NAR seeks extension of government programs

Real Estate News & Commentary by Chris McLaughlin, July 14, 2009

http://www.shortsalesriches.com

* Follow me on Twitter: http://www.twitter.com/mclaughlinchris

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NAR seeks extension of government programs

Testifying in a hearing titled “Commercial Real Estate: Do Rising Defaults Pose a Systemic Threat?” sponsored by the Joint Economic Committee of the Senate and the House, Jim Helsel, treasurer of the National Association of Realtors (NAR) called for an extension of government programs such as the Term Asset-backed Lending Facility (TALF) and the Public Private Investment Program (PPIP). Commercial real estate, which accounts for 9 million jobs and contributes billions of dollars in taxes, has been badly hit by economic downturn.

In the first quarter of 2009, office investments were down 75% compared to a year ago, while industrial sales volume dropped 83%. Helsel, in his testimony, said: “Delinquencies on commercial loans 30-plus days past due almost doubled from the first quarter of 2006 to the fourth quarter of 2008.” Helsel expressed dissatisfaction on the “slow and inadequate” response of the banks to the crisis. Commending the government on initiatives such as TALF and PPIP, Helsel said it is important to extend such programs in order to ensure liquidity and facilitate lending.

Retails sales rise for the second straight month

According to data released by the Commerce Department, retail sales rose 0.6% in June, after a 0.4% gain in May. Analysts say consumer spending, which is critical to economic recovery, is showing encouraging signs. “We’re seeing more signs that consumer spending is stabilizing,” said James O’Sullivan, an economist at UBS Securities. Sales of autos and auto parts rose 2.3% in June, the best performance since January. Excluding autos, retail sales rose by 0.3% in June. Consumers seem to be focusing on necessary items and looking for bargains. “Many middle-to-upper-income consumers are coming into our stores for the first time for their household needs due to the recession,” said Eric Schiffer, Chief Executive Officer of 99 Cents, which sells groceries, electronics and health and beauty items. Economists say jobless rate has to decline for consumer spending to show signs of sustained recovery. “Ultimately, we need to see improvement in the labor market to be confident that the spending gains will be sustained,” said Sullivan.

Goldman Sachs reports blockbuster quarterly results

Goldman Sachs has reported a net income of $3.44 billion or $4.93 per share for the second quarter of 2009; surpassing the $3.65 per-share average estimate of 22 analysts surveyed by Bloomberg. Goldman’s performance was bolstered by strong trading and stock underwriting performance. This is the highest ever quarterly net income reported by Goldman so far. The profit was impacted by a one-time $426 million charge due to repayment of $10 billion in loans from the Troubled Asset Relief Program. “Goldman’s got a sweet spot in here, they were the go-to players,” said Peter Sorrentino, a portfolio manager at Huntington Asset Advisors. “For the time being, they’ve got kind of an open playing field all to themselves.” Goldman’s results have tremendous significance given the bank’s status as the fifth largest bank by assets, and the largest surviving investment bank. The share price of Goldman Sachs has risen 77% since the beginning of this year and has almost tripled from a low of $52 last November.

Downgrades on the rise

According to Standard & Poor’s (S&P), ratings on 15 companies were downgraded to “junk” in June. This is the third highest total since 1987. Ratings of 60 issuers pertaining to debt worth $209 billion have been changed to junk so far in 2009. About 75 issuers with a debt of $255 billion are close to becoming junk. S&P has downgraded 19 banks and financial institutions to junk this year. The financial sector holds the dubious distinction of witnessing the most number of downgrades to junk status this year. S&P says some 17 financial institutions are close to becoming junk. Nouriel Roubini, an economist known for dire predictions, believes that default on corporate bonds will increase significantly. “Once a severe recession is underway a massive wave of corporate defaults will take place,” says Roubini. “In a typical year US corporate default rates are about 3.8% (average for 1971-2007); in 2006 and 2007 this figure was a puny 0.6%. And in a typical US recession such default rates surge above 10%.”

Proposal to introduce surtax on wealthy to fund healthcare

Analysts say the House Ways and Means Committee is likely to propose a surtax on incomes exceeding $250,000 as a source of funding healthcare costs. The surtax may not find favor with Republicans. “The surtax is obviously more attractive to Democrats in the House because it’s more progressive, which they find attractive in and of itself,” said Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities, a research group. Matthew Beck, a spokesman for the Ways and Means Committee, without commenting on the surtax option, said that “everything’s on the table.”

Analysts say there are 4.3 million U.S. households filing tax returns earning more than $200,000. The surtax is likely to be levied on income, before deductions such as mortgage interest and charitable gifts. Some are worried about the impact of surtax on small business owners whose business incomes get taxed on their individual returns. “With unemployment nearing double digits, we need to help small businesses grow and create jobs, not squeeze the life out of them with even higher taxes,” said Michael Steel, a spokesman for House Minority Leader John Boehner.

Now on to our real estate investor education section…

Information Seminar – Short Sales Marketing Made Easy

Every successful short sale entrepreneur will tell you the secret to their success is less about some extraordinary marketing ability but rather their ability to identify good prospects. One of the best ways to do this is to employ multi-stage marketing in the form of a seminar.

1. Creating a short sales information seminar or class allows you to identify high potential prospects as well as expand your center of influence in the local community. Rather than purchasing out of date lists or running blind ads, having the direct and undivided attention of those seeking to sell puts you face to face with motivated clients. At a minimum, be prepared to cover the following topics:

• How to sell your home fast even in a down market.
• Traditional sales – MLS, fees, repairs, time and other considerations.
• Options when you owe more than your home is worth.
• What happens when you can’t refinance – other alternatives.
• Short sales versus bankruptcy, foreclosure and just “walking away” including the pros and cons of each decision from a personal, tax and practical stand-point.
• Who benefits from short sales.
• Why banks and lenders like short sales.
• How to determine if a short sale is the right opportunity.
• How to find a short sale investor.
• What to expect and when.
• How to spot frauds from the “real deal”.
• Resources & References
• How to get a free evaluation of your property.

1. Sort. Based upon your criteria, eliminate prospects that do not meet your criteria while encouraging those that do to meet individually with you or your representative for a follow-up visit to discuss their specific situation.
2. Meet & Debrief.  At this point you should be in a position to begin bargaining in earnest should the opportunity meet your expectations. Find out what needs and objections are to be dealt with and be prepared to act swiftly.

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,

running 4 different offices, supporting nearly

450 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
* Follow me on Twitter: http://twitter.com/mclaughlinchris
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