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Kelly Reed
Unique Global Estates
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Unique Global Estates announces an ‘In the Room’ interview with Anne Randolph
<San Francisco>, <CA>, <June 12, 2008> Anne Randolph recently joined Unique Global Estates President, Donna Lee Laue, for an exclusive interview detailing her research, surveys and findings regarding the sub prime mess and how it impacts the luxury real estate market and investors. Join us for our Luxury Ambassador ‘In The Room” meeting.
We invite you to listen to the entire interview by click on the player below.
Randolph is the publisher of lore Magazine, a partner in Murray Consulting, and has a long history of consulting with Fortune 500 companies as well as Booz Allen Hamilton, the top analytical firm in the United States. She is a key speaker in the real estate industry and has been a featured speaker at The Luxury Conclave, an event we co-host with The Wall Street Journal, Unique Homes Magazine and CKG International.
Randolph’s information, as discussed during the interview and through answers to questions from our Luxury Ambassadors in attendance, detailed a grim scenario of how the sub-prime mess occurred, but presented a surprisingly hopeful picture of what the future holds and why we need not worry so much. While many believed that the sub prime situation impacted nearly 50% of the loans across the country, Randolph informed us that, in fact, only about 2.7% of the current loans in the U.S. are in trouble. This startling information presents those involved in the Luxury real estate market with more positive options. While the percentage has decreased since 2006 – 2007, she predicts if it goes up at all, it will max out at 3% and we will begin then to see a decrease again.
Purchasing. Randolph’s research indicates that we are seeing a pick up in purchasing. We concur. The information we receive from our Luxury Ambassadors is that they are seeing more offers to purchase being submitted. In other words, ‘the greed is beginning to outweigh the fear’. Trophy homes were not impacted as negatively by the “mess”, as a matter of fact this niche has experienced trading at an “over asking” multiple offer situation. Clearly the wealth of the world believes that investing in very prime, high demand location real estate is a smart use of their capital. Both Randolph’s research and ours indicate that these investors are also purchasing investment properties, in good neighborhoods and a little below market value.
Funding. We all know that the big banks now need to carry most of the jumbo loans on their books so, as a result, they have tightened underwriting restrictions significantly. Trophy homes, when financed, are at 40-50% LTV. This contributes to difficulty in the second tier of luxury market purchasing power. What is not as broadly known is which group is impacted the most; loan limitations are specifically hindering move-up buyers who wish to put a minimum of 10% down, resulting in a slow down of that specific market ($1-2 M).
Agent Recommendations. In clarifying how best to manage during these times of lender restrictions, Randolph made it clear that an agent’s best move is to focus on finding different lenders (beyond the traditional – Bank of America, Chase, Countrywide, etc.), seeking to deal more exclusively with smaller lenders who deal best with high-end clients. As upper-tier agents, developing a team of very specific companies that lend to their audiences is necessary. In addition, she spoke to the need for greater professionalism, noting that consumers are demanding more service and those agents able to negotiate best, those who know - not just the purchase contract - but how to use the addendums to protect their clients and inform them of legal implications, those who provide guidance, will be the most sought out and likely to meet with success.
Future. In the months to come, we will see an untangling of questionable sup-prime loans; procedures will be put in place in order to re-sell the real estate involved. As the bulk of troubled loans were written in 2006 and the first three quarters of 2007, there will be a natural weaning process as time passes. Clearly there is a problem trying to determine which part of each loan has been sold to whom, and short sales are difficult to accomplish because of the complexity of trying to figure out how or who needs to sign off on a purchase agreement in a foreclosure situation. Randolph assures us that we are now and will continue to see a return to sensible financing. Clearly the banks have learned a very hard lesson and are much stricter with lending policies now that they will not be able to wholesale these bundles. Wiser agents with a seasoned team of specialty lenders are going to prevail.
Interesting note. Anne indicates that the big banks are investing in land and buildings and are in contact with international investors who are purchasing in the USA.
In closing, if you have interest in Randolph’s in-depth studies of these topics, you can purchase copies of these reports, “Consumer Tsunami”, and the “Residential Real Estate Investor” through the ‘Real Trends’ office, 303-741-1000 .
For additional information on how the sub-prime situation impacts Luxury realtors, Anne Randolph can be reached directly by emailing anne@loremagazine.com
About Unique Global Estates - Unique Global Estates is the largest search site in the world for properties exclusively in excess of $1Million USD, currently showcasing over 54,000 estates in 73 countries.
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