Mid-Day Market News & Commentary by Chris McLaughlin, October 31, 2008
http://www.shortsalesriches.com/welcome.html
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The Wall Street Journal reported today that the state of Nevada led the country in having the most homes under water—the circumstance when the debt on the property exceeds its current value. First American CoreLogic, a real estate data company, estimated that a whopping 48% of all homeowners who own single family residences in Nevada are under water. This compares with an estimate of 18% nationwide. Home prices in Nevada have fallen approximately 36% since 2006.
Stocks were headed slightly lower this morning after the Reuters/University of Michigan Survey of Consumers showed that consumer confidence had its largest drop ever in October. The index dropped to 57.6 in October from 70.3 in September. The report noted that “consumers reported the most dismal assessments of their current financial situation ever recorded.”
Yeah, we know it is tough out there … but we’re reminded of the good news, and that’s that short term interest rates are now way down, with prime now at 4%. We’re reminded that mortgage applications also jumped this week. And we’re reminded that regardless of who wins the Presidential election next week, the honeymoon period that typically greets any new President will likely boost consumer confidence heading into 2009.
Now on to our real estate investor section…
Numbers to Know: Net Worth
Whether you are applying for loans or simply keeping track of where your time and energy are going, one number every short seller needs to know is net worth. It’s a great tool for personal use but also an effective method of showing sellers why a short sale is a good idea.
Personal Use
Net worth is easy to calculate and makes a great way to track progress and productivity each year; best of all, high net worth individuals are eligible for plenty of additional perks ranging from “qualified” investment opportunities to premium banking services. Unlike other measures of wealth, net work doesn’t penalize against those who prudently use leverage or debt to increase profits – making it the perfect measure for short sale investors to keep track of their growing empire.
Short Sale Use
Sometimes people need a reality check to realize exactly how serious their situation is and how long it could take to reverse it. It’s easy to include a net worth calculator on a mail-out or use during the negotiation stage for a little extra motivation. It’s simple but effective – give it a try!
How to Calculate
1. Tally Assets. Make a list of all assets and put a current value next to each. Examples include homes, cars, cash, bonds, stocks, real estate, art, antiques, jewels or any other item of value.
2. Tally Obligations. Make a list of all short and long term debts, loans and other obligations. Use the total balanced outstanding not the monthly charge. Common examples include car loans, student loans, mortgages, credit card balances, taxes, liens or other debt obligations.
3. Subtract the total amount of obligations from the total amount of assets. If the number is negative then you have a negative net worth – not good at all! Unfortunately, nearly 10 percent of Americans have a negative net worth. This means they could sell every belonging they owned and still be in debt…not even counting the cost of late fees, judgments and commissions owed. If the number is positive then congratulations – that is the level of your current wealth.
See you at the top!
Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com
Phone: (800) 452-7627
P.S.:
Want to hear from a Realtor who made $30k last month helping investors sell short sales, but who never spoke to a bank and didn’t spend 45 minutes on hold? Check out this YouTube video to learn about Jason Turk, Realtor from Tampa, FL:
http://www.youtube.com/watch?v=HuXicBom45o
P.P.S.:
And if you want a huge laugh, and can’t wait to “flip” over how to flip short sales, be sure to check this new video out, too:
http://www.youtube.com/watch?v=fqV4CpBhKTs&NR=1
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