The Price of Real-Estate Experience: $25,000

Can you put a price on experience? In real estate, you can. It is about $25,000 for the average house.
Veteran agents sell homes for an average of 12% more than their less experienced counterparts, says Bennie Waller, professor of finance and real estate at Longwood University in Farmville, Va. Veteran agents also tend to list more new properties, more townhouses and condominiums and larger properties.
Two-thirds of properties listed by veteran agents sold, while only half of properties listed by rookies did.

"The more experience you have, the more likely you are to sell the properties that you list, the more likely you are to sell it at a higher price and the less time it stays on the market," Prof. Waller says.
Prof. Waller, along with Ali Jubran, a student at Longwood University at the time, examined 10,065 real-estate listings in a mid-Atlantic multiple-listing service from March 1999 to July 2009. They divided the listings into three groups—ones listed by agents who have been licensed for two years or less (called rookies), agents who have been licensed for two to 10 years and agents who have been licensed for 10 years or more (called veterans). They controlled for property characteristics such as size and location to isolate the "experience variable," and then compared the results for rookies and veterans. The study was published in the Journal of Housing Research in May 2012.

Prof. Waller became interested in quantifying experience when he noticed an increasing number of agents who chose not to renew their licenses after two years. Real estate has "very, very, very low barriers to entry," he says. But brokers then face a steep learning curve and many struggle to reach a level of expertise that is profitable, he adds.
Two-thirds of properties listed by veteran agents sold, while only half of properties listed by rookies did. That may be because rookie agents have to be more flexible in picking up listings, even if the chances of selling are low.
"If a house is priced ridiculously, they might say, 'Fine, I'll take the listing,' " Prof. Waller says.
Generally, experienced agents have greater knowledge of the neighborhoods and a larger network of buyers and sellers, as well as relationships with home inspectors, appraisers and mortgage brokers.
For some, confidence comes with time. James Stroupe, a real-estate agent at Realogics Sotheby's International Realty in Seattle, says he used to take listings priced above-market, but now, with nearly 20 years of experience under his belt, he isn't afraid to suggest an alternative price.

And then there are the lessons learned. Michael Rankin, principal and managing partner of TTR Sotheby's International Realty in Washington, D.C., began selling real estate right out of college, so he faced the twin pitfalls of inexperience and youth.
"I would meet people and say I'm a real-estate agent. They would joke and say, 'I've got children older than you. Are you sure you're a real-estate agent?' " he says.
Mr. Rankin says he didn't get referrals until his third year in the business. Referrals now make up about 70% of his sales. His listings stock also has changed dramatically. In his 20s, his average sale price was about $300,000 to $400,000. Now, it is more than $2 million.
Experience taught him how to deal with consumer behavior. "Residential real estate is really an emotional transaction. I don't think I was prepared for any of it. It's about understanding and knowing people. That, to me, is what an experienced broker brings to the table," he says.
When Pamela J. Hagan first began practicing real estate about 30 years ago, she had a listing that just wouldn't sell. After zero offers in eight months, she asked a more experienced agent to help. "We tweaked the price and staged it properly, removed clutter and everything. I just didn't think of that when I was new," says Ms. Hagan, of Century 21 Beggins Enterprises in Longboat Key, Fla. "After we got it all set up and dropped the price, we sold it within 30 days."

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Warrants detail real estate scam conspiracy charges

Three New Canaan residents recently arrested for their alleged involvement in a real estate conspiracy scheme in town are scheduled to appear in Stamford Court on Wednesday, Sept. 18. Pleas have not yet been made.
The three residents — Ruth Jones, Adam Jones and Lynda Silvestro — turned themselves in to police on Monday, Aug. 19, after learning of warrants for their arrest for involvement in what police said appears to be a real estate scam.
Ruth Jones, 56, was charged with first degree larceny, conspiracy to commit first degree larceny, third-degree burglary and second-degree forgery.
Silvestro, 55, was charged with first-degree larceny, making a false statement in the second degree, and first degree conspiracy to commit larceny.

Adam Jones

Adam Jones, 29, was charged with first degree larceny and first degree conspiracy to commit larceny.
All three are out on $50,000 bonds. They were due in Norwalk court last Thursday, Aug. 29, but their cases were continued to Sept. 18.
“There was no larceny, no forgery, no burglary and no conspiracy,” Mike Paul, president of MGP & Associates PR, speaking on behalf of Ruth Jones, told the Advertiser. “These are false allegations. The fact is this is a civil matter which is already pending in civil court with a lawsuit against Jennifer Hilton and the estate of her late father, John Hilton. Please look it up for important details.

Lynda Silvestro

“These new, alleged, criminal charges should have never been filed in the first place. The truth will bubble to the top soon and it will include the words and actions of Jennifer Hilton and Cheri Mazza. Hilton and Mazza are both crucial parties in these cases and we believe they will not be happy when the whole truth is told. Please give us time to outline all the facts in court before bringing judgment as things are not as they appear.”
An “illegal” rental
According to police, on Nov. 6, 2012, a 54-year-old woman who was renting a home on Braeburn Drive reported to police she suspected fraudulent activity. She was renting the home from New Canaan real estate agent Ruth Jones.
The complainant told police she signed a lease to rent last August 2012 and that her agreed upon rent was $6,000 a month. According to police, she paid Jones $24,000 for a security deposit and for two months’ worth of rent.
Jones, who police say was hired as a real estate agent to try to sell this house, had a six-month contract with the owner of the estate, who lives out of state. She was hired May 27, 2011, and the contract expired on Nov. 27, 2011. According to an arrest warrant for Ruth Jones, the deal was to list the home at $795,000. After the home did not sell during that time-frame, attorneys for the estate opted not to enter into another contract with Jones, police said.
According to police, Jones had a potential buyer, but that deal fell through. Police said she had no legal right to continue showing the house after November 2011, when the contract expired.
According to police, Jones rented out the house to the eventual complainant. Jones also told the complainant that if anyone asked if she was renting the home to tell them she was an interior decorator.
At some point, according to police, Jones asked for a lease agreement change, and Silvestro, who is listed as a principal at Property Management LLC on Locust Avenue, signed a lease as one of the landlords, as did Jones’s son, Adam. At that time, the elder Jones told the renter that Silvestro planned on buying the home.
After the first potential buyer’s deal fell through, police said one of the estate’s attorneys was contacted and told that Silvestro wanted to buy the home. According to police, Silvestro put a deposit of $30,000 on the house in September 2012. Later that month, when she was supposed to close, the deal fell through. According to police, Silvestro wanted to try to buy the house again and put down an additional $50,000 deposit, and this time her husband, Santo Silvestro, was on the contract with her. The Silvestros signed that contract with a new closing date of Nov. 1, 2012, police said.
At the end of October, before the Nov. 1 closing date, one of the attorneys for the estate drove by to see what kind of damage was caused to the house by Hurricane Sandy. Two attorneys for the estate saw evidence that someone was living in the home. According to police, the estate’s attorneys asked Ruth Jones’s attorney why someone was living in the house. Police said she told them that someone was living in the home in order to stage the home for a sale.
According to an arrest warrant, the estate’s attorneys were “curious as to why a home would be staged with children’s toys strewn about, dirty dishes in the sink, toothpaste on the counter in the bathroom, and two dogs playing in the yard.”
On Nov. 2, 2012, a locksmith and one of the estate’s attorneys came to change the locks, and the complainant, who was still renting, told them she was renting the house for $6,000 a month and that Jones was her Realtor. She provided the attorney with a copy of the lease agreement, according to an arrest warrant, and the two decided that the police should be notified.
According to the warrant, while the attorney was speaking with the complainant at the home, Ruth Jones called the complainant and the attorney advised her to let it go to voice mail. In the message, Ruth Jones scolds the complainant for showing the attorney the lease and explained that the lease needed to be altered.
“It was for you,” Ruth Jones says in the message, which police downloaded from the renter’s phone. “It was for you and your divorce and to get your kid into school. OK. You’re worried about lying, what about asking for a bogus lease on White Oak Shade so I can rebate you some money so you can charge your ex-husband more money … I was asking you not to have contact with anybody. I was asking you because we need to alter the lease as it stands because as of Monday there was no heat and hot water and full occupancy.”
That same day, according to the warrant, in a mobile phone text correspondence between the two, Ruth Jones asks the complainant why she had done that. “I have tried to help you and you just completely f—– Lynda, Santo and Me ?? Great Friend,” Jones wrote in a text.
“A locksmith came ready to change the locks,” the complainant responded. “Had I not been there with proof that I was a paying tenant, [child’s name] and I would have been locked out of our home. Talk about friends. I am over $35,000 into a home that you told me you owned. I hope someone is ready to write me back a big check. I don’t need this crap.”
According to the warrant, Jones told the complainant that she had never owned the house. “I told you I was selling the house and managing the house and renovation. I helped you and you are completely out of control,” Jones wrote.
The complainant wrote back: “You never told me the truth about the house and certainly led me to believe you were one of the owners,” according to the warrant.
The estate’s attorneys told police that there was never an agreement that gave Ruth Jones the authority to act as property manager, or to rent the house.
Former potential buyer
Police contacted the woman who was first going to buy the home and then renovate it for future resale. According to the warrant, she told police she had permission to renovate the residence. She said she had invested $175,000 of her money and that Jones was also going to invest.
The plan, according to the warrant, was Jones was supposed to sell the property then close the deal with the estate. When that deal was done, she would recover her $175,000 investment and split the profits with Ruth Jones.
The woman told police that she backed out of the deal because she needed the capital to fund her own business. She also told police she had not yet been paid back her $175,000. She also told police that she knew a new investor, Lynda Silvestro, was supposed to take over.
On Nov. 27, 2012, according to the warrant, Ruth Jones was actively showing the home on her website in February 2012 and August 2012 and that the home was listed for sale for $1,369,000 in February and then again in August 2012 at the same price. In addition, in August 2012, the home was listed on her website for rent for $6,500 per month.
“This is clearly outside the dates of her exclusive contract and without authorization from the Hiltons or the Hilton estate,” the warrant states.
Silvestro’s alleged role
According to police, Silvestro put a deposit of $30,000 down on the house in September 2012, but the deal fell through. Later on, Silvestro wanted to try to buy the house again and put down an additional $50,000 deposit, and this time her husband, Santo Silvestro, was on the contract with her. The Silvestros signed that contract with a new closing date of Nov. 1, 2012, police said.
When Silvestro and Adam Jones signed their names to the rental agreement, according to police, Silvestro first told police that the signature on the lease was not hers and that it was forged. Police said her $30,000 was being managed from Property Management LLC account then deposited into another account. Police also said that based on an agreement between Property Management and Jones, that Jones had permission to sign Silvestro’s name.
According to Silvestro’s arrest warrant, the second time she was summoned to speak with police, Silvestro said she had been doing her own investigation and found that one of the attorneys for the estate had been having an affair with the renter and that he “stands to make a lot of money in the deal.”
Silvestro, who police said wanted nothing to do with the deal after the first interview, changed her mind after she said she thought about the first potential buyer losing all the money she invested in the property to fix it up. According to the warrant, she told police she wanted to do the right thing.
In addition, Silvestro told police during the second interview that when she found out the $24,000 was still in the Property Management account, she wire transferred the money to Attorney Ed Gavin’s office. According to the warrant, she stated that she “told Gavin to ‘give it to the police’ or ‘return it to Hilton’ just do whatever he needed to do with the money.”
Officer Kevin P. Casey, who has been investigating this case, said he explained to Silvestro that he had conflicting information that says Silvestro told Gavin to hold the money in escrow until a joint agreement is reached or the court orders him to dispense the money.
“I explained to Lynda Silvestro that taking control of the $24,000 that are proceeds from a larceny and instructing that they be withheld could open her up to criminal liability in this case,” Casey wrote in the warrant.
According to the warrant, she told Casey she did that because she is a principal of Property Management and she wanted to get the money out of the account so someone could decide what to do with it later.
According to the warrant, as of Jan. 6, 2013, Silvestro’s attorney still maintains control over the money at Silvestro’s request and none of the money has been returned or attempted to be returned to the Hilton estate.
Regarding Silvestro’s signature on the lease, she at first told police that it was forgery in her sworn statement, but when police asked if that was still the case, Silvestro said she never said it was forgery, but that her name was spelled incorrectly. Police then asked her if Ruth Jones had the authority to sign her name, and, according to the warrant, she stated “yes.” Casey asked Silvestro why she didn’t tell police that, and she stated she forgot, according to the warrant.
Casey eventually told Silvestro there were a lot of conflicting statements based on what she said in both interviews. According to the warrant, Casey asked her to provide another sworn statement. She asked him if she could take it home and write it. He said she could, but that she had to get it back later that day and that it had to be signed and sworn in front of an officer.
As of Jan. 6, 2013, Casey reported in the warrant that Silvestro had not provided any additional sworn statements.

American Real Estate Radio Show Interviews Credit Repair Expert

American Real Estate Radio Show Interviews Credit Repair Expert

The American Real Estate Investors Academy radio show just completed an interview with credit repair expert Paul Ritter. Audio replay of the show is available on the radio show homepage.

Three fired after state rental voucher probe

Three employees at a regional nonprofit housing agency were fired last week after state investigators found they exploited a lack of oversight within the organization in order to give a half-dozen highly coveted low-income rental vouchers to friends and relatives ahead of the general public.
State Department of Housing and Community Development officials also found that in two of the cases, the families were benefiting from additional low-income housing funds even though South Shore Housing Development Corporation lacked proper documentation to determine their eligibility.
“These deficiencies are systemic, and expose the agency to a wide range of vulnerabilities,” wrote Lizbeth Heyer, associate director at the state housing department, in a memo to the agency’s executive director, Carl Nagy-Koechlin.
As a result of the irregularities uncovered during the monthlong investigation, state officials will launch a complete audit of the Kingston-based agency this month and will review and approve job descriptions and qualifications for senior managers involved in administering state-funded programs.

A freeze implemented in July on the agency’s ability to issue new rental vouchers will continue through the audit period. The regional nonprofit administers about 4,000 housing-assistance vouchers through various state and federal programs in 62 communities in Bristol and Plymouth counties. The misappropriation did not involve federally funded housing benefits.

‘It just takes one incident like this to shake people’s confidence.’

A review of the state’s eight other regional nonprofit housing agencies launched after the allegations surfaced found no improprieties, according to state housing officials.
“We’re in a moving-forward mode,” Nagy-Koechlin said. “We learned from the incident that there are some steps we need to take to make sure we’re administering these scarce resources fairly. We fell short of that.”
The three South Shore Housing Development Corporation employees had been on paid administrative leave since late July when an agency employee tipped off Nagy-Koechlin and the state to the misappropriated vouchers that had been awarded during a two-year period. The six families had a “direct relationship” between the three employees and a senior manager, according to the state investigation.
The agency’s senior manager, who had been with the agency for more than a decade, resigned in July immediately after being confronted with the allegations. The nonprofit refused to release the names of the four former employees.
State investigators faulted the agency, which did not have a waiting list in place for rental vouchers, for failing to comply with a state directive to instead use other state housing waiting lists when issuing new vouchers. As a result, “the general public did not have equal and fair access to these program resources,” Heyer stated in the memo. She added that at the core of the problem were “systemic lapses in internal controls in the overall administration and oversight of benefits.”
Other deficiencies highlighted by investigators included the agency’s “inadequate oversight” of middle management and a lack of emphasis for employees of its conflict-of-interest policy.
Michael McGowan, president of the agency’s board of directors, said he is pleased the investigation confirmed that the incident was limited to the six families and four employees. He said the board has been meeting regularly on the matter to make sure it never happens again.
“We’re going to be focused on improved oversight,” McGowan said. “We talked about the process relating to the policy of conflict of interests and housing services and making sure that those policies that we have in place are strengthened.”
Despite their unfair advantage, the six families were found to have met the income criteria necessary to receive the rental vouchers. One of those families had yet to find housing, and voluntarily returned its voucher when informed of the allegations, Nagy-Koechlin said.
The investigation uncovered that two of the families were also receiving state transitional housing assistance funds, even though the agency lacked documentation verifying their eligibility. Nagy-Koechlin said he was caught by surprise by that finding, but he has since checked and determined that the two families are eligible for the program aimed at preventing homelessness.
Currently, the families are being allowed to keep their vouchers and benefits, but if the ongoing investigation finds that they were complicit or knew about the misappropriation, then the state would take additional action, said Matthew Sheaff, Housing and Community Development spokesman.
He added the state has a range of options, including stopping the benefits.
Since the investigation, Nagy-Koechlin said he has met with staff to review the code of conduct and ethics outlined in the employee manual, “and to hammer home the profound responsibility we have to administer these scarce resources fairly and transparently.”
“It just takes one incident like this to shake people’s confidence in the procedure,” he said. “We need to live by high standards.”

Advice for landlords out of pocket over UK housing benefit rent gap

A housing benefit cap introduced in the UK means that in many areas of the country some landlords have seen their Local Housing Authority rental income drop by up to 50%, it is claimed.
The £500 weekly benefit cap is causing some LHA landlords financial hardship as tenants are failing to give them the top up money, to pay the difference between the LHA allowance and the monthly rent.
This is a particularly true for the South East where rents are higher than the rest of the UK and landlords are facing a shortfall in rental income, according to Aki Ellahi, director of an online property portal for tenants, landlords and letting agents called Dssmove.
But he explained that this should not put off landlords taking on housing benefit tenants. ‘My advice to private landlords who are thinking on taking LHA tenants for the first time is to carry out pre-qualifying checks before they take on the tenant.  These are essential if landlords are going to protect their rental income,’ said Ellahi.
‘These checks should include seeing evidence of a potential tenant’s benefit income, seeing what LHA allowance they have been given, and checking to see if they qualify for the full LHA allowance. The landlord should also make the tenant aware that they will have to pay the difference between the LHA allowance and the monthly rent,’ he pointed out.
He also explained that landlords and letting agents must carry out these basic checks to ensure the tenancy has every chance of success. Landlords should always look at a professional tenant’s wages to ascertain whether a rent is affordable or not and this same check should also be carried out for LHA tenants.
He believes that landlords with existing tenants that have experienced a benefit cut have two options available to them. Firstly, to try and negotiate some top up payments to cover the difference between the LHA allowance and the actual monthly rent or to evict the tenant and face a void period with no rental income.
‘Many landlords have for some time, enjoyed the highest benefit rate for their properties which was well above the private market rate. The benefit cap is putting an end to this. It is time for landlords to review their rental charges for LHA tenants and bring them more in line with the private rental market,’ said Ellahi.
Meanwhile, it is estimated that around 20 million home owners in the UK have at least one spare room that isn't being used every night, meaning they could be missing out a combined £85 billion in rental income.
Based on the maximum annual tax free earning of £4,250 per bedroom rented out, each home owner could raise just over £350 per month by taking in a lodger or housemate, according to research from financial solutions provider All About Money.
Home owners with more than one spare room could earn even more although any rental earnings above £4,250 per year are subject to income tax which is 20% for basic rate taxpayers.
‘It's nice to have a spare bedroom for when guests come to stay. But having unused rooms could also mean a lot of wasted money,’ said Ian Williams of All About Money.
‘Renting out a bedroom can help to bring your household income up dramatically, which could really help when it comes to paying the bills or saving for the future. It could also be an option if you're struggling to pay the mortgage on your own and could do with an additional source of income,’ he added.

1 Hot Housing Stock Wants Out

The housing market isn't apparently just a seller's market for those looking to unload properties that have appreciated greatly since last year.
Shares of Ellie Mae  moved 3% higher in the closing minutes of trading yesterday after a Reuters article reported that the mortgage industry solutions provider is putting itself up for sale. Two sources are telling Reuters that Ellie Mae is hiring Morgan Stanley to smoke out a suitor.
You can't blame Ellie Mae for sizing up the market. Just as someone may be tempted to sell a home given the recent rebound in prices, Ellie Mae's stock has been on fire since going public at $6 two years ago. After a quiet 2011 where it actually closed out the year as a busted IPO, shares of Ellie Mae soared 391% last year.

This year has been a relative disappointment. The stock is up a mere 8% in 2013 after yesterday's pop. However, with real estate portals Zillow and Trulia up 257% and 158%, respectively, this year, it's safe to say that investors are still drawn to the companies that are cashing in on the rebound in the residential real estate market.
Ellie Mae offers on-demand automation tools for the mortgage industry. Roughly a fifth of the country's mortgages flow through its Encompass platform and its Ellie Mae Network.
Why is Ellie Mae cooling down as Zillow and Trulia are heating up? Well, Ellie Mae is at the mercy of the mortgage market. After the refinancing boom as interest rates bottomed out last year and this year's spike in home purchases, the market's started to cool as interest rates rise. If mortgage originations dry up, Ellie Mae is stuck trying to gain market share. That's something that it's been able to do in the past as a one-stop shop for mortgage processing, but it still has all of its eggs in the mortgage basket. Zillow and Trulia stand to benefit from a shift to rentals or even the desperation of brokers to drum up leads if buying demand thins out.
Ellie Mae could simply be feeling mortal. After blowing analyst profit targets every single quarter since its IPO, Ellie Mae merely met expectations last time out.
Wall Street is still banking on growth here, targeting revenue to climb 30% this year and another 22% come 2014. That's the kind of growth that is worthy of Ellie Mae's lofty multiple of 22 times next year's expected earnings, and it may still command a healthy premium to that of a private equity firm or larger financial services firm that can build on Ellie Mae's business in a way that it may not be able to do on its own.
It is a seller's market out there. You can't blame Ellie Mae for exploring the sale of its appreciated property.
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