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A New Outlook…Or Maybe Not So Much

2009 has been a long year. It has also been the most prosperous year I’ve ever experienced. It has been a year of shifting perspectives, innovative tools, unexpected hardships, and unexpected blessings. It’s a year that I’ve spent re-acquainting myself with me in order to move forward with a new outlook on life and how I live it.

It’s funny that I should say that I have a new outlook on life because this article is precisely about how I’ve eliminated one outlook that I couldn’t seem to work around. And when I say outlook, I literally mean Outlook…Microsoft Outlook.

For years I’ve used Outlook as my primary communication tool. Calendars, Contacts, Tasks, Notes, and E-mail all contained in one convenient location. For years I’ve cursed at my computer time and time again when what I believed to be the necessary evil (Outlook) would fail to open, crash, slow my system down, you name it. The only reason I stayed with it so long was because of Exchange Server. The two together make for a seamless integration of all of your devices, keeping all of your data in one location accessible anywhere.

Trapped in the confines of Microsoft’s infrastructure has been the only option until recently. And by recently, I mean within the past year or so. You see, the functionality offered by Outlook and Microsoft Exchange is not exclusive to Outlook and Exchange. It is a concept; an idea that all of your information should be in one location and you should not have to do things more than once, and that duplicate information is inefficient.

The problem has been that the only tools available require spending more money than any of us want to spend on these things. How much does a day-planner need to cost? That has changed.

I credit this personal shift to a conversation I recently had between Loren Kutsko, Director of Strategy and Information Management at Food for the Hungry, and Mark Kaech, Grassroots Campaigns and Special Projects, also at Food for the Hungry. It’s inevitable that when you put us together, we’ll talk about the latest tools and happenings in the technology world. When I expressed my apprehension about making some major shifts in how I manage my information, which ultimately translates into a more seamless transaction in the real estate contract process, I was met with the reality that I was still doing things the “Gen-X” way, and not the “Gen-Y” way and that the tools that I need are available at a fraction of the cost.

As someone who considers himself open to change, to be struck with the possibility that I’m not standing at the front of the technology-progress boat anymore caused me to reassess my ways.

The Challenge

I’ll keep this simple. I want my contacts on my iPhone to be identical to my contacts on my computer. When I read a message in my inbox and it’s marked unread, I want it to be universally marked unread so I never have to read it again unless I need to re-visit the message. I want my calendar on my phone to have the same information as my computer, and the same information as my online calendar at Google.

I want complete and seamless synchronization of all of my data so I can get to it anywhere, anytime.

The Old Solution

Microsoft Exchange Server in concert with Mobile ActiveSync, Outlook, and Outlook Web Access. If not self hosted at my own facility with over $6000 worth of hardware and software required, at the very least, paid for on a single-user basis at an exchange hosting company for about $10.00/month.

The New Way

This is so simple it amazes me that I didn’t think of it before. A note of caution. If you aren’t willing to rethink how you manage your information, almost completely, you’ll be very frustrated if you try to do this.  In fact, you may not be able to do this. There are also some pre-requisites that are assumed prior to making this type of change.

• You need your own domain name.  Lose the gmail extension, the yahoo account, the free e-mail identity.  Get your own domain name and start branding yourself personally so you never have to change it.  If your company gives you an e-mail address, use it for company communication only, and get your own identity.  you@yourname.com is far more valuable than you123@yoohoo.lame.com.
• You need a smart phone, and preferably, an iPhone.  More tools will emerge at lower and lower costs, but this is where I am today.
• I matters not whether you have a MAC or a PC anymore.  Entourage and Outlook are no longer needed.
• Please use either Firefox or Chrome as your primary internet browser.  Internet Explorer should only be used if the idiots on the other end of the website you need to use have failed to develop a more compatible site and it requires Internet Explorer to work.  Safari will suffice, but I personally avoid it.  Firefox is my first choice for now.

So What are the Changes I Actually Made?

I moved all of my data from Exchange to Google.  I moved my calendar to Google Calendars, my contacts to Google, and all of my e-mail to Google.  My notes are kept nice and neat using Evernote, my tasks…well, I never used tasks because we still need a good system that supports task dependencies and hierarchical action plans.  My website resides at another hosting provider, but all of the e-mail traffic is bounced to Google and handled by Google in a very easy to use Gmail interface.  No, I do not have a @gmail.com address.

How did I do this?  Well, it didn’t happen overnight.  I have lots of information that needed to be moved, and I’m still sorting out a few things here and there.  My website never went down, but my e-mail was interrupted for a few hours, so if you do this, you should make it a late night event.

All of these steps were accomplished in phases to ensure it was going to work, but there were some leaps of faith involved.  I made sure to get into the forums on Google to search for potential problems, then I dove in.

Before you do anything, backup all of your Outlook data.

Step 1: Establish Google Apps account for my domain.  (assumes you have a domain name already: www.godaddy.com to solve this problem.)

This is so easy.  Go to www.google.com/apps and sign up for Google Apps for Business.  It’s $50.00/year per user.  Go for the free 30 day trial (you can click here for that).

Step 2: Using the MX settings that Google gives you after you’ve setup your account, go to your domain manager at Godaddy.com or wherever you registered your domain, and modify the MX records.  Don’t screw it up and record the settings that were already there.  If you need to call someone there, do so.  They’ll help you do it.

Step 3: Watch the mail start rolling in.  It takes about 2 hours or so to kick in.

Step 4: Setup a new e-mail account on your iPhone using the gmail settings.  Now you have completely synchronized e-mail on your phone and through your gmail interface.

Step 5: Export all of your calendar data from Outlook or Entourage, or from wherever you keep it.

Step 6: Import your calendar from within your new Google account.

Step 7: Export all of your contacts from whatever program you’re using.

Step 8: Import your contacts into Google.

Step 9: Setup a new mail account using the Exchange option on your iPhone.  Follow these simple instructions to do so. Since you have already setup a mail account on your phone, make sure that your iPhone is set to sync only Calendar and Contact items, not mail.  The iPhone only allows one exchange configuration, so having a recent backup is going to make your life much easier at this point because you can delete your current exchange setup (if you have one) without losing your data.

Step 10: This is the last step.  Login to your Google Apps account (http://www.google.com/a/yourdomain.com), click the Service Settings tool bar item and then Mobile at the bottom of the drop-down menu.  Make sure you enable Google Sync at the bottom.

That’s it.  Your e-mail will be delivered to Google, you’ll be able to use the Gmail interface to manage it, and you’ll have it on your mobile device on demand.  Your calendar and contacts will begin to fill up in your phone, seemingly magically, and everything will be synchronized.

Mashable.com recently published these findings regarding Gmail vs. Outlook. I stand with Google now.

Oh, and the very very last step.  Uninstall Outlook .

If you need some help walking through this process feel free to contact me and I can help you through.

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It’s a Bottom Line Issue

A recent post on raincityguide.com got me going about the bottom line when it comes to short sales.

The article, written by Ardell, touches on the apparent importance of the assets that a property owner may have that could affect the bank’s decision regarding whether or not a short sale will be approved.

At present, there’s no guarantee that any lender will approve a short sale, ever.

Just because the value of a property is obviously less than the amount owed, that does not mean that the seller’s lienholder is going to approve the short sale.

Consider this.  If a property owner has a net worth of $1,000,000.00 and they decide to quit paying their mortgage, what happens?  The bank forecloses.  It doesn’t matter if the seller has money or not.  They have made a decision to walk away, and one thing is certain…if you have a home with a mortgage and you quit paying it, the bank will foreclose.

So, when this seller, who arguably is walking away from a moral obligation, decides to attempt to sell the property to reduce their potential deficiency liability and potential income tax liability for current market value, which may be less than what they owe, would it, or would it not be in the bank’s best interest to allow the short sale?  If they don’t allow it, will they waste money on the foreclosure process, and lose money when they list it for sale for less than market value?  They will.

Ardell’s Auto Metaphor

You lend your friend $10,000 to buy a car. He decides to sell it when he still owes you $8,000.  He tells you someone is willing to pay $5,000 for the car and he wants you to take $5,000 as payment in full.  You look at his offer, you find out he he has $15,000 in a savings account.  You find out the blue book value for the car is $6,500. The person who wants to buy the car for $5,000 is getting impatient wating for an answer. What would you do?

My answer?  It doesn’t matter to me whether or not my friend has money in the bank.  The only thing that matters to me is how much the car is worth on the open market, and how much is being offered.

The what you may be missing about this example is the fact that my friend has made a decision to eliminate a debt, and he’s going to do it one of two ways…he’ll either a) let the car get reposessed, or b) try to sell it for as much as he can and ask for a forgiveness of the remaining debt.  True, he may no longer be a friend, but that’s what he’s doing.

So, what do I do?  Well, in this case, the car should sell for $6500.00 based on Kelly Blue Book private sale.  I as the lender now have a few options.  I can a) take the car back, or b) agree to sell it for the offering price, or c) require that my friend find a buyer willing to pay market value.

Perhaps the cost of repossessing the car, reconditioning the car, licensing and registering the car, and re-marketing the car will exceed $1500.00, the difference of market value and the current offer.  In that case, I would be an idiot not to take the offer.  I as the lender, will make smart decisions in mitigating my loss, which means that I would in fact approve the sale.

If all of my costs to resell that car are less than $1500.00, then I would deny the sale and require a higher price.

Should you just take the car and try to sell it for the $6,500 or better, so that you can still collect the amount your friend owes you after you sell the car?

This is a classic example of the tug of war that we face with lenders between the concept of Loss Mitigation and Collections.  At this point, I’m not interested in collecting.  I’m interested in preventing further loss, because I know that my friend is not going to pay.  So, I want to get the car OFF of my books as quickly as possible for as much as I can possibly salvage with as little time invested as possible.

If I am concerned with collecting, knowing that my friend has the money to satisfy the debt, I will surely become bitter at him for not paying, and then I will do something stupid, like refuse to agree to mitigate my loss, which in the end will eat up time and energy, and money.  Give me my $5000.00, get the headache out of my life, and let me put that money somewhere it can begin earning again.

Is it possible to short sell more than one home of the same owner who has plenty of money in the bank but has chosen to walk away from their obligation?  Yes.  Is it right for them to walk away?  That becomes a moral question that the seller would have to ask of his self.

Bank executives understand loss mitigation, and they don’t care about each person’s personal financial situation.  They care about 3 things and 3 things only.

1. Is the owner walking away from the property?
2. What is the market value of the property?
3. What is the current offer?

Anything else has zero bearing, from the bean-counter’s perspective.

Some second lenders (junior lien holders) will hold up the sale of a property because they just want to get back at the seller for not paying.  This is a ludicrous path to follow, because it gains them nothing.  If the senior lien holders were to behave the same way, then ultimately they lose more than if they allow the short sale.

Do lenders have to approve short sales?  No, they do not.  Would it be better if they did?  Yes, but only if it means avoiding foreclosing on the property, which is something that the bank cannot prove the owner has actually decided to allow.

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Should I Buy a New Or Used Car?

Used.  Always used.  Buying a new car is one of the worst financial decisions I have ever made.

Monthly Payment

The monthly payment is the first thing that everyone looks at when they finance a car.  Why?  Because they live in a cash flow mentality.  In this economy, cash is king.  If you don’t have it, you can’t spend it.  If you can’t spend it, you can’t make it.  If you can’t make it, you won’t have it, and the circle continues.

If you’re thinking about a monthly payment, and any portion of that payment is going to be paid to anyone other than yourself (in other words, the bank), then you’ve already lost the battle, because you’re headed into debt.  There may be a reasonable explanation for why you’re seeking financing for something you don’t have enough cash to purchase up front, but my advice to you is to completely avoid it altogether.  In order to succeed at this, you will have to radically change your idea of what you should be driving.  One of the mistakes people make when they consider their monthly payment on a new or used car is how much it really is going to cost them every month.  The monthly payment every month is only the financed amount, and it hides all of the other expenses you’ll incur throughout the life of the car.

Since I’m such a nice guy, I’ll go ahead and lay out my stupidity (Dave Ramsey calls what I’m about to explain a “stupid tax”) for all to see, with no holds barred.

My Stupid New Car Buying Experience

In March of 2008, I purchased a new Honda CR-V, loaded.  The only feature I didn’t buy was the All Wheel Drive.  Big deal.  So what did my car cost?  The sticker price was $27,895.  Divide this by 72 and you have a monthly payment of $387.00, right?  Wrong.

When you buy a new car, you have to add to it the document fee, which in my case was $368.00, sales tax, which was $2259.50, and title and registration, which was another $514.71.  These are just the up front fees.  Then there’s the finance charge.  My loan was at 7.9%, which over a period of 72 months is $8162.47.

Add all of these up, and the price of the car goes up to $39139.68.  Divide that by 72 and you have a monthly payment of  $544.00.  But is that the total cost of owning the car?  No.

In the first year, the car depreciates roughly $4200.00, so for the first year, you’re paying $544 per month plus $4200.00 divided by the first year (12 months) or $350.00.  Color me stupid, but that’s $894.00/month.  Add insurance at $1200/year and that’s another $100/month.  Now we’re up to $994.00/month.  Fuel for me last year, as a REALTOR, was $2937.00.  That’s $244.00/month.

My vehicle, which appears to be costing me only $544/month (which by the way, is ridiculous and I should be stabbed through the eye with the very pen I signed with) is actually costing me $1238/month in real money!

The following is from Edmunds.com.  It shows what you can expect to be the real cost of owning a 2009 Honda CR-V.

. Year 1 Year 2 Year 3 Year 4 Year 5 5-Year Total . Depreciation $4277 $2729 $2402 $2130 $1911 $13449 . Financing $1801 $1455 $1082 $680 $247 $5265 . Insurance $1258 $1302 $1348 $1395 $1416 $6719 . Taxes & Fees $2439 $374 $313 $262 $220 $3608 . Fuel $1996 $2056 $2118 $2182 $2247 $10599 . Maintenance $93 $546 $359 $872 $1108 $2978 . Repairs $0 $0 $105 $254 $373 $732 . . Yearly Totals $11864 $8462 $7727 $7775 $7522 $43350

The Used Car Buying Experience

Let’s assume that I decided way back at the beginning, that I would be satisfied with driving the half-way okay car that I had which was completely paid off and only representive a small amount of “inconvenience” in my life.  No NAV, no fancy leather, no sun-roof…etc.  Big deal right?  Right.  Now, with a paid for car, the bank is getting nothing.

At the time, my truck was worth $8000.00.  That actually means that I could have moved from the truck into a car that was more conducive to showing property for the same price, or perhaps a bit less.  But, I would have been able to set my sights on that newer car without losing $1238/month.

Here’s how it starts.  For 10 months, I would sock away $544.00 every month in my own savings account.  Hey, I was willing to pay it to the bank, so why not just pay myself?  After 10 months, I have $5440.00.  Now I trade my $8000.00 truck, which would still have been holding its value, in to a used car dealer for a car that costs $13,440.00 (That’s $8000.00 + $5440.00.)  Not bad.  Yet again, I save for 10 months an additional $5440.00 and I trade my most recent car in for another car at the price of $18,880.00.  20 months into the process I’m driving a fairly nice used car.  Keep in mind, I’m never buying new cars through this process and I’m always upgrading to cars that are holding their value, like a Honda or Toyota.  For another 10 months, I save an additional $5440.00 and I trade my $18,880.00 car in for a used $24,320.00 car.  30 months have gone by and I haven’t paid the bank a red cent, and every 10 months I get to upgrade to a newer car, and not only that, but the $24,000 car I’m in now, was purchased by someone else NEW just 3 years earlier for a whole lot more than $24,320.  Let the first owner take the depreciation.  Let’s do it again.  10 more months of saving $544/month for another $5440.00 and I’m now able to trade in for a $29,760.00 car, paid for, IN FULL!

If you’ll recall, the price of my new Honda CR-V was $27,895.00.  It’s been 40 months or 3.3 years, it’s 2011, and I can actually now purchase that 2008, loaded CR-V with miles on it, for much less than its original sticker price.  In fact, that car that I had to have last year, would probably cost me under $20,000 in 2011, and would have all of the same features!

This is an absolute no brainer.  When you buy a new car, you lose, no matter what.  If you’re in a financial position to be able to take that loss, in other words, if you have the money to blow, then you can buy a new car, but you lose.  It’s a mathematical fact.  Most of us do not have that money because we jump in before we look at the facts.  So here’s where I am now, as a result of my impatience.  I have a one-year-old car with 20K miles that’s worth about $22,000.  My monthly payment is $544, but as we’ve seen, the actual cost of ownership this first year has been over $1200/month.  I still owe $27,000 on the car, which is a hair under the sticker price, and the only way out is to sell it and take a note for the difference.

Instead of having a paid for Honda CR-V in 40 months, I have to get rid of it and take an $8000.00 loss, which means I’ll be paying off nothing for a while.  Are you as stupid as me?

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How Do Real Estate Agents Get Paid?

…and who pays them?

Before I was a REALTOR, I was a consumer, and I bought a house. Fortunately for me, or maybe it wasn’t so fortunate, my REALTOR was my father. He also owned the house that I purchased. This worked both for and against me, but we won’t go into that now. The point is, I had no idea how REALTORS made a living prior to diving into the business myself, and you may also have questions about how we get paid.

Real estate agents are 100% commission based jobs. That means, we don’t get a paycheck unless we do business. Makes sense. Open up shop, provide a service, get paid, or sit on the couch all day wondering what to do.

Real estate agents also work as sales agents under a real estate Broker. That broker typically collects a percentage of what we make to cover the costs of running the company. At Realty Executives, we pay a premium to use the name while we conduct business according to their standards and the standards of the Arizona Department of Real Estate and the National Association of Realtors.

If we don’t sell a home, we still pay our broker, mortgage, utilities, etc. So we’re always in a position where cash is flowing out, but not always in a position where cash is flowing in. We’re also in a business where we need to be available when most of the rest of the world is not. This means that we sometimes have to work on the holidays that you get to spend having fun. On the other hand, we have the freedom to “take a lunch” whenever we want.

What does having a Realtor cost the Buyer? Answer: Nothing. Zero. Zip. Nada.

When you meet me for the first time and express an interest in purchasing a home, I assess how serious you are about purchasing, and then I begin to spend money on you to help you find that home. Searching for a home with a REALTOR costs you only time. You will spend nothing out of pocket, but we will commit a large portion of our business day(s) and marketing budget to provide you with the most pleasant showings as we possibly can. We fill our tanks, fill your stomachs, and become your city tour guide for the duration of your search. If you purchase a home without using us after spending all that time, we don’t get paid, but we also don’t hold it against you, because you may not have known, which is why I’m writing about it.

When the seller hires a broker to sell their home, the broker charges them a commission to do so. When that broker lists the property on the MLS, they indicate how much of that commission will be paid to the agent who brings YOU (the buyer) to the table to purchase the home.

The buyer won’t have to open their wallets until an offer is accepted, at which point a series of events begin that justify why the selling broker is willing to pay us in most cases half of the agreed upon commission.

What does having a Realtor cost the Seller?

The seller is the one who has the highest expense. From fixing up their property to staging it, the seller will bear the majority burden of cost in selling a home.

When the seller strikes an employment agreement with the broker, they typically agree to a set commission of the final sales price of the home and they offer a portion of that to anyone who brings a buyer. When the property closes escrow, the funds owed the listing brokerage are distributed according to the agreement between the two brokerages and each real estate agent is paid accordingly.