According to an article in the Scotsman Guide, the Mortgage Bankers Association (MBA) forbearance numbers increased again last week but at a slower rate.
MBA estimates about 7.54% in servicers’ portfolios were in forbearance as of April 26, up from 6.99% a week earlier. A total of 3.8 million homeowners are now in forbearance plans.
Forbearance in the context of the mortgage process, is a special agreement between the lender and the borrower to delay a foreclosure. According to the agreement, the lender delays its right to exercise foreclosure if the borrower can catch up to its payment schedule by a certain time. (Wikipedia)
As we get back to work and restart our economy, lenders are exercising restraint. Never before have so many Americans lost their jobs in so short a time. Let’s be creative and work for a quick recovery.
Please let me know if I can help you with a private loan.
I have had to really watch myself with this social distancing thing. I am a toucher. I lean into hugs, always shake hands, pat shoulders. I soak up touch. When I’m talking, I find myself creeping closer to the person I am talking to as if I can’t see them or hear them well enough at a distance.
I am certain this economy will recover. People still need homes and loans, but we still may not be able to shake hands for a long time.
In some American states, selling real estate is still an essential occupation as is banking. When we are selling homes or signing loan papers, we are working with others in small groups, but we may be working with people from other states or countries and need to keep ourselves and our families safe during this Covid-19 pandemic.
FIRST & IN THE FUTURE
Use only appointment-only open house formats this way you know who is coming when and you are not surprised. But advertise this new situation on the door so people don’t come in unannounced. This will help you assure that only one group is walking through a house at a time.
Use social media to make virtual tours, even if people will want to see a property before they buy. They can spend more time exploring the house online and visit the website multiple times without having to worry about personal protection equipment.
Prepare business cards and signs to reflect appointment-only restriction.
Place a separate set of clothes and shoes for home just inside the door to your home or in your mudroom if you have one.
Remove your wedding ring.
Stop using a purse or briefcase and instead use a plastic or washable cloth bag for business cards, open- house guest books and pens.
Place a fresh set of business cards and other items in 6 or 7 bags and label them for each day. Take a fresh bag of supplies with you to an open house or to the office every day.
Equip yourself with gloves, face mask, face shield, and booties for your shoes (For open house).
AT THE OPEN HOUSE
Spend time cleaning doorknobs and surfaces before and after a showing, A glossy kitchen counter can be a magnet for a tactile person. They just have to run their hands over the surface. Windowsills might also need some disinfectant. If your store is out of prepared disinfectant use original unflavored Listerine in a spray bottle.
Wash your hands before and after a showing.
Invite your potential buyer to wash their hands before and after touring the house. And, provide a hand sanitizer.
Remind everyone to be aware of where they set down their mobile phone so they don’t set it down on counters or in the bathroom or on other shared surfaces.
Stay alert to what is touched during a showing so you can be sure to clean these surfaces with extra attention after the showing.
You can wear gloves but know how to take them off and dispose of them correctly without contaminating your hands and everything around you when you take them off. Peel them off before you touch your car, turn them inside out and place them in a plastic bag and tie it shut. Put the plastic bag in the trunk of your car for later disposal if there is no trashcan nearby.
Keep your distance from each other. This is the best way to prevent the spread of a respiratory disease.
Wearing a mask will protect you and your client. While wearing a mask, smile more, wink and speak so you are sure to acknowledge people even if you keep your distance and do not touch.
Hang up the bag of supplies you return with near the door, spray it with disinfectant and Let the bags hang unused for a week to 9 days so the virus will have time to die out before you use the bag again.
Strip out of your outside or work clothes and shoes near the doorway or in the mudroom.
Wash your hands.
If you are wearing gloves, dispose of them before touching your clean clothes. If you want to reuse them, place them in a plastic bag so you can disinfect them later.
Dress in your indoor clothes.
With gloves on, bag us your work clothes and wash them immediately.
Let jackets and hard items rest for a week or 9 days at room temperature before using them again to give the virus time to die out.
An open house is not as dangerous as a concert or a basketball game. Usually there are 3 people involved and they are usually adults. Perhaps sometimes parents bring their children, but that is something that can be avoided right now.
Unlike a family, the 3 people involved in the showing usually do not know each other intimately. The buyer does not know where the realtor had been recently and neither know where the homeowner has been recently if they are still living in the home being shown. Precautions need to be taken so you don’t catch the coronavirus or bring it home to your family.
I hope that I can be of help to you this month. I can be reached at
Although many states are exempting building, utility, road, and bridge construction from “stay-at-home” work shutdowns carried out to prevent the spread of the coronavirus, some states are calling for a cessation of all residential construction because it is not defined as “life sustaining” work or “construction of essential infrastructure.” If you read the recent Dallas County Shelter in Place order, you will see that Dallas County has not shut down residential construction. However, some states and counties across the country have. A fix-n-flipper needs to pay attention to the exemptions and inclusions in the work-stoppages orders that are being issued by state or county governments because it may affect your schedule and costs in ways you cannot predict.
Dallas county residents are being ordered to stay in their homes except for crucial work and errands, beginning 11:59P.M. Monday. All businesses that aren’t deemed essential also must stop operating.
Dallas Morning News, Updated 3/22/2020
Your construction loan has or will have terms and limits, usually 24 months for a fix-n-flip loan that will pay 100% of your estimated rehab costs. In an epidemic, you may find that you cannot finish construction in 24 months or within the costs you estimated months ago. If you are faced with a situation like the coronavirus pandemic, something you could neither foresee or prevent, you need to review your contracts for “Force Majeure” and price escalation clauses to understand who bears the risk in the case of work stoppages or rising material costs and shortages that are due to situations that cannot be predicted or avoided.
Be proactive. Start working this out with the organization or lender that lent you the money. Be sure to understand that if the project needs to be stopped and the contract rewritten who calls the stoppage and who and how everyone involved must be informed.
Delays often ripple through a project and can cause you to miss the deadline for your loan to be paid back, increasing your interest and penalties. Perhaps you can’t get a plumbing fixture delivered or a critical subcontractor is quarantined, and the next trades scheduled to work cannot proceed. Jump in and be aggressive about finding local alternative materials and even workers.
Louisiana becomes the ninth state to announce a statewide shelter-in-place order since California did so on Thursday night. Residents in Connecticut, Illinois, New Jersey, New York, Ohio, Oregon and Pennsylvania have begun or are about to begin staying at home for at least two weeks.
The Advocate, March 22, 2020
Below is a list of ways the coronavirus pandemic might affect your fix-n-flip project:
Sick workers who must quarantine for 14 days
Exposed workers who must quarantine for 14 days
Workers required to take off work to care for children when schools close
You have to take off work to care for your children when schools close
Subcontractors or specialty contractors who do not show up
Government permitting offices shutdown
Material shortages caused by epidemic in China or elsewhere
Shipping delays due to port-of-entry quarantines
Construction work stoppages in your area ordered by government to slow the spread of disease.
Material shortages cause prices to rise
Shipping costs rise owing to transportation shutdowns
If you are in the process of negotiating your loan and calculating your expenses, you need to be very careful in estimating your materials. Right now, in the middle of this epidemic, it is for me, or might be for you, impossible to tell how long impacts to business will last. Review your contracts to include appropriate “Force Majeure” and price acceleration provision clauses in your contracts. Look for local alternative suppliers.
Learning to negotiate is critical to investing in real estate. Although this is not a full class on business negotiating, or even a brown-bag lunch seminar, I found this list of tips on negotiating on the Forbes website, and it is helpful. The article, “15 Tactics for Successful Business Negotiations” is by Richard Harroch and was written in 2016. The techniques, or tactics, are worth considering.
It is very likely you will naturally have some negotiating ability or you wouldn’t be in the real estate business. However, your skills may not be evenly distributed, and it is good to reflect on a comprehensive list so you can bring to mind skills that you might need to work on. For example, perhaps you are not shy at all, but you hate paperwork. As you will see from the following list, both of these traits, no fear and paperwork, will have a place in your negotiating tool box.
The 15 tactics include:
Listen and understand the other party’s issues and point of view.
Key: Do not do all the talking.
Key: Review the business’s website and do Google and LinkedIn searches to learn all you can about the other party, the person you will be negotiating with, past deals, and what you competitors have offered or their pricing.
Keep the negotiations professional and courteous.
Key: “Don’t be an asshole.” Establish a good long-term relationship.
Understand the deal dynamics.
Key: Who has the leverage, time constraints, alternatives available to the other side, who is getting the payment?
Always draft the first version of the agreement.
Key: This lets you frame how the deal would be structured. Balance is key.
Be prepared to play poker.
Key: Know your walkaway price and stick to it. Walkaway if you cannot live with the offer.
Avoid the negotiating by continually conceding.
Key: the other party will learn your tactic and keep producing unreasonable demands, knowing you will concede. The deal will not get done.
Keep in mind that time is the enemy of many deals.
Key: be prompt and turn documents around quickly. Keep the deal moving.
Do not fixate on the deal in front of you and ignore alternatives
Key: Alternatives let the other party know they have competitors.
Do not get hung up on one issue
Key: Set aside hot issue for later so you do not get stuck on it and maybe can think of a creative solution.
Identify who the real decision-maker is.
Key: You cannot get anywhere if the other party cannot say yes or no. If you have the leverage, ask to speak to the person who has the power.
Never accept the first offer.
Key: Counteroffers and some back and forth will most likely lead to both parties being satisfied with the deal.
Ask the right questions.
Key: Do not be afraid to ask questions.
Prepare a Letter of Intent or Term Sheet to reflect your deal.
Key: The letter reflects your view of the key terms of the deal.
Get the help of the best advisors and lawyers.
Key: It is often worth the money to hire an investment baker or real estate attorney in a complicated deal.
As a broker, I can help you make the funding contacts and fill out the applications. But, in the business of real estate investing it is worth your time to learn to negotiate so you are satisfied with the deal you end up with.
To read more from Richard Harroch who is a venture capitalist in the San Francisco area.
When money comes into your marriage after the top of the wedding cake is long gone or collapsed in the bottom of the freezer, even a happily married couple may experience new uncertainties about how to make sure these new assets remain with their rightful owner should the marriage break up. As this recent article in (I)Investopedia, points out, the postnuptial agreement (postnup) is the legal tool made specifically to handle changing financial conditions in a marriage. Why is the postnup needed? Because… things change.
In the article “5 Signs You Need a Postnup,” Amy Bell reminds us that financial circumstances change during the life of any marriage, even a long successful one. Regardless of where the money comes from, say from the profits of a successful business or from a massive inheritance, new money flowing into a marriage might call for an agreement about how money will be divided if the marriage breaks up.
Without a written agreement spelling out your wishes, assets brought into the marriage after the wedding day would generally become joint assets and be divided equally or according to the rules imposed by the state you live in. The postnup agreement is a way to preserve assets for your own use or to ensure that inherited family money is passed down to your children from a previous marriage.
So, if talk of contracts and love made you change the subject before the wedding day, and you never signed a prenup, remember that the postnup is an agreement. While you are married, hopefully you can agree on what is fair if things should go badly later. And, despite the old saying that everything changes, the statistics on marriage longevity in America have remained not good.