Financing

Is the 7/23 Dead? Nah…It’s Just Resting

October 14, 2014 By Rick Jarvis

From 1995-2006, I was a 7/23 addict.

The ‘7/23’ was a loan product with a fixed rate for 7 years which became an adjustable rate product at the end of the 7th year. With the fluidity of the market, people were moving constantly and building equity quickly mattered greatly.

The Hybrids (7/23, 5/1, 7/1, 3/1…and others)

From a lender’s (and Realtor’s) perspective, the 7/23 was the best product ever dreamed up as it offered the best of both worlds – a lower rate and fixed payment. Effectively, a 7/23 offered the stability of a fixed rate product at rates roughly 2 points below the 30 year mortgage for the first 7 years, at which point it would become a 1 year ARM (adjustable rate mortgage.) The 7/23 was especially popular with those who knew their first purchase was likely to be a 10 year or less hold and/or move up buyers. If you were not going to be in the home for 30 years, why pay for the privilege of a rate for 30 years, right?

The 7/23, and with it, a host of other hybrid products which blended fixed periods of varying lengths and less frequent adjustments (than the standard 1 year adjustable products) made a lot of sense.

And then 2008 happened…

The Crash and The Fed’s Impact

When the market crashed in 2008 and the Fed began to buy down the rates, the low pricing on fixed rate products made adjustable products largely obsolete. Why take the risk of rate adjustment when you can lock a 4% rate for 30 years? It made no sense to do anything than lock for as long as possible. Adjustable rate products got placed on the shelf along with the McMansion and the Humvee and we have sort of forgotten about them.

Until now…

The New Mortgage Market

We are coming to the end of an era, folks, and it is the end of the 4% 30 year fixed mortgage. Janet Yellen (the Fed Chief) has more or less announced the Fed’s stance is about to change and with it, the last of the 30 year fixed rate mortgages will be originated in the early spring of 2015 (probably.) We will look back in 20 years with our real estate grand kids on our collective real estate knees and tell them the story of the 4% 30 year fixed mortgage products and how they used to rule the lending world. Our kids will gasp with amazement at the idea that mortgages used to be 3.875% 1+0. We will also tell them about $70/SF for housing…and pagers…and flip phones…but I digress.

As the Fed begins ease the Quantitative Easing (see what I did there??) which has kept rates so low for so long, we will begin to see rates spread back out more than the 3/4 rate point they are currently. The market does not really drive pricing (the Fed does) and when they (the Fed) decide lift their foot off of the brake and let the market go back to driving the long bond, then we will see rates rise, especially the further out the commitment (i.e. 30 years). As rates rise, adjustable and hybrid products will become more and move in vogue.

So What Do We Do?

What does all of this mean?

It means this – decision making is returning to lending. Right now only real decision a borrower needs to make it when to lock (watch this VIDEO on ‘Rate Protection’ some lenders offer, kinda cool). Soon, borrowers will need to understand all of the mortgage products available to them as the difference between the long term and short term rates will increase the complexity of the decision.

Take a look at the rate sheet from 1995 and tell me, what would you have done in January (and let me help, the difference between the 30 year and the 1 year ARM is $454/mo)?

HSH_S_National_Monthly_Mortgage_Statistics_-_1995 — Rates can move quickly and good lenders understand market forces

Good question, eh?

In 10 years, you would have payed over $50,000 in additional interest if you chose FIXED over ARM. That number decreases dramatically if your payment adjusts up but what if it adjusts down? Will it go up…or down…and when?? What will happen?? HELP!!! The bottom line is you need a true pro to help you decide.

Lenders and Guidance

I think the key in all of this is to be presented with facts, options and guidance. With the prevalence of online sources quoting rates without any knowledge of the market, the customer is the loser. Quoting a rate is not providing information, despite what the online lending portals want you to believe. I cannot tell you the number of times a client has had a miserable experience when they tried to use a ‘lender’ with an 800 number and a 5 digit extension whose hours are obviously not east coast. It NEVER (repeat, N-E-V-E-R) works out.

What are the characteristics of a good lender?

A robust and talented crew (often called the ‘Secondary Market Group’) paying attention to Wall Street, The Fed, Congress, Oil, Employment, Housing, weather and about every other input to the market which can drive rates. They keep the originator up to date when the market swings (and I cannot overstate the importance of their information and the benefit our clients)
A direct line to their underwriting department so that they can promise a date by which your application is reviewed and approved
A direct line to their processing department so you can see where the loans are and when you can expect paperwork delivered
A talented, ethical and diligent group of loan officers who make sure their company can deliver as promised and to meet the timeline you need

Oh, and by the way, they should have some awfully low rates, too. The best ones always do.

The lenders we work with have all of these talents and skills for sure. It is why we recommend our clients work with them.

Does yours?

Understanding Mortgages

August 17, 2014 By Rick Jarvis

The power of compound interest... — The power of compound interest…

I once heard someone say (and I thought it brilliant) that when you decide to buy a house, you are not only buying a home, but you are also buying the money to buy the home. What they were implying is that the price you pay for the money you borrow (the interest rate) will have a significant impact on much your financial life.

How Much Interest Did I Pay? WHAT?!?!

Ok, a $300,000 loan at 5.5% over 30 years requires a payment of $1700/mo (before taxes and insurance) and over the course of the 30 years, you will have paid $317,000 in interest. In effect, a 5.5% mortgage makes the amount of interest you pay for the money you borrow as expensive as the asset itself. While interest rates dipped below 5% and stayed there for a considerable period of time, the sub 5% interest rate is historically more rare than Haley’s comet. The impact of interest will become increasingly more impactful soon as a rate of 8.25% (where they were in 2000) will mean the interest you pay is actually 2x the amount you actually borrow …

American Finance

The majority of American finance is driven by the monthly payment.

Almost all of our bills arrive 12 times a year, from credit cards to utilities to cars to Netflix and thus, we think in terms of impact to our monthly finances. We are a month to month society whose entire debt structure is driven by how much we can afford per month. Ask your local lender for any type of loan and the first question will be about your monthly income…same for the local Chevy dealer. With almost every loan driven by the monthly implication of the payment on monthly income, it is no wonder we think in terms of monthly payment.

So, lets take a look at what is REALLY going on inside of a mortgage and not just what the monthly payment is.

The 30 Year Mortgage

First, the 30 year fixed mortgage in the amount of $300,000 originated in January of 2000

$1,703/mo payment
$613,000 in total payments over the life of the loan
$313,000 in total interest paid over the life of the loan
Last payment due in December of 2029
After 5 years, the balance is still over $277,000
After 10 years, the balance is just over $240,000
After 15 years, the balance is just under $200,000

In 15 years, you have paid off just under 1/3 of your mortgage.

The 15 Year Mortgage

Now, lets explore what happened if you chose a 15 year mortgage in lieu of a 30 year mortgage.
The 15 year mortgage was computed at 4.75%…15 year mortgages tend to trade at .75% less than 30 year mortgages:

$2,333 monthly payment
$420,000 in total payments over the life of the loan
$120,000 in total interest paid over the life of the loan
Last payment due in December of 2015
After 5 years, the balance is $204,000
After 10 years, the balance is $100,000
After 15 years, the balance is $0

How Do They Compare?

Consider these points:

The difference in payments over 15 years ($2,333-1,703 x 180 payments) is $113,000.
The savings in interest is $193,000 over the life of both loans ($313,000 – $120,000)
The debt is paid down by $200,000 in 15 years fewer ($200,000 vs $0)
The $113,000 you invested in your mortgage swings $393,000 in your favor in 15 years.

Stated differently, the ‘extra’ $603 per month you make in payments is really the same as being invested in an investment product whose PRE-Tax rate of return approaches 15%. Additionally, the favorable tax treatment that real estate receives will increase the return by several points (depending on your tax rate). A 15%+ rate of return on cash with little to no risk would make Warren Buffet sit up and take notice.

Amortization_Schedule_Calculator — Use ‘Loan Amortization Calculators’ to help your analysis of potential mortgage products.

Let me repeat…the difference between $2300/mo and 1700/mo is close to $400,000 in 15 years!

So when you look at the impact of mortgage on your purchase, you see that the structure of your debt can make a HUGE impact on your net worth.

Personally, I get frustrated when I hear people talk about the monthly payment with little, if any, discussion about the impact on the actual debt. Much of our collective indebtedness can easily be attributed to a lack of fundamental understanding of mortgage principles, by both the public and the lenders who provide the advice.

Choose Wisely

Am I saying that everyone should use 15 year mortgage products? No. I am saying to secure the maximum amount of debt with little to no understanding of its impact is foolish. Many legitimate reasons exist to stretch your debt to the maximum…but many reasons not to also exist. Question your strategy.

Conventional underwriting looks at your income relative to you payment and not to the actual debt amount. Mortgage companies underwrite you more on how much debt you can reasonably service and not really at how much you can reasonably repay. It is a huge difference.

The takeaway advice is this … spend as much time understanding the loan you seek as the house you buy. Numerous mortgage calculators exist to help you better understand the impact of rate and term on mortgage interest – (List of Mortgage Calculators here)

Looking at homes online (or in person) is a lot more fun than poring over numbers, but securing a poorly structured mortgage is far more costly in the long run than even a poorly constructed home.

Most Superior Awesome Peerless Pinnacle Realty

July 30, 2014 By Rick Jarvis

Elite Pinnacle Moon Realty has a nice ring to it... — ‘Above Everyone on the Moon Realty’ has a nice ring to it…

We (Realtors) try way too hard.

Our industry, at some point in our past, quit naming real estate brokerages after the founders of the company (or their market location) and began using adjectives and adverbs implying increasing levels of superiority. Glance at any roster of companies in any MLS Board and you will see a list of names suggesting perfection, self-actualization and/or rapture.

I can only assume that there are more than a handful of clients who have experienced less than an ‘elite’ or ‘superior’ experience (or worse) from ‘Super-Duper Elite Realty’ or ‘Awesome Real Estate’ (I actually found a company branding under ‘Awesome Real Estate‘ in Florida!)

Put down the Thesaurus now and step away.

_____ Realty

If we really wanted to name our companies accurately, we should try giving them names like:

Consistently 20 Minutes Late Real Estate
Never Returned Your Call Properties
Probably Should Wash My Car if I am Going to Show Property Today Realty
Ill-Prepared Associates

I know I could go on creating names for quite a while and I am sure the public could, too.

Focus on Service

The practice of naming a company after an action verb or superlative term which rarely describes the level of service provided only calls attention to the lack of connection between the promised and delivered results. It hurts us all.

So maybe, instead of trying to outdo ourselves with names that ring extremely hollow, notably arrogant and often just plain ole dumb, maybe we should be focusing on providing what the public wants … knowledge, insight, analysis, value, transparency. Focusing on what our clients want seems so obvious but for some unknown reason, we call ourselves ‘elite’ when our service levle is the exact opposite.

Portals or Agents?

The big news in our industry is the increasingly powerful impact of the online portals of Trulia, Zillow and some ‘yet to be named’ company currently in its beta test somewhere in a garage in Silicon Valley. As we spend our time trying to create a name that makes us appear more important than we actually are, these behemoths, stocked with drawerfuls filled with cash and workstations filled with Stanford graduates, are currently in the process of creating REAL value for the client. And guess what, they are doing it (or at least the public feels that way.)

At One South, we are attempting to do the same thing (adding value, not renaming our company to Superior Elite Best Thing Ever Realty.) By using the data provided to us by our MLS, applying advanced analysis AND local knowledge (something Trulia and Zillow’s computers in California and Washington will never have), we provide our clients with true insight into the marketplace.

For now, we will keep our boring name and focus on providing our clients with the intelligence and analysis they need to make informed decisions.

Assessments, Appraisals and Zestimates

July 5, 2014 By Rick Jarvis

Why is the assessment so high (or low)? Why does Zillow say my house is worth so little (or so much)? Is that the same as my home’s Market Value? And why is the appraisal different from the assessment?

It can be confusing to say the least.

Agents are asked a version of this question with regularity and often, time does not allow us to fully explore the subtleties of the answer. The summary answer is that each ‘valuation’ is estimating a different value, using differing data and for differing purposes.

Market Value (or Fair Market Value)

iStock_000000808927Small — Wall Street seeks to measure Fair Market Value of almost everything imaginable…

Any discussion of the different valuations begins with the definition of Fair Market Value (FMV). Fair Market Value is the measurement which most closely reflects the value of the asset at any given point in time. The simplest definition of FMV is: the price at which both a rational buyer and a seller would exchange the asset neither under undue pressure.

Two key points to remember :

FMV is established by the market
FMV measures a specific moment in time

Stated differently, FMV is NOT established by a third party at a point in the PAST. While there may be additional interested parties to the transaction other than the buyer and seller (lender, mortgage insurer, title company, assessor’s office), they are not the ones who set the FMV. FMV is set by the market and all other valuations SHOULD be driven by this fact.

Alas, it is not always so. FMV is under attack by the other parties in the transaction and in order to make an informed decision, a buyer or seller needs to understand the intent of each of the other forms of valuation.

Below begins a discussion of the other common valuations and how they are established.

The Assessment (Tax Assessment)

Want to go down to City Hall to protest your assessment? Here is where... — Want to go down to City Hall to protest your assessment? Here is where you go…

Each year, property owners get a piece of paper from their local City (or Town) Hall asking them to remit payment to the treasurer for their property tax. We all open the bill with curiosity to see where our ‘assessment’ is and generally, it is met with a grunt, nod or gasp. Sometimes we feel it is so egregiously incorrect we place a call to the local assessor’s office to argue that the value is either too high (meaning you are paying too much in tax) or too low (meaning that you wish to pay more in tax…not sure I understand why people wish to argue their values UP, but I digress…) Regardless, the assessment value is what your property tax bill is based on.

Now, how is the assessment established? Much like Realtors, assessors use a combination of factors including size, age, beds, baths and location, as well as sales price of other ‘similar’ properties…and establish a value. A city or county does not have to be right, they just have to be ‘close enough.’ In reality, the perfect assessment is one which generates the most revenue without making its residents vehemently complain. As the actual bill is computed by taking the tax RATE and multiplying it by the tax ASSESSMENT, so a county is better off to lower assessments and up the rate…which they do with regularity.

So how accurate are assessments? A word that comes to mind is ‘somewhat.’ The assessment uses the least current information (tax assessments are generally adjusted on an annual or bi-annual basis) and it uses the least accurate information. Since the assessment department does not see the information in MLS and rarely (if ever) visits the home, an assessors office will likely not know if a home has been improved or unfinished areas are completed (think 3rd floor or basement.) The assessors office will likely not know (or really care) about the condition of a property (unless it is in need of condemnation) or if deferred maintenance has been kept up with and if the grass is cut regularly…despite all of these factors impacting FMV.

Accuracy Level – 85% at best and generally below the FMV, unless the market is falling dramatically.

Want to see what an appraisal looks like?

The Appraisal

If you have recently gone through the purchase process and used a mortgage as a part of your purchase, you are familiar with the appraisal.

So what is an Appraisal? An appraisal is a valuation process required by almost every lending institution when a buyer is using debt (a mortgage or loan) to purchase a home.

It goes like this – a bank contracts a professional appraiser to examine the property and offer an unbiased opinion the value. An appraiser (generally) has access to the most accurate information (MLS data), the most recent sales and actually visits the property to confirm measurements and condition. (*** It should be noted that appraisers are licensed and required to attend continuing professional education and many seek additional designations in order to help value more and more complex properties. In addition, all appraisers use standardized forms to help guide the process ***)

How do appraisers establish values? While the appraisal process notes the three primary methods of valuation (comparable sales, income approach and replacement cost) the comparable sales method is the most common when establishing value of single family homes. It is the job of the appraiser to compare the subject property to 3 of the most applicable (and recent) sales in the immediate marketplace and make adjustments for any differences. Simply put, an appraisal on a 5 bedroom home in Salisbury should be compared to other 5 bedroom homes of similar size and age in Salisbury with small adjustments for differing features (garage size, lot size, new roof, etc.) The houses being used for comparison purposes should be substantially similar…thus the term ‘COMPARABLE sales.’

What is the purpose of the appraisal? The appraisal is used by the bank or mortgage company to establish the maximum loan amount. Typically, the effective interest rate increases (and this is a gross over-simplification) the more debt is applied to the value of the home. Stated differently (and another incredibly gross over-simplification), a bank might give you an interest rate of 5% if the loan is 80% of the value of the home but closer to 6% if the loan is 90% of the home’s value. The bank uses the appraisal (and NOT THE SALES PRICE) to establish the ‘loan to value’ ratio for the home. If the appraisal is less than the sales price, then either (and alert, my last gross over-simplification is coming) the buyer must make a bigger down payment or accept the higher rate. Needless to say, a great deal hinges on the appraisal, especially when maximum loan amounts are sought, and many deals have failed to consummate due to an appraisal coming in lower than the sales price.

Then how do appraisals differ from FMV? In many minds (including appraisers, underwriters AND many Realtors) an appraisal and FMV are one and the same…which is unfortunate. An appraisal is measuring value at a past point of time to establish a value in the present under the assumption past and present market conditions are effectively constant. Using recent history as an example, the rapidly accelerating (or decelerating) markets of spring 2013 (or summer of 2008), the appraisers were being asked to value properties whose values were literally shifting several percentage points each month and thus, no longer accurate.

And remember, the appraiser did not see what the buyer saw during their home selection process. A buyer can easily look at 20 homes during their search and select the best option given the available homes at the time. The appraisal seeks to compare the subject decision to one made during a different time period and by different people who saw an entirely different set of homes. Far too little attention is paid to this hugely important fact.

Real_Estate_Market_Statistics_for_Zip_Code_Report___RBI — This chart shows median sales price in 23220. Do you think that a sale closed in January can be used to measure the value of a property contracted during May?

Regardless of the arguments presented above, the appraisal is USUALLY accurate enough (in most instances) and while not perfect, is probably the most accurate of the measurements of Fair Market Value.

Accuracy Level – 95-98%

The Zestimate (or other Automated Valuation Models…sometimes called AVM’s)

Zillow buries their accuracy charts deep in their site but they can be found if you know where to look…or by clicking here.

A lot has been written about the issues with Zillow’s estimate of value. They are far from the accurate estimates the market feels they are.

In Henrico County, for example, Zillow offers the following disclaimer – a Zestimate of $400,000 means a computer in Palo Alto has estimated that the ultimate sales price be +10% in 64% of the cases. The other 36% of the time, the value is less accurate than that.

Use the Zestimate at your own risk.

Accuracy Level – see the chart that Zillow publishes

Summary

If there is any takeaway from this post, it is the measurements of value are all measuring different things for different parties. Do not mistake any of the varied measurements for FMV. If you and your agent take the time to do the correct homework and to structure the search correctly, then the correct outcome will occur. Before you allow a Zestimate or Assessment to cloud your view of a home you are considering, take a good look at the methods used to establish the valuation and ask yourself who is doing the measuring and how they came to their conclusion. If you do your own homework and strive to understand the forces that drive the market, your own estimate will be far more valuable than anyone else’s.

The Evolution of a Buyer

February 9, 2014 By Rick Jarvis

iStock_000000995347Small — Darwin, obviously…

The word ‘evolution‘ is generally defined by a sense of growth or improvement over time. Living things evolve, as do more theoretical things, such as ideas, processes, societies and technology. Evolution surrounds us.

Applied to real estate, the concept of evolution is most apparent in the stages of growth the best buyers go through on their quest to buy a home.

How Do Buyers Evolve?

It is important to begin with the following statement – the market that exists today has not been seen since approximately 1994 and the home buying experience of the period of 2003-2012 has almost zero resemblance to the buying experience of today. The importance of this cannot be understated and as soon as a buyer understands that what they remember about buying a home 5-10 years ago (or more) will offer little value to the process of home buying today. Even the buying experience from as little as a few years ago differs radically from that of today. The current market has inventory conditions tighter than any period in modern history and the Dodd-Frank Act has permanently altered the mortgage markets in ways we are still discovering.

Evolutionary Stage One | All of the Good Cheap Houses Sold in 2009 and 10

When the market rolled over, demand for housing stopped before production ceased. Effectively, the lag time between when everyone realized the magnitude of what was happening and when nail guns fell silent, meant that we continued to produce homes at an incredible pace for an additional 6-9 months despite demand falling to almost zero. The US created roughly 2 million new homes in 2007. By 2009, we built less than 500,000.

Needless to say, the production which continued created an incredible overhang of quality inventory that the market was forced to absorb prior to it resetting itself. This overhang, many times brand new or recently built (and many times now owned by the local banks), provided a plethora of quality housing available for sale at steep discounts well into 2011. Additionally, special financing options were used to move excess property from the bank balance sheet into the hands of individual buyers.

As prices began to stabilize, largely due to the absorption of this inventory, the buying public began to show up to buy, only to find out that the 20-30% discount on great home was no longer an option.

Evolutionary Stage Two | Every House I am Interested in Sells Before I Can Get to It

I believe each Realtor somehow knew that when the market turned, it would turn quickly (the inventory graph below tells the story better than any words ever could.)

Market values by 2010 were as far below trend as the values had been above trend in 2007. By 2015, the same conditions which drove the market to its heights (far too much demand for the existing supply) were about to occur again, albeit for a different reason (far too little inventory for the existing demand). The spring markets of the last several years brought bidding wars, multiple contracts and escalation clauses (all hallmarks of 2006/7) in many sub-markets of Richmond. The conditions are unlike to change as building has still not caught up with demand and ‘quality’ don’t sit around long, especially in mature neighborhoods.

Expecting to be able to take your time and sit on your decision for several days will result in lost opportunity.

Evolutionary Stage Three | Every Contract Price Seems to Be Higher than I Expect!

iStock_000003466249Small — If you drive while looking out your mirrors, you just might not being paying attention to what is in front of you.

Appraisals, assessments and Trulia/Zillow estimates are all driven by comparable sales. Comparable sales are PAST events and represent where we WERE and not where we ARE. If you are exclusively using events from the past to drive current decisions, your estimates of value will feel low relative to the actual market values. While this may feel slightly disconcerting, the same statement can be said during the free fall of the market in 2009 (albeit in the exact reverse) meaning everyone felt as if they were making great below market deals, only to find out the market was falling faster than they realized. Past events are helpful in establishing where we have been…use them for that purpose.

Evolutionary Stage Four – Every Seller (and/or listing agent) is Becoming Unrealistic Again

Denial of reasonable repair requests, refusal to renegotiate when appraisals miss, ‘shopping’ contracts, missed deadlines for response, pocket listings … they are all starting to occur again. When response times are not honored, contract agreements ignored or other behaviors designed to extract value after the fact, buyers become frustrated and decision making becomes poor. Just remember, when the market was flipped, buyer behaviors exhibited in 2009/10 were exactly the same. When one side of the market has an extreme upper hand, they will act accordingly.

When you are buying into a tight market, expect these behaviors. Being surprised or frustrated by questionable seller behaviors is a recipe to miss the bigger picture.

Evolutionary Stage Five – Trulia and Zillow are Total Crapshoots and Cannot be Trusted, Despite Some Really Great Commercials

Data_Coverage_and_Rent_Zestimate_Accuracy_-_Zillow — In their best markets, Zillow can only estimate the FMV of a $300,000 home within $30k about half the time…

In 2009, Trulia and Zillow were nothing more than websites with funny names. This is no longer the case.

Today, T/Z (unfortunately) represent the housing gospel in many folk’s minds and thus (poorly) impact many buyer and seller decisions. It is one of the most unfortunate developments in our industry in the past 5 years. Simply put, the data that T/Z use is not accurate and thus, their estimates of value are poor (I am being kind) and inventory they represent as available is questionably accurate.

For reasons I am not entirely sure I understand, many feel that a computer in either Seattle or San Francisco knows more about the market than those locals who live it and breathe it daily. T/Z, are amazing technological achievements and offer some great tools, it is just that which they do most poorly (value estimates and availability) is what they tout as their best features.

If you wish to rely on T/Z to help you buy a home, I wish you the best of luck.

Evolutionary Stage Six – Appraisers and Underwriting Departments are Petrified of Mistakes Thanks to Dodd-Frank

Business_Latest__Dodd-Frank_fail___MSNBC-2 — Markets hate uncertainty and Dodd-Frank offers it in droves.

The Dodd-Frank Consumer Protection Act is another classic example of government intervention negatively impacting the market it was created to protect. Dodd Frank increased regulation, capped compensation to lenders, decreased product choices and created additional bureaucracy. It has effectively slowed the market and increased the cost of administration. It was also enacted well after the financial crisis had occurred and largely repaired itself.

In the short run, the act has created an atmosphere where decision makers are waiting for legal precedent to guide their actions (think ‘lawsuits’.) Even several years after passing the law, only half of the over 400 new rules created under the act have been finalized…The level of uncertainty created by Dodd-Frank is staggering. Currently, those in the mortgage business have little guidance and therefore, decision making is stiflingly slow and conservative. Any loan which does not fit nicely into the proscribed box (think ‘most every loan’) represents an unnecessary challenge.

Evolutionary Summary

At the end of the day, the evolution one must go through has more to do with understanding market conditions than anything else. The past 5-7 years has brought about monumental shifts in values, processes and inputs unprecedented in any time in history. Failure to recognize not only the difference in the process, but the impact of the differences will lead to failure.

Nothing about today’s home buying bears any resemblance to the past and those who seek to compare the two are destined to struggle.