Included in the REAL Trends 500 is Intero Real Estate Services, Inc. headquartered in Cupertino, California. With close to 7,000 transactions closed in 2012 and $4,640,000,000 in residential sales volume, Intero ranked number 13 in the REAL Trends 500.

The 2013 REAL Trends 500 is a compilation of a nationwide study of leading residential real estate companies conducted by REAL Trends, the trusted source for useful and timely information. This year’s survey represents the most comprehensive collection of data assembled on the leaders of the residential brokerage industry. Numbers are documented by outside accounting firms.

“The recovery in housing sales was reflected in the results from the REAL Trends 500,” says REAL Trends editor Steve Murray. “There were a record number of firms that closed more than $1 billion in sales and over 1,000 units. Unit sales were up 15.3 percent overall and total sales volume was up 20.7 percent. There were over 1,300 firms that qualified for either the REAL Trends 500 or the Up and Comer list. Many of the firms that had increased unit sales accomplished this through organic growth while merger activity remained slower than in years past. We expect acquisition activity to pick up, however, in the years to come as the market consolidates.”

REAL Trends, Inc. is a research, publishing and communication company located in Denver serving the information needs of the residential real estate industry.

I had to smile reading Karen Blumenthal column in the Wall Street Journal over the weekend. I thought I was reading my own story! Karen’s article was titled “Say Au Revoir to Your Credit.” It is kind of a warning to all those of us, American citizens, who live abroad for a while, whether for business or pleasure, and return home to find out that they have no credit record! How unfortunate if you happen to be looking to buy a home, or anything on credit for that matter!

Such a scenario is hardly exceptional. Nearly 7 million Americans reside in foreign countries, as the article suggests. That’s over 2% of the entire population. Not a negligible number. That number could actually go up if the trend of sending employees overseas continues. In 2012, 64% of multinational companies have increased their international assignments, according to Brookfield Global Relocation Services. That’s up from 43% in 2011.

All those relocated workers and the millions of Americans enjoying a retirement, or a prolonged vacation, or a sabbatical in a foreign land, are at risk. Unless they were/are smart enough to keep their credit record alive while out of the country.

Evidently I was not one of the smart ones in 2007. That year, my wife & I decided to fly back to the US after about 5 years doing business in Europe. Before packing the suitcases, I called a car dealer to order a car online, providing all of the requested info for a lease. When we showed up on US soil, I called again to let the dealer know that I was on my way to pick up the vehicle. The guy told me that he had the desired vehicle all right but that, if I really wanted to lease, he would charge me an arm in the leg since I had no credit!

My blood turned steamy-hot! How could I be treated like a new kid on the block when I had nothing but a stellar credit history? I went straight to the dealership CFO with rage in my brain, demanding the absolute best rate I deserved. The CFO, in a very calm civilized way, explained to me (and showed me) that my credit record was…Blank. All of the good stuff had been erased. My credit score, if I had any, was Zero. The CFO, at least, was able to verify that I existed (nice) and that, even though I had no credit record, he could tell that I did not have a bad one!!!

Don’t cry for me; I got the car and the lease, at a good rate. Thank you. I did, however, have to buy tons of stuff on credit for months and months to get the score back to par. Lesson learned.

What happened is what Karen Blumenthal is writing about in her paper. Credit is tied to an address. You are fine if the address is in the US. You are not if the address is elsewhere on the planet. Karen cites this quote from the VP of Education at Experian: “Even though we are in a global marketplace, the credit marketplace is still very segmented by country.” In other words, US lenders don’t know what you do with your money while out of the country when the address referenced on a charge card is not a domestic one. There is no sharing of information between banks, from here to there.

The problem arises very quickly after you change accounts to a foreign address, since the FICO score will die six months down the road once lenders stop updating their report. Forget about obtaining mortgage financing on your would-be next home if you let the clock tick too long!

There are tips to keep in mind in order to avoid being stuck in this predicament. The best one is a no-brainer: Keep your US credit intact, as Karen puts it. Her advice to expatriates is to have at least one credit card or loan tied to a US address. “Use the credit card at least a couple of times a year and pay the bill online to show activity on your credit record.”  Thank you. I, for one, will know next time!

A survey released by Zillow last week found that home buyers answered basic questions about mortgages wrong 32.5% of the time.

Some of the misinformation out there includes:

• 34% of first-time buyers surveyed aren’t aware that it’s possible to get a mortgage with less than 5% down.

• Home buyers also don’t understand how to secure the best possible interest rates and loan terms. 26% incorrectly believe they are obligated to close their loan with the lender that pre-approved them. 24% incorrectly believe that they’ll get the best rates and fees through the bank they currently do business with. And 34% of buyers believe all lenders are required by law to charge the same fees for credit reports and appraisals.

• Further misinformation and beliefs exist in refinancings, with 25% saying it’s not possible for underwater borrowers to refinance. In fact, 2.2 million underwater borrowers have refinanced under the federal Home Affordable Refinance Program, which was recently extended through 2015. And almost half (47%) of current homeowners believe they must wait at least one year between refinancings.

Why is this story significant?

A number of reasons. For one, as the market picks up speed, we need more savvy buyers among our ranks to keep it moving. Understanding the mortgage process enables a borrower to navigate it better and more quickly, which we’re seeing is really important in markets where inventory moves fast.

In hot markets that have tight supply, buyers who’ve gone through pre-approval and/or better prepared themselves for the loan process will be the more attractive offer for sellers. They’re more likely to qualify for financing and close faster than their unprepared counterparts.

In addition, as we saw with the financial market collapse, recession and housing downturn five years ago, the unsavvy borrower is not only a danger to himself, but to our economy as a whole.

So, how do you educate yourself if you’re in the market to buy? You can read up on the basics at the Mortgage Professor, a site with great information from a non-interested third party (i.e., it’s not your bank giving you advice). You can engage in discussions with your Intero Real Estate agent, who can recommend local sources.

This is an important piece of the housing recovery that until now hasn’t received much attention. How can we expect a healthy purchase market if buyers don’t know how to navigate their loans? Maybe borrower education will (or should) be the next big area of innovation in our market.

As I said before, in a previous blog, real estate companies may be born equal but they sure don’t evolve at the same speed and to the same extent. Some grow. Some shrink. There is always a reason. In our case, there is no doubt that “Luxury Portfolio,” because of their international scope of coverage and the many tolls & services which complement ours, gave us the dimension & the batting average required today to successfully market luxury homes.

Luxury Portfolio, as big as it is, is an offspring of a giant network by the name of “Leading Real Estate Companies of the World.” LeadingRE, to use its acronym, assembles 500 of the leading independent companies in 35 countries, with 4,600 offices and 140,000 associates, representing an aggregate sales volume that exceeds $235 Billion annually.

Created back in 1997 by 50 of the largest real estate companies at the time, LeadingRE has come a long way, as a recent article in RISMedia reminded me. The concept that served as a winning business model was rather refreshing at a time when the big fishes were burning lots of time & beaucoup money to buy small/medium-size fishes to become bigger fishes… Here, the idea was to create a company of equals, an umbrella if you will, run by the leading independent firms for their own individual & collective benefits.

Having read the Three Musketeers about 20 times when I was a kid, I am sold on the concept of “One For All and All For One.” In business as in life in general, you cannot (and should not?) do everything yourself if you can count on trusted others to do it better and with you. That’s the power of teamwork. Pam O’Connor, the President & CEO of LeadingRE, has another mantra that she likes to cite: “Make the best brokerages better.” It is working.

Interestingly enough, the birth of the Luxury Portfolio, the estates division of the group led by Paul Boosma, was born from the Sotheby’s acquisition by Cendant. It was launched to fill the vacancy you might say. The baby quickly grew to become the high-end powerhouse that it is today. As matter of fact, if we look at the US market share of $Million + listings according to the Mintel International Website Survey of a year ago, Luxury Portfolio, with about 10,000 properties at the time, was outperforming SothebysRealty.com by better than 20%, ChristiesGreatEstates.com by better than 80% and ColdwellBankerPreviews.com by more than 100%!

Yesterday’s craving for becoming part of a national brand is not quite as big a deal today. Lots of brokers find it more rewarding to ”build their own brand rather than someone else’s,” as Paul Boosma was quoted saying.  Using Luxury Portfolio as a bridge to top independent brokers around the world and, by extension, to their high end buyers, accomplishes the goal of accessing the pool of wealthy would-be-buyers, thereby multiplying selling opportunities. Hence the title we chose for the blog: “Home Grown, Locally Owned, and Internationally Known!”

The extraordinary growth that we experienced with our Luxury Portfolio partner came as no surprise. The real estate business has changed enormously over the last 20 some years. Technology has caused the world to shrink. Local is now global. Today, many of the most exclusive cities of the most attractive states and countries are competing for the same buyers for the most pricey properties. Whether you sell real estate in New York, San Francisco or Miami, the chance that you will sell a trophy home to a foreign national or an out-of-state buyer far exceeds the chance to sell it to a “local.”

Even at the entry level to the high end, Realtors must now have the marketing means to effectively reach out to all or most of the potential buyers well beyond the regional boundaries….Or become completely irrelevant to the needs of home sellers and buyers in an industry forced to keep pace with technology and growing clients’ expectations.

Mortgage defaults are down – way down. First-time delinquent home loans fell to 0.84% of the 50.2 million mortgages in March, according to LPS.

It was monumental because it was the first month defaults fell below 1% since 2007, when the first defaults of the financial crisis reared their heads.

First-time delinquents are defined as loans that went from performing to at least 60 days delinquent when the report was created.

The days of problem loans aren’t fully behind us – there will be some amount of that in the market for a while. But the days of massive waves of these loans are safely tucked in the background, for now it seems.

Flip: Real estate’s four-letter word

Flipping made a media comeback this past week when RealtyTrac released a report highlighting the top 25 markets for flipping homes in 2012. The markets reflect those cities in which flipping produced the highest rate of return for flippers, i.e., gross profit.

Phoenix had the highest number of flips in 2012 with 10,589 property flips. Inland Empire, CA, Las Vegas, Miami, Denver and Detroit also topped the list by volume of flips.

The top five markets in terms of dollar amount profit in 2012 were San Jose ($103,241), San Diego ($85,714), San Francisco ($80,306), Las Vegas ($70,746), and Ventura County, CA ($70,426).

While flipping may conjure up bad memories of its TV glory days when everyone from waiters to hairdressers was a self-proclaimed real estate investment guru, it’s not a bad thing.

Flipping implies property improvements and increasing values – two important factors in pushing a healthy, widespread recovery.

Something tells me it’ll be less circus-like this time around. More seasoned investors and levelheaded borrowers. More lending restrictions. Less snap decisions and debt digging.

Lessons learned indeed. But it’s something to keep an eye on. If we start to see insane rampant flipping by real estate hobbyists again, we may need to step back and reboot.

Nobody can talk about the estates market in Paris better than Feau, the leading brokerage in the luxury market. It can be said that they “own” the high end, as they represent better than 70% of the listings over $2.5M in a highly competitive environment. Charles-Marie Jottras, a good friend and CEO of Feau, just sent me the study they put together on the state of affairs at the top of the price pyramid. It is quite an education, one that I would like to share with you.

The first thing that jumps at you when reading the report is the dramatic surge of new listings which has been hitting the Paris market every month for the last 12! .…Exactly the opposite of what most cities in the US have been experiencing over the same period. The surge is not just in the number of properties for sale but in the overall value of the available top heavy stock, as the top end is driving this phenomenon. There was $7 Billion worth of active inventory in the Quarter that just ended…

You may wonder why? Well, one of the crowd-pleasing initiatives that the government has been promoting is to raise taxes on the wealthy. Nice concept to gain popularity here, there & everywhere these days, but the French pushed it to the extreme level, the “guillotine level”, by announcing a…75% tax rate! Granted foreigners are not affected by the new measures, except for capital gains, but the French citizens who own pricey real estate can’t pack their bag fast enough to leave this “fiscal inferno”, hence the explosion of new listings.

Case in point, looking at the entire listings inventory: just in the second quarter of last year, 25% of sellers of $2.5M+ homes were on their way out of “Douce France”. Above $9M, the exodus reaches 44%, including 28% absentee owners for whom the decision is not quite as painful.

Paris is no exception to the rule of supply & demand. When a big wave of listings hits, prices usually adjust downwards. The volume of sales, in Q1, was 20% lighter than that of 2012. No surprise. The good news is that buyers can now pick & choose, and they can even negotiate, which is a pretty new thing in Paris. Some smart buyers are jumping on the opportunity, while many are sitting tight hoping for lower prices yet. Good luck!

So, who is buying these days in the French capital?

Buyers from the Gulf come first. They cannot have enough of Paris. They are pretty busy in London as well. The Russians too are avid of Paris real estate. Price is no object. Only the best. People from the Mediterranean Basin come next, followed by….Us, genuine American buyers with good money and a love for Paris. Could not be better timing to show your love!

http://www.mercurynews.com/saratoga/ci_23134772/some-hot-wheels-will-raise-money-kids

Pending home sales – a closely watched housing indicator – increased in March and remained above levels from last year. But it showed only modest movement, which indicates that we’re in for another couple months of slower-than-we’d-hoped-for sales, according to the latest index released this week from the National Association of Realtors.

NAR’s Pending Home Sales Index increased 1.5% to 105.7 in March from 104.1 in February. It was 7% higher than March 2012 when it was 98.8. The data tracks contract signings, not closings, which makes it a good prognosticator of things to come.

Not surprisingly, the numbers show that a slower sales and contract pace is not due to a lack in demand, but rather a lack of supply – a problem we’ve talked about plenty here.

In related news, the home building industry has been hustling and bustling this year, enjoying rising revenues and even some IPOs.

However, CNBC points out that despite rising demand, some builders are slowing down production. That sounds counter-intuitive to what’s happening out there today.

Why not increase production at a time when the appetite for homes is strong and growing? It’s simple: building costs are also rising. Some builders will need to control their production to be sure that the rising costs of construction don’t sideline their growth and derail them.

How might this development potentially snag the market for resale homes? It just means that supply may continue to be tight until we reach our tipping point where more owners who are currently underwater either come above water or reach a point where they could afford to sell.

It could also mean values continue upward at a more rapid pace than we originally predicted. I don’t think builders are going to stop building, but this rise in costs is something they’ll each face as they look to build more.

I tend to think of these things not as snags but as blessings in disguise. If there’s one thing we learned from the last housing boom and the downturn that followed, it’s that the faster you climb the harder you fall.

Maybe a little reality check to stop and catch our breath is a good thing in the overall picture.

Happy house hunting!

This should not be construed as a statement of blind faith in the strength of our recovery, but it is definitely a sign that, relative to the other guys, we are doing alright. We are “the least ugly kid on the block,” as Gary Schlossberg, a top economist from Wells Fargo, described the situation last week at a gathering of top brokers.

One of the major players in the investment field, Allianz Real Estate, a subsidiary of the insurance giant, recently confided to Reuters that it plans to more than double the volume of its acquisitions in the US. Allianz RE has traditionally focused on Germany, France & Italy but, in light of the many troubles rocking the European continent these days, they will place more money (about $500M just this year) in the US & Asia, where growth is a reasonable expectation.

The fraction allocated outside of Europe, when all is done, will still only represent 20% of the roughly $30 to $40 Billion that Allianz wants to invest in real estate by 2016, but progressively moving the money around speaks wisdom.

“ In Europe, we are in a flat world with a 5% return, while in the US, we are also in a 5% world but with growth,” told the CEO to Reuters. The outcome can be vastly different, although short term expectation is not the key factor here. A real estate investment, for Allianz, has a 10 year life, so what matters most is the kind of reforms which are anticipated over the next 3 years or so in targeted countries, susceptible of producing an economic rebound.

With this in mind, I sure like the optimism that Gary Schlossberg expressed the other day in front of some of the most distinguished and successful real estate executives in the country.  The market, as he sees it, has “come full circle, from foreboding to cautious optimism in early 2013.”

Nobody could disagree in the assembly. We have indeed, since 2011, seen a slow but steady recovery with our own eyes in the residential market and healthier P&L statements are here to prove it. Even though listings are still scarce, unit sales remain at a high level and the volume of sales is going straight up, thanks to a fast rise in home prices.

To illustrate the point, let me say that year over year, our company experienced a 23% jump in $ volume in Q1 2013 in its Santa Clara county primary market and a near 30% jump in average sales price. This is particularly graphic in the $1 to $3M price segment where our sales have exploded at the rate of 61% in the 1^st Quarter.

Schlossberg predicts that we may experience somewhat of a Spring/Summer minor slowdown, a “soft patch” as he calls it, but the horizon is blue. All the ingredients are here to make it so: low interest rates, pent-up demand, high affordability, rebound in household wealth…. I can go on & on. Bottom line: Real estate, whether residential or commercial, is looking strong. Enjoy!

But what about this hot spring we’ve all been anticipating? What about the great recovery and growth period we’re supposed to see in 2013? What’s going on here?

The problem is lack of homes. There’s plenty of demand from buyers, but just not enough to choose from on the market.

Some areas are experiencing multiple bids, which can frustrate buyers after they’ve been outbid a handful of times and turn them away.

And in some cases, we see sellers being affected as well. For those in tight markets, they may not feel confident enough to list their homes until they know for sure they’ll be able to find a new one to move into.

Despite the decline in March sales from February, home sales were still 10.3% higher than the same month a year ago, marking the 21^st consecutive month of year-over-year increases. That’s good news, and a good indicator of how the market is trending in the big picture.

Demand is still strong, according to the National Association of Realtors, which reported buyer traffic is 25% above a year ago. But the drop in available homes has put upward pressure on prices. And some buyers are getting frustrated and priced out.

The national median home price was $184,300 in March, 11.8% higher than a year ago. The increase was the highest gain since November 2005.

Total housing inventory was up 1.6% to 1.93% homes for sale, representing a 4.7-month supply at the current pace. For-sale inventory was 16.8% below what it was a year ago, showing how lack of supply is truly impacting the pace of sales and overall market activity.

What happens next?

At the rate things are going, we can likely expect more price increases, driven by continued tight markets with some increases in new home building to balance supply.

At some point, prices will reach a tipping point where more sellers are able to sell because values will meet their needs.

Until then, buyers need patience and the ability to act fast; sellers need motivation or the right price points to get out from an underwater mortgage. We have an interesting second half of the year ahead!