as there were in 2008 and 2010?

Any ideas or thoughts of rates and what they will do over the next month or two?

Why jumbos are going away and why are they harder to find?

With people looking for new loans, what are credit minimums and BPI maximums for FHA and conventional?

If you have a 3.875% interest rate - where is the threshold to see a profit with a refinance?

Listen to this full episode to get all of Nicole's insights and results from her research for the week.

Nicole Rueth

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Jobless claims came out yesterday, and they were actually down just a tick, which really doesn't help at all because we're sitting now after three weeks, we have 3.3 million three weeks ago, 6.6 million the week after that, and then just right at 6.6 million, so we had a little bit over that two weeks ago, and then this week, we just came in at 6.6 million. Those are some staggering numbers. Having said that, I am going to continue to go back to the fact that this is not a housing bubble. This is not an economic recession.

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MBA puts together this measure on a monthly basis, and they've been watching the credit availability and it fell off, and it fell off specifically because of those non-government backed loans. I want to talk about this for a second. This is the lowest level of mortgage credit availability since 2015, and a lot of this loss is in the non-government. If I look at conventional, which is non-government backed, which is an interesting term because you actually think of conventional kind of being all-encompassing, the conventional measure, in this case, is the non-government backed, so you're talking about the small banks, the portfolio loans, and the instances where they're not Fannie Mae and Freddie Mac. Those went down 24% already, and they'll probably go down even further the next month when these are measured.

Conforming, which is backed by Fannie Mae and Freddie Mac, was down 2.7%, the number of people that could be eligible versus were eligible last month. This is the measure of eligibility. Jumbo was down 37%. Jumbo has almost become non-existent. Only certain banks are having it, and they're requiring lower loan-to-values, lower debt-to-income ratios, and higher credit scores.

Then, Ginnie Mae, which covers FHA, VA, and USDA was down almost 7%, and that's because of those credit score restrictions that we all saw, where we were coming up off of the 600. Some banks were going to 640, 660, 680, and then many of them were restricting the debt-to-income ratio to 45%. We also saw many lenders saw the loss of the down payment assistance programs. All of that goes into that. We're going to see that number go lower still in April.

Now, interestingly enough, there's a lot of conversations going on today with Chase, who holds one of the largest warehouse lines. Chase CEO and Mark Calabria are, I don't want to say they're buddies, they know each other, and the question is, is, "Is this some sort of a play for market share?" I don't know. I'm just, I'm being human and I'm guessing. There are some conversations going on as far as, "Where is this going? What are the actual goals set behind the scenes that are creating this inability for FHFA to stand up where we need them most?", because that kind of stability is what gives me, the lender, you, the realtor and our consumers that we serve the knowledge and the comfort, knowing that this is all going to be okay, and the housing market, which was so strong before we got here will be that strong, if not, stronger when we get out.

In fact, it's my belief that the housing market could be the very thing that continues to grow our economic strength and pull us out of this recession quickly. Those are conversations that have yet to have been concluded. They're conversations that are still going on. Who is going to be affected most? It's the first-time homebuyer.

Listen to this full episode to get all of Nicole's insights and results from her research for the week.

Nicole Rueth

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Part of our ongoing series this month to support local charities is our focus on Nurse-Family Partnership. Nicole is joined by Michelle Warner from Nurse-Family Partnership in Colorado. Their home visiting program has been greatly affected by COVID-19. They have moved to 100% telehealth. Many of their clients don't have cellphone access. They have lost all access to their nurse at the most critical time in their lives - when they are preparing to have a baby. It's such an isolating time, but without a partner, alone, pregnant it's even more isolating. Anything we can do to help them is appreciated. 

Verizon is donating up to 3800 phones across the country. Nationally N-FP has committed $500,000 to minutes to help these moms stay connected to have access to the social support they need. This was completely unbudgeted since it was so unexpected. They are turning to people to make donations to contribute to this cause.

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DONATE TODAY:

All you have to do is enter The Rueth Team in the comments section and we'll match your donation HERE

About Nurse-Family Partnership:

BEGINNING WITH TRUST, ENDING WITH EXTRAORDINARY OUTCOMES.

Nurse-Family Partnership empowers first-time moms to transform their lives and create better futures for themselves and their babies.

Over more than four decades, research consistently has proven that Nurse-Family Partnership succeeds at its most important goals: keeping children healthy and safe and improving the lives of moms and babies.

Nurse-Family Partnership works by having specially trained nurses regularly visit young, first-time moms-to-be, starting early in the pregnancy, and continuing through the child’s second birthday.

Meet Cindy Bell, executive director of HomeAid Colorado. HomeAid CO has been around for 20 years completing construction projects and providing critical resources to nonprofit care providers, who assist those in our community who are at a high risk of homelessness. HomeAid Colorado provides critically needed construction projects like housing and shelters, and resources like diapers, hygiene items, and basic home essentials.

https://homeaidcolorado.givingfuel.com/homeaid-website

FHFA Director Mike Calabria, said today that they were going to "pause" on setting up any kind of liquidity facility for conventional loans. Unlike Ginnie Mae, which last week, set up a liquidity facility for government-backed loans...FHA, VA, USDA loans. Ginnie Mae said they were going to help support the Servicers of these loans to pay investors, property tax, homeowners insurance and mortgage insurance for borrowers who couldn't make their payment

Typically, Servicers are able to handle changes in the market and handle a situation where a small percentage of borrowers don't make their payment. But, they are NOT able to withstand the magnitude of borrowers seeking Forbearance. if 25% of all mortgage holders take advantage of Forbearance, that could cost the Servicers up to $25 BILLION a month. No Servicer is set up to handle that massive amount of liquidity needs to satisfy investors, property tax and homeowners insurance.

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Mark Calabria stated he prefers to "wait and see" if liquidity facilities are needed, perhaps, in early 2021. Well, Mark, by then it may be too late because mortgage lenders and servicers need the ability to originate and service loans. And without liquidity support, it could put a halt on the ability to provide conventional loans for buyers. Mr. Calabria does not feel things are "not that bad yet". Not that bad yet? Just in the first week alone, there was a 1,270 percent increase in borrowers seeking forbearance. In the second week, there was an increase of 1,896 percent increase. Looking at just one servicer. During the first week available, Mr. Cooper allowed over 86,000 loans to go into forbearance. The second week there were 219,000 loans that went into forbearance, the third week 717,000 went into forbearance. There is no immediate sign of slowing down.

​The Big Question Remains: Is Real Estate Essential?

CAR released a letter last essentially stating that they are needing to re-look at whether real estate is an "essential business". The 3rd update of the Colorado Public Health Order it did NOT include open houses or in-house showings as essential. The definitions are currently being debated among lawyers and said a formal position will be made available soon. As of the writing of this post, that position has not been released.

Transactions are still considered essential. So contract transactions, loan origination, appraisals, and closing are still able to be completed.

RSVP TODAY - Agent Ignite - Online

Nicole Rueth

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This episode is the Q&A portion from the 4/3 Agent Ignite Coffee Talk: How the Stimulus Package Affects Real Estate, and Equity Rich Zip-codes.

Questions included wondering about how new home buyers are affected, more on forbearance rules and recommendations, Fannie & Freddie, and how lenders are putting a PAUSE on new transactions. Listen to this episode. RSVP to join the next coffee talk and reach out to Nicole Rueth directly if you have more questions.

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Coffee Talk:   https://fairwaymc.zoom.us/webinar/register/WN_5xzg3jN3SDiM8mHV4FNQ0w

Agent Ignite:  https://theruethteam.com/Agent-Ignite