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Foreclosures spread

by admin on January 28, 2011

Smart Real Estate News & Commentary by Chris McLaughlin January 27, 2011

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Foreclosures spread

According a report released Thursday by RealtyTrac, one out of every 9 homes in Las Vegas received some kind of default notice in 2010.  But there is a silver lining: The foreclosure rate is actually dropping in Vegas, down 7% compared to the end of 2009.  In fact, rates fell in all top 10 foreclosure markets of 2010. In No. 2 Cape Coral, Fla., for example, filings dropped 28%. In third place Modesto, Calif., they fell 13%; and forth place Phoenix dipped 7%.  But even as foreclosures fell in the worst-hit areas, they rose in 72% of the 206 metro areas covered by RealtyTrac’s report.  Foreclosures have spread beyond the original bubble cities as the economy melted down. Unemployment rates spiked nearly everywhere, and people out of work can’t make their mortgage payments.  As a result, there is now a cohort of metro areas that didn’t enjoy the housing boom but are now enduring double-digit foreclosure spikes.

For example, Houston foreclosures grew by 26% — the biggest jump by any of the 20 largest metro areas — to one for every 62 households. The city suffered from a bleak job picture, with unemployment rising to 8.6% in November from 8.1% a year earlier.  Atlanta rose to 25th place with a 21% jump in 2010 filings following a 42% spike in 2009. And Salt Lake City filings ballooned by 30% in 2010, good for 27th place.  Bubble state cities still dominate the top of the list, however, accounting for 19 of the 20 top markets. And the easing in these worst-hit markets may be temporary, said Rick Sharga, spokesman for RealtyTrac.  He forecasts a foreclosure rise again in the Sand States this year as banks restart their engines. Overall, he thinks, foreclosures should plateau and stay at about the same level throughout 2012. “Until jobs come back, we won’t see much of a change,” he said.

Initial jobless claims higher

There were 454,000 initial jobless claims filed in the week ended Jan. 22, the Labor Department said today.  That was up 51,000 from the 403,000 claims filed the week before, and much worse than the 410,000 claims economists surveyed by Briefing.com had expected.  Jobless claims have bounced around for months, dipping below the 400,000 mark four weeks ago. Soon after, they began rising again. Since the weekly figures can be volatile, economists look at the four-week moving average to smooth out the week-to-week choppiness. That figure rose 15,750 to 428,750 from the previous week, showing a slightly worse job market.  Continuing claims — which include people filing for the second week of benefits or more — rose to 3,991,000 in the week ended Jan. 15, an increase of 94,000 from the week before.

Olick – what’s behind the new sales surge?

“No, I’m not about to throw a huge bucket of water on a really nice monthly stat that is infusing a modicum of hope in the housing market. I just want to put it all in perspective.  New home sales surged 17.5% in December, month-to-month, according to the Commerce Department, and that brought inventories way down to a 6.9 month supply (the total number of new homes for sale also fell to the lowest level since 1968). Prices of new construction actually bumped up significantly as well, up 8.5% year over year.  It’s important to remember that this particular data series is based on contracts signed in December and not closings, as the Existing Home Sales survey from the National Association of Realtors is. So what happened in December?  From the last week in November, into December, the rate on the 30 year fixed mortgage surged more than half a%age point, briefly touching 5%.

That clearly had the effect of pushing some fence-sitters to the buy side, worried that rates might go even higher, and they would be priced out of the market. Rates have since flattened below 5% with not much going on. The urgency is gone.  To put all this in perspective, while 17.5% seems like a big number, the actual number of homes that sold in December was 22,000, with November being revised down to 20,000. ‘So December is the second worst month in recorded history behind November,’ notes JT Smith of Aristar Funding. He also notes that 23% of the sales were of vacant lots.  The strange number in the report is a huge 72% jump in sales month to month out West, ‘strangely where most of the excess existing home inventory is,’ says Miller Tabak’s Peter Boockvar. I’m wondering if the surge out West isn’t due to the fact that foreclosure sales were halted, so buyers turned to new construction.  ‘Net-net, housing continues to bounce along the bottom, as we’re well aware that a bubble of the extend we had takes many years to work through,’ adds Boockvar.  It will be telling to see if this sales pace can hold on and improve, as banks ramp up foreclosures and start putting them back on the market.”

Deficit hits $1.5 trillion

New budget estimates released yesterday predict the government’s deficit will hit almost $1.5 trillion this year, a new record.  The daunting numbers mean that the government will have to borrow 40 cents for every dollar it spends.  The new Congressional Budget Office estimates will add fuel to a raging debate over cutting spending and looming legislation that’s required to allow the government to borrow more money as the national debt nears the $14.3 trillion cap set by law. Republicans controlling the House say there’s no way they’ll raise the limit without significant cuts in spending, starting with a government funding bill that will advance next month.  The CBO analysis predicts the economy will grow by 3.1% this year, but that joblessness will remain above 9% this year. Dauntingly for President Obama, the nonpartisan agency estimates a nationwide unemployment rate of 8.2% on Election Day in 2012. 

The latest figures are up from previous estimates because of bipartisan legislation passed in December that extended Bush-era tax cuts, unemployment benefits for the long-term jobless and provided a 2% payroll tax cut this year.  That measure added almost $400 billion to this year’s deficit, CBO says.  The deficit is on track to beat the record of $1.4 trillion set in 2009. That figure reflected huge outlays from the Wall St. bailout. The nonpartisan budget agency predicts the deficit will drop to $1.1 trillion next year.  “The fiscal challenge confronting us is enormous. To solve this problem, it will require real compromise and a great deal of political will,” said Budget Committee Chairman Kent Conrad, D-N.D. “We need to have both sides, Democrats and Republicans, willing to move off their fixed positions and find common ground.”

Google to get out of real estate

Massive search engine, Google, will take down real estate listings from Google Maps on Feb. 10.  Brian McClendon, vice president Google Earth and Maps, broke the story on the company’s LatLong blog yesterday and said the real estate listing feature is simply not popular enough to justify its existence.  Google first announced the tool in July 2009. Surfers using Google Maps gained the ability to find properties for rent or sale when searching locations.  “We’ve learned a lot and been excited to see real estate companies use Google Maps in innovative ways to help people find places to live,” McClendon said…yet we recognize that there might be better, more effective ways to help people find local real estate information than the current feature makes possible.  We’ll continue to explore this area.”  Four months after Google launched its real estate listing services, HousingWire broke that the Web firm planned to launch a mortgage pricing tool, the fate of which remains unclear.  Competition also pulled too much traffic from the tool, McClendon added.  Indeed, Web-based real estate information company Zillow is reporting record-breaking traffic, by logging more than 13 million unique users in the traditionally slow real estate month of December.

Now for our real estate education section…

Cash Buyer Myths

One of the most persistent myths in the real estate business involves the concept surrounding a cash buyers. In fact, even seasoned real estate agents and other professionals often succumb to these same myths and misperceptions. Today we are going to spend some time sorting out the facts from the fiction surrounding cash and shed some light on this elusive topic.

Myth #1 – Cash buyers are all rich. WRONG! Cash buyers come in all shapes, sizes, gender and income brackets so stop limiting your client roster due to an out of date mindset. The reality is that many buyers with average incomes are able and willing to pay cash. Common examples can include the sale of a prior property, inheritance, 401k or other withdrawal and even cash advances from other sources including signature loans or credit cards. Don’t place restraint on buyers by assuming cash is out of the question.

Myth #2 – Cash is King. Well, this certainly holds true in many instances but not always. For example, in some situations a seller may actually wish to hold a note as when providing owner financing over a long period of time. In fact, early pay-off is considered a risk to this type of portfolio due to the reduced interest earnings over the lifetime of the loan.

Myth #3 – Cash Can’t Compete with ROI. In the past this was often the case but with real ROI”s in the low single digits, cash deals have investors squealing with delight. For example, let’s assume an investor pays $50,000 cash for a house that rents for $500 per month. Setting aside 2 months worth for taxes and insurance, this investor still recognizes a 10% annual return excluding appreciation! Not a bad investment considering the alternative of leaving it in the bank earning two to three percent.

Myth #4 – It Takes a Lot of Time to Save Enough Cash. While it is true that trying to save up enough cash to buy a property for cash can take years, it is equally true that it doesn’t have to. The key is to set your sights on what will provide quick cash and then use the profits to fund future endeavors. One of the most critical mistakes made by novice investors is trying to shoot for the stars the first time out. Better yet, rather than trying to fund the purchase of a property all on your own, seek out a partner or provide bird dog services for other investors. Not only will it allow you to earn extra income to pay down bills and pad your investment portfolio, but you will also obtain valuable insight and experience without having to take on excessive risk.

Myth #5 – Cash Kills the Tax Advantages. Buying for cash may not allow some buyers to obtain a mortgage interest deduction but most of the other meaningful tax advantages are still available. Even more importantly, the streamlined time and cost associated with a cash purchase is often more than worth the savings. After all, it doesn’t make a lot of financial sense to spend a dollar in order to save 35 cents. For those that are using real estate as a method to make money, maximizing profits while minimizing expenses is the clear leader in tax strategies; cash allows that plus much more.

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************
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 over
     400 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
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

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Economy “muddling along”

by admin on October 29, 2010

Smart Real Estate News & Commentary by Chris McLaughlin October 29, 2010

Forward this e-mail to your friends!  Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–> http://www.mclaughlinchris.com

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LAST CHANCE: Our Orlando Foreclosure Investing Summit is nearly

SOLD OUT.  Click here to claim one of the last seats:

http://www.ORLInvestorEvent.com\

**********************************************************

DSNews.com – home prices up

Third quarter home sales weren’t exactly vigorous, but, according to ZipRealty’s Quarterly Home Hunter Report, Q3 home sales in upscale and starter communities were more robust than they have been in many months.  According to ZipRealty, California has five of the nation’s “hottest” ZIP codes. ZIP codes are ranked by determining which average home sale price is most above the average list price by percentage.  The report said that some homes in various price ranges were selling at around 5 percent above asking price, though this time last year homes in the country’s hottest ZIP codes were selling at an average of 13 percent above asking price.

The Greater Grand Crossing neighborhood in Chicago, Illinois was the country’s “hottest” ZIP code last quarter. Homes in this area sold for an average of nine percent higher than the asking price.  Also on the “hot” list are ZIPs in Fort Lauderdale, Florida; Covington, Washington; and North Las Vegas.  In contrast, in the “coldest” ZIP code, located in Durham, North Carolina, homes sold for an average of only 81 percent of the asking price. Even so, these numbers are still an improvement. The “coldest” ZIP code in Q2 was located in Winchester, Connecticut, where homes sold for an average of 72 percent of the asking price.

Economy “muddling along”

The Commerce Department said today that the economy expanded at a 2 percent annual rate in the July-September quarter. It marked an improvement from the feeble 1.7 percent growth in the April-June quarter.  Consumers helped boost last quarter’s economic growth with 2.6 percent growth in spending. That was better than the second quarter’s 2.2 percent growth rate and marked the biggest quarterly increase since a 4.1 percent gain at the end of 2006 before the recession hit, but quite pathetic historically.  “We’re just muddling along,” said Ken Mayland, president of ClearView Economics. “I think it is going to be hard to break out of this sluggish-growth rut.”  With consumers spending more, they socked less into their savings. They saved 5.5 percent of their disposable income in the July-September quarter, down from 5.5 percent in the April-June quarter. That’s still a high savings rate. Before the recession, people saved only about 1 percent of their disposable income. 

Growth in the October-December quarter isn’t expected to improve much. A new AP Economy survey estimates a 2.4 percent pace.  If that’s that case, the economy will end 2010 on weaker footing than it started. In the January-March quarter, the economy expanded at a 3.7 percent pace.  Under one rule of thumb, the economy would need to expand by 5 percent for a full year to knock the jobless rate down by a full percentage point.  For all of this year, the economy is expected to grow 2.6 percent. That would mark an improvement from 2009. The gross domestic product shrank that year by an equal amount, the largest annual decline since 1946. GDP measures the values of all goods and services — from machinery to manicures — produced in the United States.

Olick – unexpected cities hit by foreclosures

“Yes, the four states that we always talk about are still leading the nation in foreclosure rates. Okay, Florida, California, Arizona, Nevada…if you’ve been trapped under something heavy for the past few years. But for the past few months a new trend is emerging, and some numbers released today really put it into perspective.  Foreclosure ‘actions’ in Q3, which include anything from default notices to bank repossessions, rose in 65 percent of the nation’s top 200 housing markets.  In Seattle, they jumped 71 percent, in Chicago up 35 percent and big double-digit jumps in Houston and Atlanta too. 

These are not cities that saw enormous price jumps during the housing boom (maybe Seattle, but not the others) and they definitely did not see the kind of investor activity that the fab four saw during housing’s heyday.  Not in the general release, but in a little side-bar that Realty Trac sent me, you see really big jumps in bank repossessions, which are the final stage of foreclosure when the bank takes the house back and evicts you. Quarter to quarter, Seattle saw a 65 percent jump, Philadelphia a 38 percent jump, Boise, ID up 71 percent and even Richmond, VA taking a 28 percent leap. One word: Unemployment.  Of course the logical question next is, what happens to home prices in those cities, as foreclosures hit the for-sale inventory.  Sure, there are buyers out there looking for deals, but with the foreclosure robo-mess hanging over the market, some sales frozen, some not, there’s not a whole lot of buyer confidence out there to take the leap into the ‘distressed’ market.  That just means the prices on those homes have to go lower.”

Roubini – “fiscal train wreck”

The U.S. economy is a “fiscal train wreck” waiting to happen that risks ushering in a period of stagnation featuring by minimal growth, high unemployment and deflationary pressure, U.S. economist Nouriel Roubini wrote today.  In a commentary for the Financial Times, Roubini — one of the first economists to predict the housing crash in the United States and known as ‘Dr Doom’ for his pessimistic forecasts — said fiscal and monetary stimulus had prevented another depression.  But he said that further quantitative easing likely to be announced by the Federal Reserve next Wednesday will have little effect on U.S. growth in 2011, “so fiscal policy should be doing some of the lifting to prevent a double dip recession,” he said.

He said the U.S. remains on an “unsustainable fiscal course” and the likely make-up of Congress after elections next Tuesday, in which the Republicans look set for strong gains, virtually takes fiscal reform off the agenda.  “The risk … is that something on the fiscal side will snap … The trigger could be a debt rollover crisis in a major U.S. state government,” he wrote.  “The worst of the coming fiscal train wreck will be prevented by the Fed’s easing. But the risk is (Obama) … will then preside over … a Japanese style stagnation, where growth is barely positive, and deflationary pressures and high unemployment linger.”

LPS – no defects, no fee-splittin 

Lender Processing Services began reducing its foreclosure signing services back in 2008 and stands by its mortgage processing services. Further, when the firm caught a manager robo-signing foreclosure documents, the only such case it says it found, that manager was immediately dismissed and documents remediated.  “We believe we have taken appropriate steps and we do not believe it resulted in any wrongful foreclosures,” said LPS CEO Jeff Carbiener in a third-quarter conference call to investors Friday. “We no longer provide foreclosure document services.”  Carbiener also said that his company does not participate in fee-splitting or revenue-sharing with lawyers, another recent charge against the company.  “We are not an equity owner in any law firm,” he said.  LPS, a mortgage and real estate technology and services provider, reported net earnings of $78.7 million or 85 cents per share, in the third quarter of 2010, up from $75.5 million or 78 cents per share, in last year’s quarter. 

JPMorgan Chase, Bank of America and Wells Fargo also now use LPS desktop management software for dealing with clerical issues when it comes to mortgages, the CEO said.  This means that nearly all of the top 20 mortgage servicers use some form of LPS desktop systems.  “The trend towards outsourcing lender processing continues,” said Carbiener in a third quarter conference call to investors Friday. “We continue to gain market share across all key businesses.”

Now for our real estate education section…

Friday File – 15 Minute Resolution: Prepare Today for Bing-Yahoo Moves

In what may initially sound like just another search engine strategy, Bing and Yahoo are actually positioning to make major waves in the market. The Yahoo/Microsoft alliance is designed to switch the way results are viewed and rated. While this may not initially impact Google, who remains the single largest search engine in the nation, it does have the potential to impact ALL (including Google at a later time) search results in fairly dramatic ways. Savvy short sale and real estate professionals should take note and begin putting a plan into action sooner rather than later. One of the first steps you can take to prepare is to use your social media network…not only will it help with the Bing/Yahoo campaigns but is very likely to increase your Google ratings as well. Here’s what you need to know to get started:

Facebook Meets Search

Facebook is often viewed as only a social networking site and indeed, word of mouth marketing is terrific especially when used to get the word out about a great property or stay in touch with prospective clients….but it’s also much more.

By now everyone has seen the “like” buttons on Facebook but what you may not know is that Facebook can count the number of “likes” posted by your personal network and use those results to make suggestions to your friends and family when they perform a search. A combination of location, social network “likes” and other criteria may soon become a major push toward filtering the search results derived from the data. Evidence of this trend is now becoming increasingly clear with the Bing-Yahoo connection where items that were “liked by your friends” may appear on the actual search result page.

How to Prepare

Although the “like” button has been around for awhile, the majority of results remain unliked or not noticed by people. Start making a concerted effort to request that friends “like” your results as often and frequently as possible. Of course, the first step to making sure information is “liked” is to keep it relevant, interesting and engaging. Request information to be share with others and make it simple for readers to save, share and spread the word.

 For those that haven’t yet taken the time to establish a Facebook or social network…the time is now. Make it a priority. In fact, take 15 minutes and set-up your initial Facebook page today then start sharing news and information on a regular basis. It’s simple, free and increasingly effective.

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************
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 over
     400 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
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

{ 0 comments }

Foreclosures up 16% in California

by admin on September 14, 2010

Smart Real Estate News & Commentary by Chris McLaughlin September 14, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–> http://www.mclaughlinchris.com

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris

**********************************************************

There’s 9 recent changes in short sales that are going to cost investors a lot of money…

https://www2.gotomeeting.com/register/463692738

Here’s just a taste of what you’ll learn to overcome on Tuesday night’s webinar at 8:30 PM ET, 5:30 PM PST:

* Homeowners freaking out over deficiency judgments

* How to get out of “seasoning” jams (when the bank wants you to actually “own” the property before flipping it

* Resale restrictions in acceptance letters eating into your margins

And there’s even more!

There’s many more. Some you may not even know about. And you’ll be helpless to deal with… ….unless you discover them ahead of time…

and how to turn the table on these rules to to actually take advantage of them.

But you have to be fast. Go here for tonight’s webinar:

https://www2.gotomeeting.com/register/463692738

**********************************************************

Foreclosures up 16% in California

According to ForeclosureRadar, notice of default filings in California rose for the fourth-straight month in August, climbing another 16.6%.  The firm has been tracking foreclosure rates in California since March 2007, and will now offer data for Arizona, Nevada, Oregon and Washington after tracking those states for a year. Executives expect the added search capabilities to allow readers “to dynamically drill down to the state, county, city and zip code level of their choice.”  Foreclosures fell 12.2% in Arizona last month after rising 28.8% in July, but are down 20.3% from a year earlier. Banks took back more properties at auction than they resold in August in Arizona, pushing the inventory of REO homes up 4.79% from July, and 60.48% from a year ago.  In California, foreclosures are down 16.3% from a year earlier, and fewer homeowners found foreclosure relief as cancellations fell 11.2% and 15.6% more homes were lost in foreclosure sales.  The number of foreclosures in Nevada in August was 6,682, down 41.8% from the year ago and 7.5% below 7,223 in July.  In the Northwest, foreclosures in Oregon rose 10.7% in August from the month earlier and are up 12.5% from last year. Washington saw a 15.8% decline in the monthly rate  but the August level of 3,598 foreclosures is 82% higher than a year earlier.

MBA – mortgage banker profits up

Independent mortgage bankers and subsidiaries made an average profit of $917 on each loan they originated in the second quarter of 2010, up from $606 per loan in the first quarter of 2010, according to the Mortgage Bankers Association (MBA)’s 2nd Quarter 2010 Mortgage Bankers Performance Report released today.   The increase was driven by a rise in the average production volume for each firm to $196.6 million in the second quarter of 2010, compared to $157.8 million in the first quarter of 2010. As a result, production operating expenses decreased to $4,677 per loan in the second quarter of 2010, from $5,147 per loan in the first quarter of 2010.  “The significant rise in loan origination volume during the second quarter reflects the surge in first time home buyers seeking to take advantage of the tax credit before the deadline expired,” said Marina Walsh, MBA’s Associate Vice President of Industry Analysis.

“Higher production operating expenses typically are associated with purchase production compared to refinances. But in this case, fixed costs were spread out over more loans and lenders experienced higher pull-through rates. These factors help explain why operating expense dropped on a per-loan basis by $470 per loan between quarters.”  However, average profits in the second quarter of 2010 were significantly lower than the profits in the second quarter of 2009. Walsh explained, “A year before, quarterly production volume averaged $280.9 million and the refinancing share was over 60%.  The heavy volume and refinancing share helped lower per-loan operating costs to $3,414 per loan and profits soared to $1,358 per loan.”

Crying foul on Obamacare

The Senate will debate the Small Business Jobs Act, which includes a $30 billion fund to spur lending and $12 billion worth of tax breaks.  But they’ll also decide whether to repeal a law enacted as part of health care reform that will require small businesses to file millions of new tax forms — a provision sane people will know is job killing.  A small section of the massive health care law mandates that beginning in 2012, all companies will have to issue a 1099 tax form not only to contracted workers, as they must already do, but also to any individual or corporation from which they buy more than $600 in goods or services in a year.  The IRS Form 1099 is used to document income for individual workers other than wages and salaries: Freelancers get them and businesses send them out. Under the new law, the 1099 form would be used to track payments for services and tangible goods.

Also, it requires that 1099s be issued not just to individuals, but to corporations as well. The result would be millions of additional tax forms.  While major corporations have entire departments of staffers and computers to deal with tax requirements, most Main Street business owners wear the tax preparer hat themselves, or have to pay a tax preparer to do it for them.  0:00 /9:12Small business: Stop ignoring us!

“We have a Nebraska business who says it is going to cost him $23,000 a year in CPA fees just to file all this crap,” said Steve Wymer, the communications director for Sen. Mike Johanns, a Nebraska Republican who has proposed an measure to repeal the requirement entirely.  House Minority Leader John Boehner called the 1099 tax requirement “job killing” in a speech last month. “Talk about overhead.”  The U.S. Chamber of Commerce sent a letter to members of Congress on Monday with 2,434 signatures from businesses and associations calling for repeal.  The Senate is set to first take up Johanns’ measure and then move to Nelson’s version on Tuesday. It’s unlikely either will get the required 60 votes, but the issue is expected to debated and lobbied in coming days.  This may well be the tip of the iceberg as more hidden clauses leach out of the massive, largely unread bill the Democrats rammed through Congress and into the laps of Americans.

MBA – more findings

Along with the news that mortgage bankers’ profits are up, there are additional findings in the 2nd Quarter 2010 Mortgage Bankers Performance Report:

- The purchase share of total originations ($) for this sample of independent mortgage bankers and subsidiaries rose to 65% in the second quarter of 2010, compared to 56% in the first quarter of 2010 and 38% in the second quarter of 2009.

- The average pull-through (the number of closings divided by the number of loan applications) was 72% in the second quarter of 2010, compared to 68% in the first quarter of 2010. 

- The “net cost to originate” dropped to $2,611 per loan in the second quarter of 2010, from $2,945 per loan in the first quarter of 2010.  The “net cost to originate” includes all production operating expenses and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread.

- Total personnel expense dropped to $3,017 per loan in the second quarter of 2010, compared to $3,296 per loan in the first quarter of 2010.  In the second quarter of 2009, personnel expenses averaged $2,283 per loan.

- 85% of the firms in the study posted pre-tax net financial profits in the second quarter of 2010, compared to 75% in the first quarter of 2010 and 96% in the second quarter of 2009.

Retail sales up

The Commerce Department said today that retail sales grew for the second month in a row in August, led by back-to-school shopping and a strong showing from grocery stores and gasoline stations.  Total retail sales rose 0.4% to $363.7 billion, up from July’s 0.3% increase, and July’s increase was downwardly revised from the originally reported 0.4%.  The overall gains were limited by motor vehicle and parts sales, which declined 0.7% during the month, echoing downbeat auto sales reported two weeks ago. Last month was the worst August for industry wide auto sales in 27 years.  Stripping out the volatile auto component, however, retail sales rose 0.6% last month, much stronger than economists expected. 

The recent increase reflects rising gasoline and food prices, as well as a strong back-to-school shopping season, Paul Dales, a U.S. economist with Capital Economics said in a research note.  While the uptick is an encouraging sign that consumer spending is picking up, shoppers are still holding back because of uncertainty about the economy, he said.  “Clearly household spending is not capitulating, but it is still being hampered by high unemployment, widespread negative equity and a desire to pay down debt.”  Consumer spending accounts for two-thirds of U.S. economic activity, so retail indicators are viewed as a gauge on the health of the overall economy.

Freddie Mac – home prices will fall another 23%

In its September economic outlook, Freddie Mac says it expects 4 million new and existing home sales in the third quarter, a possible 20.7% decline from last year and 23% drop from the previous quarter.  Recent reports of plummeting home sales and near record-high delinquencies has shaken confidence in the “fragile” housing recovery. After the homebuyer tax credit expired in April, the National Association of Realtors (NAR) reported existing home sales fell 27% in July, and new home sales have fallen to the lowest point since 1963.  The news will further weigh on the market. JPMorgan Chase analysts lowered expectations of housing recovery in the next four years. Jon Daurio, chief executive at the distressed loan purchaser Kondaur Captial, warned that home prices could fall another 20% as well.  “The main issue for the housing market outlook is how much of the recent weakness in home sales can be explained by transactions that were pulled forward by the credit – that is, ‘borrowed’ from sales in future months – versus signs that a more fundamental deterioration may be underway,” according to Freddie Mac. 

Freddie has considered two scenarios for how the market will respond to the missing government stimulus.  The first is a “payback” of the “borrowed” sales over a gradual recovery. Under this scenario, home sales would drop another 10% in August from the low in July that start to climb out of the bottom. This assumes about 600,000 of the home sales were pulled forward in response to the tax credits.  The second scenario only half of these sales were pulled forward, and the rest were purchases that otherwise wouldn’t have been made without the credit. Under this scenario, sales would recovery faster, perhaps by the end of October.

Now for our real estate education section…

Monday’s Myth Buster – Renovations Don’t Always Add Up

The Myth: Flipping is Most Profitable When a Property is Market Ready

The Fact: Not only do a significant number of properties sell during the renovation stage but the time and cost savings often generate a greater ROI than a comparable “market ready” parcel.

Novice short sale investors often search for “fixer uppers” or other properties in need of maintenance and repairs; after all, it’s a great way to add value and increase the ROI or return on investment. However, don’t make the mistake of believing it is absolutely necessary – or even desirable – to spend a lot of time and money renovating or repairing every property. Instead, learn how to evaluate the best return on your time and money by understanding the facts and figures behind each transaction.

Here’s a quick tutorial on how to determine when to hold and when to sell:

1. Calculate the total time and estimated cost of all repairs with an anticipated sales schedule. Be sure to include taxes, transaction and finance fees etc…you will need this later in order to determine whether selling in “as is” condition will generate greater profits than completing the work on your own.

2. Begin working on the exterior of the property first. Not only does it provide the biggest “bang for the buck” but it attracts a lot of attention from neighbors, friends and others that may be searching for a bargain. Shrubs, paint and general repairs cost very little and can make a major impact. Put the word out that this property will be for sale “soon”.

3. Remove all trash, debris and other eye-sores both inside and outside of the home. Old appliances, ceiling fans, light fixtures and even carpeting should be removed rather than allowed to remain. It’s easier for people to envision putting their own touch into the property when it’s a clean slate. Provide an “as is” price or bonus at closing for prospective buyers to consider at this stage.

4. Continue to perform needed repairs while showing the home. Be sure to inform buyers of how much they can save by “doing it themselves”; not only can it save a lot of time, effort and headaches for the investor but buyers often prefer to select the color and style of carpeting/flooring, window blinds, appliances and other items.

5. Don’t forget to add the time/value of money and opportunity cost. Like the old adage “a bird in hand is worth two”…a qualified buyer is worth two prospective buyers any day. If you have a “live wire” then it’s often worth it to make a little less than originally anticipated but move on to bigger and better things. Time is money and investing in short sales is often a numbers game. Rather than trying to gain bragging rights to the “most” profit, lock in real gains by selling fast and moving on to the next deal. Contrary to popular opinion, properties are not always easier to flip when they are market ready…people like to feel like they are getting a deal. Make it your priority to give them one. Perform just enough repairs to allow people to see the potential in the property then lock in the return.

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2010.

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 over
     400 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
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
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Top 5 Growth Markets for Short Sale Investors

by Chris McLaughlin on November 6, 2008

Mid-Day Market News & Commentary by Chris McLaughlin, November 6, 2008
http://www.shortsalesriches.com/welcome.html

We knew it was coming, but the negative news from retailers today weighed on the markets, sending stocks tumbling for the second day, with the Dow Jones Industrial Average dropping 443.48 to 8,695.79.  Department stores like Penney reported a 13% drop in same store sales, Macy’s dropped 6.3%, and Target Corp. slid 4.8%.  But the luxury stores were hit the most, with Saks Inc. declining 16.6% and Nordstrom slipping 15.7%.

There was one bright spot for most US consumers, especially Realtors who drive clients around: crude oil plunged 7% amid concern of a global economic slowdown.   U.S. crude prices dropped $4.53 to $60.77 a barrel, well below the high of $147 a barrel reached in July.  The decline, while bad news for oil companies, will mean further relief at the pump for many Americans and a possible uptick in sales for large SUVs.

Now, on to our real estate investor section…

Top 5 Growth Markets for Short Sale Investors

Ever wonder where people are moving? According to recent data published by the US Census, the top projected growth markets for the nation between now and 2030 are as follows:

1.     Arizona

2.     California

3.     Florida

4.     Nevada

5.     Texas

The first thing any short sale investor should notice is that “Growth” is ranked – not total population. Growth represents the percentage of population increase rather than existing population. This is an important concept when it comes to the purchase of any real estate investment because growth is equal to demand. The greater the demand the greater future appreciation and future value of the land and property. When deciding where to buy your next short sale investment property select a combination of affordability and growth potential for a win-win combination.

If growth markets are where the future values lies then it should come as no surprise that dying markets should be avoided at all cost. According to the same data, there are three areas actually losing people even while the rest of the nation shows an increase in population due to birth rates, longer life-span and immigration.

Think twice before investing in real estate in these states; you need to be cautious as there are more people leaving the area than coming in. Less people means less demand and less demand will eventually lead to lower prices and little to no future appreciation. To add insult to injury, property taxes are likely to increase on those remaining property owners in an attempt to provide basic services with declining revenue base. Dying markets include:

1.     Washington DC  (although this could be reversed with a new Administration coming to DC)

2.     North Dakota

3.     West Virginia

While selecting a growing or contracting market is one piece of the puzzle when it comes to making an informed real estate investment decision, it’s not the only one. Price, location, return and more are each important aspects to consider before purchasing any short sale property.

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 learn how a 27 year old kid makes six figures a month flipping short sales?  Join us TONIGHT, Thursday, at 9 PM EDT and 6 PM PST by registering for our fr’ee webinar:

https://www2.gotomeeting.com/register/387995435

 

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