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Seven Biggest Mistakes in Short Sale Investing

by Chris McLaughlin on November 10, 2008

Mid-Day Market News & Commentary by Chris McLaughlin, November 10, 2008
http://www.shortsalesriches.com/welcome.html

Don’t miss this webinar! We’re holding another webinar on The Top 12 Strategies for Short Sales Riches this coming Tuesday at 9 PM EST, 6 PM PST. This is something you just don’t want to miss! Register today:
https://www2.gotomeeting.com/register/324799291

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The market was higher in morning trading as investors cheered a $586 billion stimulus package from the government of China. The China bailout is seen as assisting many of the multinational US companies such as Caterpillar or General Electric. But the sheer size of the stimulus package gives many hope that the US government will also propose a stimulus package that will jump start consumer confidence as well as housing demand.

Meanwhile, the nearly trillion dollar bailout is getting spent faster than many folks can count. The Federal Reserve and the Treasury Department announced another $40 billion will be committed to help bail out AIG, making the total bailout of the insurance giant around $150 billion. The additional $40 billion comes out of the $700 billion recently approved by Congress.

In other bailout news, Fannie Mae announced that it is burning cash and might need some more government help. The mortgage-finance giant reported a staggering $29 billion dollar loss in the quarter. Ouch.

And shares of automaker General Motors (GM) slid to a 60 year low today after analysts forecast that the company may run out of cash in April 2009. Analysts slashed their price targets for the company, with Barclays now targeting GM at $1 a share and Deutsche Bank taking its price target to $0. Some stock commentators believe that there will be limited government intervention to possibly bailout the automakers.

Circuit City filed for bankruptcy protection. The nation’s electronics retailer will shed 700 jobs and will close approximately 20% of its stores.

Yeah, it was a bunch of bad news today … but don’t let it get your down, just learn more about short sales and REO properties. This is your time. This is your moment. Make it happen for you.

I just love this quote I found:

“God grant me the serenity to accept the people I cannot change, the courage to change the one I can, and the wisdom to know it’s me.” - Unknown

So now that you know it’s you, and that this market is what you make of it, let’s talk about the seven mistakes most Realtors and investors make with short sale investing.

The mistakes in short sale investing might come as a surprise to many in the real estate industry; after all, the media is filled with news about escalating bankruptcies, banks dissolving overnight and loss of consumer confidence…obviously it’s a buyer’s market. Unfortunately, availability doesn’t translate into information so the majority of would-be buyers simple don’t understand the who, what, how and why of short sales as evidenced by the seven biggest mistakes below:

1. Thinking rather than doing. Short sale investors that think about buying but don’t actually ever get around to putting a plan into action are not buyers or investors – just dreamers. Stop procrastinating and take action.

2. Failure to follow the rules. Each and every bank, buyer or broker has a process that must be followed. One of the advantages of dealing with Short Sales Riches is the ability to learn a proven system that gets results rather than having to start from scratch.

3. Improperly presenting your case. Make no mistake about it; successful short sale negotiations require a solid presentation to the buyer and the bank. Fortunately for you, there isn’t any need to recreate the wheel – simply adopt what has been proven to work and begin building your own short sale profits.

4. Failure to take risk. Playing it safe has a time and place but there are times in life when risk is rewarded; ask yourself, how have your stocks and bonds performed over the past few years? Is your job keeping pace with inflation? Can you afford to retire if the current financial trends continue? If you are like most Americans then it is time to take a chance on something different; something you are able to control, something everyone needs.

5. Substituting Attitude for Accomplishment. With enough credit cards and lines of credit it’s easy enough for nearly anyone to “act” wealthy but when times get tough suddenly things fall apart. Successful and wealthy individuals may not always look rich but they have staying power and actual accomplishments to prove their net worth. Forget finding fame and fortune overnight – success is typically the product of planning, preparation and tireless pro-activity.

6. Last minute thinking. It never fails; a flood of offers at the final hour. Unfortunately, last minute thinking puts you into direct competition with all the other procrastinators and eliminates the opportunity to fix potential problems that may arise. Instead, jump in early before the sleepers wake up.

7. Putting all your hopes into one property. This is particularly true of short-sale newbies; don’t fall in love with a property. Keep your options – and mind- open to different types of properties. Keep the real objectives in mind; profit potential.

More tomorrow…

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.: You are going to be on our Webinar tomorrow night aren’t you? As Jim Rohn said: “If someone is going down the wrong road, he doesn’t need motivation to speed him up. He needs education to turn him around.” Get that education now:

https://www2.gotomeeting.com/register/324799291

Fed Cuts Rate & Pending Home Sales Rise

by Chris McLaughlin on October 8, 2008

Mid-Day Market News & Commentary by Chris McLaughlin, October 8, 2008
http://www.shortsalesriches.com/welcome.html

LEARN THE 12 STRATEGIES FOR SHORT SALES RICHES ON OUR WEBINAR THIS THURSDAY:

Wow. We’re doing it again. We messed up our scheduling and conflicted with the Presidential debate last night, but our Webinar was still packed! For those who couldn’t make it, join us this Thursday at 9 PM EST, 6 PM PST:

https://www2.gotomeeting.com/register/163012169

RSVP early as spaces are limited and it fills up FAST!

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Global markets were in a free fall early this morning, but a coordinated effort by 5 of the world’s central banks to cut rates helped temper nervous investors. The United States Federal Reserve reduced its federal funds rate, the rate that lenders charge one another for overnight loans, by 50 basis points to 1.5%. This means that the prime rate will be pegged at 4.5%. The Fed also reduced the discount rate, which is the rate that the Fed charges its member banks to borrow directly from the Fed. The banks of China, Canada, Sweden, Switzerland, The Bank of England and the European Central Bank all reduced rates.

This month everyone’s 401(k) suddenly began to look like 200.5(k)s. In the last year alone over 2 trillion dollars have been lost in American’s retirement accounts, and in the last 5 trading days the Dow has lost over 1,400 points. And today at mid-morning it looks to be another crazy ride on the stock market roller coaster. Stocks plunged over 230 points at the open, despite news of the rate cut, because fear and panic are ruling the day. As this e-mail was sent out the Dow was down 160 points.

What does all this mean to a Realtor or real estate investor? First, short term borrowing is now cheaper, so consumers will receive reductions in their credit card interest rates as well as any rate that fluctuates with prime, which can mean home equity loans. Second, homeowners that might have rate adjustments coming up will also benefit from lower rates. Third, the current crisis in the equity markets has also led the 30-year fixed mortgage lower, with the rate now hovering around 5.82%.

So have these buyers come out of hiding, and are we near a bottom you wonder?

Well, if you reviewed the National Association of Realtor’s Pending Home Sales Index you would certainly think so. The report shows a jump of 7.4% to 93.4 from July over August, the single best reading since June 2007. Lawrence Yun, NAR chief economist, said home buyers were responding to lower prices and lower interest rates. “What we’re seeing is the momentum of people taking advantage of low home prices, with pending home sales up strongly in California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C., region,” he said. “It’s unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we’re hopeful most of the increase will translate into closed existing-home sales.”

I agree — let’s hope those pending sales do translate into closings!

Now for our real estate education section. Our question today: When Will Real Estate Values Rise?

Historically home prices have ultimately risen even after dramatic declines. Although there isn’t any known method to pinpoint the top or bottom of any market, experts tend to agree that the following signs indicate a turning point.

1. Real estate values stop declining and begin holding steady or selling side-ways. Although it may seem like common sense, determining the sales price of a home isn’t as easy as it may initially appear. For example, the Case-Schiller Index tracks sale prices across the largest MSA’s in the nation and while prices are still declining in the majority of cities surveyed, at least 20 metro areas experienced a recent price increase. Likewise, it is important to evaluate sale prices across different segments of the market – luxury homes continue to fall (and thereby lower the mean selling price of all homes in the area) while affordable homes have already showed signs of holding steady.

2. Inflation. While inflation (the type often associated with excessive printing of new money out of thin air as demonstrated in the past several weeks) tends to hurt those on fixed incomes or who put money into savings accounts, it tends to help those who own commodities and hard assets like real estate since the price of goods and services tend to rise in relation to inflation.

3. Lack of viable alternatives. One of the reasons real estate gained such a great deal of popularity and momentum in recent years was a lack of viable alternative investments after the technology or “dot-com” bubble. As investors seek new ways to obtain greater returns on their money – or simply keep pace with inflation – they will automatically gravitate toward that area which provides the best ROI or return on investment. Although real estate has experienced a major decline, so have all other forms of investment.

4. Eased lending standards. The availability of credit and affordable low-interest rates is yet another major impetus toward creating rising real estate values however, it should be noted that for those who already own real estate (or have purchased short sales with considerable equity available), the ability to ‘act like the bank’ and finance all or part of the sales price – at high interest rates- is a profitable endeavor to be considered. During the late 70’s and early 80’s as interest rates hit double digits, owner financed homes became a hot commodity as homebuyers bypassed the banks and worked out deals directly with the seller. Locking in a fixed 5, 6 or even 7 percent interest rate then re-selling a home at 10 or 12 percent interest rate results in immediate return without the hassle of taxes, insurance, maintenance or repairs.

Seven Biggest Mistakes in Short Sale Investing

Fed Cuts Rate & Pending Home Sales Rise

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