When Don Faught speaks, others listen, or at least other Realtors did last week when Faught talked about the changing work environment in real estate to a large audience at the Valley Real Estate Network meeting at Tommy T's. Faught, vice president of Alain Pinel Realty and managing broker, has been in the business for 24 years, the last eight at here in Pleasanton. With new regulations, a tight mortgage money market and banked-owned (REO) and short sales now accounting for 40% of all home sales, the good old days of handshake deals and quick transactions by home buyers and sellers are over.
Because the real estate market is becoming increasingly complicated, Faught says Realtors are the best "go-to" people that home buyers and sellers should deal with. Not only do Realtors have the professional experience and ongoing and regularly updated training to steer transactions through the multitude of hurdles now in place, they're also the ones who can help those who might be in danger of losing their homes. Foreclosure lists are still growing as low-interest mortgages convert to higher rates that some homeowners can't afford. Foreclosures should be avoided at all costs, Faught says, and Realtors are in the best position to counsel those at risk on how best to handle their dilemma. After all, Realtors have a vested interest in maintaining home values in the communities they serve and in doing what they can to keep homeowners in their homes, even if it means no commission for their service. That can come later when the homeowner's back on his feet financially and decides to trade up to a more expensive property.
Short sales aren't much better and, as Faught points out, aren't "short." In fact, they can take months, even as long as a year as the owner pays what he can while a willing buyer waits out the process. With so many short sales in progress and many financial institutions unable to keep pace, the risk to the seller who thinks he has a buyer is that the sale is scuttled when the buyer finds a better deal and leaves the table. A Realtor with experience in handling short sales can help press the bank for a speedier outcome, saving the seller from losing the property altogether as well as his credit rating.
Faught is treasurer of the prestigious California Association of Realtors and is a candidate for president-elect in that organization's elections in May. If he wins, and so far he has no opposition, he'll be CAR's president in 2013. As an officer, he makes frequent trips to Washington, D.C., to help the CAR and those at the National Association of Realtors (NAR) lobby for (or against) legislation that impacts home sales. Recently, he helped diffuse proposed federal legislation that would have required costly energy-saving, environmentally-friendly retrofits of homes at the point of sale and at considerable added costs to the sellers. In California, he's worked to curtail legislation proposed by the Gov. Jerry Brown administration that would have added $12.5 million in "fees," including special fees on services such as termite and roof inspections, mortgage loan processing and more. So confident was the administration of imposing this fee structure before realizing a two-thirds majority vote in the Legislature wasn't there that the Statehouse is now scrambling on where else to find the $12.5 million it has already programmed into its new budget proposal.
Another concern of Faught's is a plan being advanced by the Obama Administration to take away federal interest loan tax deductions. The cap for these deductions has been set at the $2 million mark for years. Obama wants to lower that threshold to $500,000 and for the taxpayer's primary home only. That lower cap, of course, would affect most homeowners in Pleasanton and in much of California and a few other states which have high housing costs. So far, Faught believes that proposal is on the back burner but it's there for all of us to watch. He also told Realtors that the Feds want to lower to $625,000 from the current $729,000 the amount of mortgages that qualify as conforming loans. Above that, loans would be considered "jumbo," subject to much higher interest rates.
With Faught working the halls of Congress and the Capitol in Sacramento, it's no wonder his remarks drew loud applause from other Realtors who, along with their clients, stand to benefit.