The Waiver

The FHA traditionally does not insure financing for properties with a less than 90-day resell turnaround. This policy exists to control property speculation and to protect the ultimate consumer. However, in 2010 the FHA waived its restriction on flipping through 2011 in an attempt to encourage real estate transactions. Since then, the FHA has insured nearly 42,000 mortgages totaling more than $7 billion on “flipped” properties across America. See here.

Under pressure to continue to ease restrictions on the housing market, the FHA has decided to extend its waiver through this year.

The Dilemma

While these numbers may seem large, they are actually quite small relative to traditional single family residence sales. In California, the percentage of FHA mortgages backing flipped homes is minuscule. This is because brokers and principles face certain disclosure dilemmas and distinct liabilities during a property flip regardless of whether the property is otherwise eligible for FHA financing.

Brokers and agents representing home buyers during a flipper’s resell are bound by a fiduciary duty to their clients and a general duty to the public. Sellers must disclose all material facts which might influence the sale price. Facts that indicate a significantly higher or lower present value than the one being considered should generally be disclosed – and problems can occur when those facts are not revealed.

Of course, most lenders continue to restrict flips as a condition for granting short sale approval and many title companies have policies that restrict double escrows. My past article on double escrows during short sales is reproduced here.

Let me ask you a simple question – if you had a choice to drink from a body of water, which would you prefer – a river or a pond? Why?

Water in a river remains pure because it is moving, and it is generally agreed that the quicker it is moving, the more pure it is.  When water is stagnating, trapped, or immobile, what happens?  It collects a lot of crap and becomes polluted.  Right?

So, what is the message we all can learn from water?

That it is critical for us to continue moving fast and forward if we are interested in improving.  Otherwise we could be in danger of becoming idle, polluted, and turn into crap.  It is interesting to note that as children, we are expected to grow and improve every year mentally, physically and emotionally. This is why we have different grades in school and have to improve each year to continue on.

Then we graduate and what happens?  Most people’s growth process stops or slows down drastically.  The unfortunate thing is when we stop growing, we don’t stay the same.  We actually start to move backwards year after year.

What are you doing to improve every day in your F5 (Faith, Family Friends, Fitness and Finance)?  Are you reacting to life or are you attacking and taking from it?

Let’s all make a commitment to keep in action, keep moving, changing, flowing – mentally, physically, and emotionally.  It is going to help purify who we are.  Let’s choose not to turn into crap.  Let’s choose to continue to become more pure!

Side Note:
Be sure and drink lots of water since 70% of our body is made up of it and we don’t want it just sitting in our bodies stagnant like a dirty pond – purge the old and replenish with new fresh clean water every day.

Like most of you, one of my New Year’s resolutions for 2012 was to get healthier.  Gino, JT, myself and a few others have been doing food and fitness logs that we text to each other EVERY DAY.  Every day we send each other what we did to improve our fitness and we also include everything we ate/drank for the day, everything!  It is amazing how much of an impact this little exercise has on our daily eating habits.  I can tell you that a few people in the group have already had a massive transformation.  If you are looking to improve in any area of your life, do the same with a group of friends or colleagues.  It will have a huge impact.

With all its utility, email can come back to bite you. Getting buried often means forgetting to follow up. Reading emails on your mobile while waiting in line for your morning latte often means reading and forgetting to reply when you have time later.

Don’t let this happen to you. Bring back the magic of email and check out a new app called Contactually.

Contactually is like a personal assistant who handles your email follow ups. It automatically prompts you to take action with the people in your network according to groups and time schedules that it and you set up. It even syncs with all the contact info in your CRM.

The service connects directly with your email program, and sends you daily messages saying that you need to follow up with these specific people today. When you first set up the service, it notes who you contact, how frequently you email them and how quickly you respond to people. Then Contactually puts them into buckets based on commonalities. (You can also organize the buckets yourself.)

Basically, you get a reminder email when Contactually sees that you haven’t reached out to an important contact in awhile. This can be tremendously useful in your prospecting efforts. Most people only buy and/or sell a house once every seven or so years, and regular check-ins can be easy to let slip. Contactually does the thinking for you and gives a nudge when the right amount of time has passed.

Contactually works with Gmail, Yahoo, AOL and Google Apps right now. The company expects to support POP3 and Microsoft Exchange in the future. You can get a free trial at https://www.contactually.com/.

Last week we discussed the overview of Chapter 3 from the book Great by Choice.  This week I would like to move onto Chapter 4: Fire Bullets, Then Cannonballs.

Imagine yourself at sea with an enemy ship approaching.  You have two choices on how to attack; 1) Fire one giant cannonball in the general direction of the enemy ship and hope it hits (using up  all of your gunpowder in the process) , or 2) fire a few bullets to align your target first, and then follow up with a cannonball for a perfect shot.   Although the first option may seem enticing, the second allows you to adjust accordingly for a more accurate and successful blast.

Before Amgen made their success in Erythropoietin (EPO), they fired lots of bullets (an empirical test aimed at learning what works and that meets three criteria: low cost, low risk, and low distraction) to figure out what would work.  Once they saw some promise in EPO, they added more gunpowder (more specific testing) and eventually shot a cannonball to execute it.   EPO became the first super-blockbuster bioengineered product in history.  If Amgen had not tested multiple avenues prior to launching, they would not be the name we know today.  Amgen could have easily fired a cannonball with the first idea they had resulting in time and money blown to pieces.

The challenge is not getting ahead of oneself.  Problems arise when companies start firing cannonballs to soon.  PSA launched a cannonball called “Fly-Drive-Sleep” which sounds like a great concept, and it could have been if PSA had fired a series of bullets in a few areas by buying one hotel and partnering with a local rental car company.  Instead, they bought and leased 25 hotels and bought a rental company.   The program went too big too fast generating losses for years to come.  The problem was there was no test; no way to work out the kinks and try other models.  PSA had one shot to win it all or lose it and they lost it.

Of course even 10Xers make mistakes firing cannonballs before they’re ready for it.  The difference is instead of trying to recover by firing another cannonball which can make things worse; they take it as a learning opportunity and start over, only firing another cannonball when it has been calibrated.  A calibrated cannonball has confirmation based on actual experience.  The other option would be an uncalibrated cannonball which would mean placing a big bet without empirical validation.

What is the point of all of this?  Well, no one can predict the future.  If we knew which bullets would stick, we would just execute those.  This is why firing multiple bullets is so important.  It gives more validation of an idea allowing us to move forward with a more educated and formulated concept ultimately resulting in more success.

I have experienced this process first hand through the development of our insurance partner, Cause Insurance, a full service, “cause driven” insurance brokerage firm with a philanthropic focus. They provide the best insurance at competitive pricing while giving up to 20% of their commissions earned to the charity of the clients’ choice.  Just think, if all 2,000 Intero agents were set up with Cause Insurance they would not only be likely  to save money and get better insurance coverage, they could potentially raise up to $200,000 for The Intero Foundation just this year and every year after that on renewal.  Of course, Cause Insurance couldn’t just pop up and be successful; they have fired many bullets, realigned, and shot again.  These bullets will continue to be shot until they are ready to shoot a calibrated cannonball with the firm evidence of success.

The following are the key points found at the end of Chapter 4 to help you better understand the effectiveness and importance of firing bullets, then cannonballs:

• A “Fire bullet, then cannonballs” approach better explains the success of 10X companies than big-leap innovations and predictive genius.
• A bullet is a low-cost, low-risk, and low-distraction test or experiment.  10Xers use bullets to empirically validate what will actually work.  Based on that empirical validation, they then concentrate their resources to fire a cannonball, enabling large returns from concentrated bets.
• Our 10X cases fired a significant number of bullets that never hit anything.  They didn’t know ahead of time which bullets would hit or be successful.
• 10Xers periodically made the mistake of firing an uncalibrated cannonball, but they tended to self-correct quickly.  The comparison cases were more likely to try to fix their mistakes by firing yet another uncalibrated cannonball, compounding their problems.
• The idea is not to choose between bullets or cannonballs but to fire bullets first, then fire cannonballs.

Which of the following behaviors do you most need to increase?

• Firing enough bullets
• Resisting the temptation to fire uncalibrated cannonballs
• Committing, by converting bullets into cannonballs once you have empirical validation

Reference: Great by Choice by Jim Collins

California Business and Professions Code Section 10163
An agent who uses his personal address in advertisements and material documents can be perceived by the Department of Real Estate as running an unlicensed place of business. Every real estate brokerage’s “place of business” must be independently revealed to and licensed by the DRE. California law delegates the DRE Commissioner full authority to determine whether an office is being used as a “place of business” for real estate brokerage purposes and every such place must have an on-sight broker representative to oversee and manage licensed activities.

Audits
The DRE may audit any individual salesperson and responsible broker suspected of operating an unlicensed place of business. Normally, the DRE comes across a business card, flier, or website which seems to direct clients and cooperating brokers to a physical address not belonging to the salesperson’s broker (usually it’s the salesperson’s home address or second job). From there, the DRE may conduct an audit or a less formal inquiry to determine the extent of business operations being conducted at the location.
If the Commissioner determines that an unlicensed office exists, the Commissioner may remedy the situation by requiring that the location become licensed (evoking tax and zoning dilemmas) or restricting/revoking the responsible party’s license.

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Of course, agents reveal their home addresses to clients and cooperating brokers for any number of reasons – most are completely proper. Audits normally result when a non-brokerage address is posted on an advertisement or a material document to the transaction.  As such, it’s advisable to have agents refrain from ever putting home addresses on their business cards, fliers, or any other medium used as the first point of contact with clients and the general public. More obviously, an agent should never post his personal address in lieu of his broker’s address on a listing agreement, agency disclosure, or purchase contract.

Cal Bus & Profs §10163 is reproduced as follows:

“If the applicant for a real estate broker’s license maintains more than one place of business within the State he shall apply for and procure an additional license for each branch office so maintained by him. Every such application shall state the name of the person and the location of the place or places of business for which such license is desired. The commissioner may determine whether or not a real estate broker is doing a real estate brokerage business at or from any particular location which requires him to have a branch office license.”

If you didn’t make those changes, you would die soon. A lot sooner than you had to.

Could you change when change really mattered?

Yes, you say? Try again. Most likely you wouldn’t change.

Don’t believe me? Let me share with you the odds – 9 to 1. That’s 9 to 1 against you.

Do you realize a SMALL percent of the population consumes the VAST majority of the health care budget for diseases that are very well known, and by in large behavioral? We are sick because of how we choose to live our lives, not because of any environmental or genetic factors beyond our control. They say it could be as much as 80% of our health care budget is consumed by these behavioral issues – smoking, eating, drinking, stress and lack of exercise.

Could behaviors be driving issues in more than one area of our lives? Could we ultimately be in control of the aspects we felt were a product of conditions outside our control?

Do you want some more proof of the challenge we all face in change?

There was a study done back in 1995 of people who went through bypass surgery (open heart surgery). Of those studied, within 2 years from surgery 90% went right back to their old unhealthy lifestyle. So, if the fear of DEATH doesn’t initiate change – is there any hope? More importantly how do we get our stubborn brain to stop resisting change so tenaciously. Why do we fight it even when we KNOW if we don’t it will kill us?

Well, knowing that motivating people with the fear of death wasn’t the right approach because 90% went right back to where they were before, the study tried a different approach. They decided to change the patients focus. Have any idea to what? The joy of LIVING.

The study took 300 patients and put a 100% daily effort into focusing their minds on all the daily things that make life great. They coached them on their mindset, their attitude, their daily habits, and surrounded them continually with the RIGHT influences. It was this change of focus – taking it away from the fear of death and into the joy of living – that allowed 77% of the patients to sustain the lifestyle changes.

What changes do we need to make? Where is our focus – in fear or in joy?

It’s time to make some changes now!

Download and read Alan Deutschman’s complete Change or Die article, my inspiration for today’s Mojo. It’s an eye opener – definitely worth taking the time to read.

Make is a GREAT week and a GREAT life!

SocialBro is a plugin that works with Google Chrome and Adobe Air. It gives you a nice overview of your Twitter community – enabling you to see who’s influential and who’s not, and sort them into lists accordingly.

The latest update to the app adds a real-time feature that enables you to see which of your followers are active (which clues you in to who will likely see your tweets), the number of active users each second, the apps they’re using to tweet from, and the languages they’re tweeting in. These are all interesting insights, but the most useful is the window into which of your followers are active, which enables you to segment, tailor and target the content of your tweets.

In addition, you can also focus on a particular Twitter list or search term – like “Silicon Valley real estate,” for example, and learn a bit about the people who are tweeting about that topic. This too can help you segment, tailor and target the content of your tweets for more effective social marketing.

SocialBro considers a user “active” if they’ve tweeted in the last 5 minutes.

Other notable features and uses of the tool include:

• Easy follow-back tools that enable you to efficiently and strategically follow people back
• Discover who has unfollowed you
• Discover the best time to tweet
• Discover who isn’t following you back
• Discover influential people who follow you
• Organize followers into lists
• See your followers on a map

Check out SocialBro for the intelligence you need to effectively use Twitter for your real estate business. You can download the app from the website for free.

When Jim Collins began his study, he and his team thought they might see 10X winners respond to a volatile, fast-changing world full of new opportunities by pursuing aggressive growth and making radical, big leaps, catching and riding the Next Big Wave, time and again. And yes, they did grow, and they did pursue spectacular opportunities as they grew. But the less successful comparison cases pursued much more aggressive growth and undertook big-leap, radical-change adventures to a much greater degree than the 10X winners. The 10X cases exemplified what Collins and his team came to call the 20 Mile March concept, hitting stepwise performance markers with great consistency over a long period of time, and the comparison cases did not.

For example, when John Brown became CEO of Stryker in 1977, he deliberately set a performance benchmark to drive consistent progress: Stryker would achieve 20 percent net income growth every year. This was more than a mere target, or a wish, or a hope, or a dream, or a vision. It was to use Brown’s own words, “the law.” He ingrained “the law” into the company’s culture, making it a way of life.

Imagine going to a big company meeting. You walk into the main ballroom to find sales regions arranged by performance. Those in regions that achieved their 20 Mile March get seating assignments at the front of the room; those that fell behind find themselves assigned to tables in the back of the room.

From the time John Brown became CEO in 1977 through 1998 and excluding a 1990 extraordinary gain, Stryker hit its 20 Mile March goal more than 90 percent of the time. Yet for all this self-imposed pressure, Stryker had an equally important self-imposed constraint: to never go too far, to never grow too much in a single year. According to the Wall Street Transcript, some observers criticized Brown for not being more aggressive. Brown, however, consistently chose to maintain the 20 Mile March, regardless of criticism urging him to grow Stryker at a faster pace in boom years.

The 20 Mile March is more than a philosophy. It’s about having concrete, clear, intelligent, and rigorously pursued performance mechanisms that keep you on track. The 20 Mile March creates two types of self-imposed discomfort: (1) the discomfort of unwavering commitment to high performance in difficult conditions, and (2) the discomfort of holding back in good conditions.

Some people believe that a world characterized by radical change and disruptive forces no longer favors those who engage in consistent 20 Mile Marching. Yet the great irony is that when Collins and his team examined just this type of out-of-control, fast-paced environment, they found that every 10X company exemplified the 20 Mile March principle during the era they studied. The evidence shows that the 10X companies embraced a 20 Mile March early, long before they were big companies.

In 29 events in which companies such as Stryker, Southwest Airlines, Intel, and Progressive 20 Mile Marched into turbulent industry episode, they came out of the turbulence with a good outcome in every single instance, without exception, 29 of 29, 100 percent of the time. However, in 23 events in which companies failed to 20 Mile March heading into a turbulent industry episode, they emerged from the turbulent episode with a good outcome only 2 out of 23 times.

The following are the key points found at the end of Chapter 3 to help you better understand the effectiveness and importance of 20 Mile Marching:

• The 20 Mile March was a distinguishing factor, to an overwhelming degree, between the 10X companies and the comparison companies in our research.
• To 20 Mile March requires hitting specified performance markers with great consistency over a long period of time. It requires two distinct types of discomfort, delivering high performance in difficult times and holding back in good times.
• A good 20 Mile March has the following seven characteristics:
  1. Clear performance markers.
  2. Self-imposed constraints.
  3. Appropriate to the specific enterprise.
  4. Largely within the company’s control to achieve.
  5. A proper timeframe – long enough to manage, yet short   enough to have teeth.
  6. Imposed by the company upon itself.
  7. Achieved with high consistency.
• A 20 Mile March needn’t be financial. You can have a creative march, a learning march, a service-improvement march, or any other type of march, as long as it has the primary characteristics of a good 20 Mile March.
• The 20 Mile March builds confidence. By adhering to a 20 Mile March, no matter what challenges and unexpected shocks you encounter, you prove to yourself and your enterprise that performance is not determined by your conditions but largely by your own actions.
• Failing to 20 Mile March leaves an organization more exposed to turbulent events. Every comparison case had at least one episode of slamming into a difficult time without having the discipline of a 20 Mile March in place, which resulted in a major setback or catastrophe.
• The 20 Mile March helps you exert self-control in an out-of-control environment.
• 10X winners set their own 20 Mile March, appropriate to their own enterprise; they don’t let outside pressures define it for them.
• A company can always adopt 20 Mile March discipline even if it hasn’t had such discipline earlier in its history, as Genentech did under Levinson.

What is your 20 Mile March, something that you can commit to achieving for 15 to 30 years with as much consistency as Stryker, Southwest Airlines, Intel, and Progressive?

I heard this slogan the other day, actually from a Kellogg’s commercial! Immediately though, I thought it was a brilliant way of saying so much about the true gift of weight loss.

When we go on a diet, we often think of the sacrifices we will be making, of the challenges to undoubtedly incur and the rough and hungry road ahead. “Diets” are painted out to be an arduous venture and often an unsuccessful one. When we jump in to weight loss with this mindset, it’s no wonder so many “fail”…the uphill battle has already started without the first pound behind us.

What if you wanted to get in better shape and/or become healthier through weight loss, better nutrition or better blood numbers? What if before you started, you thought about all that you will gain in your life by losing the weight and focusing on your health? Do you think you might look at the “project” a little differently? Quite possibly you could get enthusiastic about the goal…maybe even excited! Now that would be a change, wouldn’t it?

Here are some possible life changing experiences you might gain if you lost…

• More energy
• Sleeping better
• Being able to do activities with friends
• Feeling great in your clothes
• Better mental focus
• Keep up with your children
• Longer life and one which feels better
• Looking awesome
• Picking up a new sport you never thought you could do
• Influencing and inspiring others who need a little motivation to get healthy

These are just a few examples I have seen friends and clients GAIN when they chose to lose weight and improve their well being! How about you…do you have anything to gain?

Then it all started to happen. Like it does for so many people, it did not happen all at once, but gradually over time. One day he looked at himself in the mirror and did not recognize the person he saw. He had gone from being this positive, ambitious, fit and healthy young man who was going to conquer the world and turned into this normal middle aged, overweight, cynical guy with slumped shoulders, horrible posture and a frown on his face. Heck, he did not even take the time to trim that hair growing out of his nose and ears…he just did not care anymore. You know the kind of person I am talking about. It may even be you. We see it all of the time…unfortunately, it is actually more normal that not. It is called the gravity of life. Reality of it is it is also just plain old gravity itself. Keeping fit and healthy in the equities of our life does not get easier as we get older, it gets harder. There are the aches and pains, the responsibilities, lack of time, and hanging out with our other people who are letting gravity suck them to the ground as well that helps us justify in our own minds it is okay. Well, I am here to tell you it is not okay. People, just taking it easy is why we have so much obesity, alcohol and drug addiction, poverty, money problems and divorce. The most important stuff in life requires hard work.

Gravity is what keeps us on the ground physically, but it is also what can pull us down in all the areas of our lives. And, if we let it, gravity will pull us below the ground. I have talked with my trainer, Brad, about this for years. The mindset of most people as they get older is all about working hard at life until we can take our foot off the gas and chill…get the house paid off, kids through college, retirement…

“Ah…How sweet it is going to be…lazy days, vacationing, fine wine and food, and doing a whole lot of nothing”

Well, I am here to tell you we all need to change our mindset. I know firsthand things don’t get easier as we get older; they get harder in many ways. We actually need to work harder at all the equities of our life because there is no such thing as a status quo life. Either we are getting better or we are getting worse, but we are never staying the same. And, if we aren’t working at getting better every day, gravity will suck us into the ground. We can’t just set off into the sunset. It is not easier to keep off the pounds, it is harder…it’s not easier to keep your blood pressure and cholesterol under control, it’s  harder…it’s not easier to keep connected with our kids once they are out of the house, it’s harder…it’s not easier, it’s harder in all the areas of our life.

My challenge to everyone is every day you wake up make a commitment to make at least a small improvement in all the areas of your F5 (faith, family, friends, fitness, finance) and Defy Gravity. It may require some short term pain, but I promise the long term gain is worth it!!!!!!!

Defy Gravity!!!!!