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HAMP destined to fail

As Amherst Securities Group LP’s Laurie Goodman told Congress, the U.S. loan modification program is “destined to fail” because it doesn’t confront the real problem of negative home equity that is driving foreclosures.  The three-year housing slump has wiped at least 28 percent off home values nationwide, government and industry data show. Almost 23 percent of homeowners in the third quarter owed more than their properties are worth, according to First American Core Logic, a real-estate data company in Santa Ana, California.  “The phenomenon of underwater mortgages is one of the most troubling aspects of the entire housing market collapse,” Julia Gordon, senior policy counsel at the Center for Responsible Lending, told the committee. “Homeowner equity position has emerged as a key predictor of loan modification re-default, more so than unemployment or other facts.”  

Fewer than 1.5 million of the 3.2 million homeowners targeted by the Obama administration for mortgage relief are likely to qualify for the Home Affordable Modification Program, Herb Allison, the U.S. Treasury Department’s assistant secretary for financial stability, told the committee.   Banks have said they are rushing to meet a new deadline announced by the Treasury on Nov. 30 to permanently convert more than half of the 650,994 loans that were in trial modifications at the end of October into permanent reductions by year’s end. A mortgage “cram-down” bill that stalled in Congress earlier this year will also be attached to the broader financial regulatory legislation and voted on this week, Frank said today. The cram-down provision would let federal judges lengthen mortgage terms, cut interest rates and reduce loan balances for homeowners in bankruptcy court, even if the lender objects.

Cash for caulkers

President Obama proposed a new program yesterday that would reimburse homeowners for energy-efficient appliances and insulation, part of a broader plan to stimulate the economy.  No one is quite sure how it would work, but Steve Nadel, director at the American Council for an Energy-Efficient Economy, who’s helping write the bill, said a homeowner could receive up to $12,000 in rebates.  The plan will likely create a new program where private contractors conduct home energy audits, buy the necessary gear and install it, according to a staffer on the Senate Energy Committee and Nadel at the American Council for an Energy-Efficient Economy.  Big-ticket items like air conditioners, heating systems, washing machines, refrigerators, windows and insulation would likely be covered, Nadel said.  Consumers might be eligible for a 50% rebate on both the price of the equipment and the installation, up to $12,000, said Nadel. So far, there is no income restriction on who is eligible.

That would mean a household could spend as much as $24,000 on upgrades and get half back.  Homes that take full advantage of the program could see their energy bills drop as much as 20%, he said. The program is expected to cost in the $10 billion range. “Not only will [such legislation] increase our energy security and transform our energy infrastructure to a modern, clean and efficient one,” Senate Energy Committee Chairman Jeff Bingaman, D-N.M., wrote in a recent op-ed column in the Hill, a Capitol Hill newspaper. “But it also will position the United States to lead in the development of clean energy technologies.”

Mortgage applications up

According to the Mortgage Bankers Association (MBA), the  Weekly Mortgage Applications Survey for the week ending December 4, 2009 increased 8.5 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 54.0 percent compared with the previous week, but it was a shortened week due to the Thanksgiving holiday.   The Refinance Index increased 11.1 percent from the previous week and the seasonally adjusted Purchase Index increased 4.0 percent from one week earlier.  The unadjusted Purchase Index increased 41.7 percent compared with the previous week and was 18.8 percent lower than the same week one year ago. 

The increase in purchase applications reflected a 10.0 percent increase in Government Purchase applications and a 0.2 percent decrease in Conventional Purchase applications, both on a seasonally adjusted basis.  The four week moving average for the seasonally adjusted Market Index is up 1.5 percent.  The four week moving average is up 2.3 percent for the seasonally adjusted Purchase Index, while this average is up 1.6 percent for the Refinance Index.  The refinance share of mortgage activity increased to 74.4 percent of total applications from 72.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.7 percent from 4.8 percent of total applications the previous week.  The average contract interest rate for 30-year fixed-rate mortgages increased to 4.88 percent from 4.79 percent, with points increasing to 1.17 from 1.00 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This ends a six week run of declining 30-year fixed rates which may have triggered the increase in refinance applications.

Shoveling more money

President Barack Obama wants to spend even more with an expansion of his $787 billion stimulus plan, unveiling job-creation proposals that build on the initial package, including a hiring tax credit that his own party jettisoned as unworkable and some business owners deemed ineffective.  An additional $50 billion would go toward infrastructure spending, ramping up Treasury Department lending to small businesses through the Troubled Asset Relief Program, extending tax credits for business investment and offering state and local governments a fresh lifeline.  Other ideas that weren’t in the February stimulus legislation include a tax credit that rewards companies for hiring workers and tax rebates for individuals who make their homes more energy efficient.  New infrastructure spending would include funds for roads, bridges, airports and water systems, even though tens of billions of dollars from the original stimulus plan remain in the pipeline.

White House economist Jared Bernstein said worthy projects not deemed “shovel ready” in the initial funding applications now will see money, implying that federal stimulus spending could stretch well beyond 2010.  Some beneficiaries of the latest plan expressed skepticism about its payoff. Philadelphia Mayor Michael Nutter, a Democrat, said the initiatives might spur job growth indirectly, but he would prefer a less circuitous route. He said the Obama administration needs to do more direct hiring, to create jobs programs aimed at high-unemployment urban centers like Philadelphia, where unemployment stands at 11.2%. Ralph Braun, chief executive of Braun Corp. in Winamac, Ind., said a tax credit is meaningless for a producer like him. “If you’re just going out to hire someone just for a tax credit, what kind of job will you put them in that has any longevity to it?” said Mr. Braun, whose 730-employee company produces wheelchair lifts and other equipment. “You have to have a customer for that employee to serve — so I’m confused how a tax credit would stimulate anything.”

Fewer prices declines

A total of 22 percent of houses on the market as of December 1 have lowered prices at least once, down from 25.6 percent in November, marking the lowest share since Trulia started tracking reductions in April.  In real numbers, home sellers slashed $24.7 billion from asking prices for houses listed as of Dec. 1 nationwide, down 12 percent from $28.1 billion the prior month.  “The tax credit extension has provided sellers with a much bigger window of opportunity, creating significantly less pressure to sell now,” Pete Flint, chief executive of San Francisco-based Trulia, said in a statement.  The Trulia report showed price cuts are fewer in areas hardest hit by foreclosures, showing a floor is starting to be reached after deep discounting. These regions will be the first to return toward fair market value, Trulia said.  The South and West regions, which include some of the cities hardest hit by foreclosures, had the lowest level of price cutting in the latest report. Nineteen percent of listings in the South and 20 percent in the West had price cuts, compared with 22 percent in the Midwest and 25 percent in the Northeast.  The luxury market continues to pay a high price in the housing bust. Homes listed at $2 million or higher have slashed prices by an average of 14 percent from the original asking amount.  These houses represent less than two percent of all current listings on Trulia, but are responsible for 26 percent of the $24.7 billion in home price reductions.

Now on to our real estate investing educational arena …

The High Price of Mortgage Modification

Short sale investors frequently encounter homeowners that believe a simple mortgage modification or refinance will solve all their financial woes – tragically that is rarely true. In fact, recent research released by the federal government seems to indicate it is merely postponing the day of reckoning. Rather than delaying the inevitable it’s important to explain the high price of mortgage modification to distressed sellers.

All Pain – No Gain

Research shows more and more distressed homeowners are falling behind even after obtaining a mortgage modification but this only presents half the problem. Homeowners become so focused on remaining in their property they forget the long term cost of carrying a mortgage they cannot afford. The result is the loss of financial security for years to come; college savings, retirement accounts and lifestyle are sacrificed for a home they cannot afford. It’s imperative for homeowners to ask several important questions to determine if they are making the right decision for their financial future:

1. How much is the home worth today versus how much is owed?

2. How long do you intend to keep the property?

3. How much would you save by downsizing or purchasing a different property?

4. How much are you able to set aside for college, retirement and savings while servicing the mortgage?

5. What can you expect to make on the property if you needed to rent/lease it?

6. How long will it takes you to break even on the property if you were to sell it?

7. How much will be added to the price of the loan after legal fees, overages and other costs?

8. How many additional years will you need to pay the loan if fees/other are capitalized?

9. Is the interest rate, PMI, HOA and escrow subject to change? If so, will you be able to afford the new rates in the future?

10. Is your spouse willing to become financially responsible in the event of a loan modification? Remember, even if the original mortgage was purchased only in one name, most modification programs require both spouses to assume financial responsibility in order to obtain a modification agreement.

11. Will the property need to be repaired or brought up to a certain standard in order to qualify for the mortgage modification – if so, can you afford it?

12. What rights and responsibilities are required should you sell the property at a later date?

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

*************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

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

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
    * Add me on Facebook: http://www.facebook.com/mclaughlinchris
    * Join my Fan Page: http://www.mclaughlinchris.com
–

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

* Join my fan page:  http://www.mclaughlinchris.com 

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

MBA – 3Q09 Commercial and Multifamily Mortgage Performance Falls

According to the Mortgage Bankers Association’s (MBA)

Commercial/Multifamily Delinquency Report, delinquency rates for most commercial/multifamily mortgage investor groups continued to increase in the third quarter.  Commercial and multifamily mortgages continued to feel stress in the face of the weakened economy,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research.  “The deterioration in commercial and multifamily loan performance is generally in line with what is being seen in other parts of the economy, with loans backed by commercial properties continuing to perform far better than construction and development loans.”   Between the second and third quarters, the 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) rose 0.17 percentage points to 4.06 percent.  

The 60+ day delinquency rate on loans held in life company portfolios rose 0.08 percentage points to 0.23 percent.  The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.11 percentage points to 0.62 percent.  The 90+ day delinquency rate on multifamily loans held or insured by Freddie Mac remained unchanged at 0.11 percent.  The 90+day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.51 percentage points to 3.43 percent. Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the third quarter were as follows: CMBS:  4.06 percent (30+ days delinquent or in REO); Life company portfolios:  0.23 percent (60+days delinquent); Fannie Mae:  0.62 percent (60 or more days delinquent); Freddie Mac:  0.11 percent (90 or more days delinquent); Banks and thrifts:  3.43 percent (90 or more days delinquent or in non-accrual).  Construction and development loans are not included in the numbers presented here.

Stop Spending, Washington

Several groups of citizens and experts across the country, part of the Concord Coalition’s Fiscal Stewardship Project, delivered a report to their lawmakers on Capitol Hill detailing their suggestions for how best to address the long-term fiscal storm facing the United States if lawmakers do nothing.  To solve the country’s fiscal problems, the gross domestic product would need to increase by double digits on average for the next 75 years, on an inflation-adjusted basis, according to estimates from the Government Accountability Office, lawmakers are left with three unpopular choices: cut spending, raise taxes, or stop making promises the country can’t afford.  Here are a few of the concrete suggestions made by one or more of the councils: Shore up Social Security’s long-term shortfalls: The range of suggestions included raising the retirement age, applying means testing to benefits, raising more revenue and ensuring by a “date certain” that projected revenue is sufficient to cover projected expenses; Simplify the tax code: The aim should be to reduce taxpayer aggravation, increase voluntary compliance and reduce enforcement costs; Raise taxes when necessary: The Atlanta council suggested a combination of an income tax and a federal consumption tax. 

The Northern California council recommended that the additional tax burden “be spread in a way that ensures everyone will contribute at least something in return for the government services they receive”; Make everyone curb growth in health spending: That includes the government, medical providers, insurance companies, lawyers and consumers; Form a bipartisan fiscal commission: The goal is to have a commission willing to make tough recommendations about how to address long-term budgetary shortfalls and put those recommendations up for a yes-or-down vote in Congress; Think long-term: Lawmakers should consider the costs and effects of a bill beyond the 10-year window they usually use. And they should think about the consequences of their actions on younger generations; The Atlanta council put it this way: “If Americans don’t make the hard decisions now, it will have a devastating impact on the quality of life for our children a and grandchildren.”

Interest rates to stay low

Fed Chairman Ben Bernanke says the Federal Reserve is still looking at an “extended period” for low interest rates because the economic recovery remains tentative and inflation continues to be stable.  “Right now we are still looking at the extended period, given that conditions remain, low rate utilization…and stable inflation expectations, that remains where we are now,” Bernanke said in response to a question at the Economic Club of Washington. “We continue to look at the economy, obviously there have been signs of strength recently.” 

As is becoming a habit in Washington these days, he tagged on this:  “We still have some way to go before we can be assured that the recovery will be self sustaining.”  The Fed chief repeated his belief that the recovery will continue at least into next year. But he cautioned that the economy is confronting some “formidable headwinds” — including a weak job market, cautious consumers and still-tight credit. Those forces “seem likely to keep the pace of expansion moderate,” he said.  Under one Fed forecast released last month, the jobless rate would remain stubbornly high next year — ranging from 9.3 to 9.7 percent. The Fed has warned that it could take five or six years for the job market to return to normal.

BOA – 2/3s of HAMP borrowers will lose homes

Mr. Schakett, Credit loss mitigation strategies executive at Bank of America (BOA) says that of the 65 thousand trial modifications set to expire Dec. 31st with (BOA), a full two thirds of the borrowers, while current on their payments, have not submitted the full documentation required to turn a trial mod permanent under the HAMP guidelines.  “We don’t really know the major reason why the customers are not returning the documentation,” Schakett claims. Diana Olick says:  “Well I can tell you why (and I’m sure he knows this too). The trial modification process only requires oral verification of income to begin, but to go permanent, you need to prove your income, submit your tax returns, and basically come clean with all your finances. I’m guessing a lot of folks who took out their initial loans with false or non-existent documentation aren’t eager to let the government know that.”  Schakett says that Treasury is now considering upping the ante on the trial modifications, requiring much more documentation up front, so that banks won’t have all these trial mods going with borrowers who inevitably won’t reach permanent modification status.  As Olick says:  “…I get a lot of email from borrowers, telling me that the banks are holding up their paperwork, losing faxes, messing up modifications and leaving those borrowers in the lurch. I don’t dispute that, but I can’t fully dismiss the banks when they tell me that 2/3 of the borrowers won’t submit the paperwork. I also happen to know that a huge percentage of borrowers being offered modifications are rejecting them. They don’t want to pay. Many are already gone.”

Jobs outlook getting worse?

According to Mike “Mish” Shedlock, author of Mish’s Global Economic Trend Analysis and an investment advisor at SitkaPacific Capital Management, the November jobs report that got everyone excited was an “outlier” and “almost looked fabricated.” Looking beyond the November jobs data, Shedlock says the odds of the unemployment rate coming down anytime soon are remote.  Even based on generous assumptions of 150,000 new jobs per month, no double-dip recession and a declining participation rate as Baby Boomers retire, “the best I can do is suggest the unemployment rate will be over 10% all the way through 2015 and never dip below 8% all the way out through the end of 2020,” Mish says.  “In the absence of a war outbreak in the Middle East or Pakistan — and/or Congress going completely insane with more stimulus efforts — I think oil prices are likely to drop, the dollar will strengthen or at least hold its own, and the best opportunities are likely to be on the short side,” he writes. “2010 is highly likely to retrace most if not all of the ‘reflation’ efforts of 2009. If things play out as I suspect, 2010 will be the year of the great retrace as the economic recovery disappoints.”

Now on to our real estate investing educational arena …

How to Pick the Perfect Loan

A lot has been written about interest rates and credit scores but few people focus on how to pick the perfect loan. While it might not sound like the most exciting part of purchasing a short sale property, it is one of the most important decisions you are likely to make. As millions of Americans have already learned, obtaining the wrong loan can be a very costly decision. Fortunately, it’s relatively simple to secure a great loan that works well for your individual situation once you are aware of all your options. Follow these quick steps to help find your perfect loan:

1. Determine your down payment. The larger your down payment the more options you will have available but always leave a little additional cash for emergencies and other needs.

• 0-5 Percent Down Payment: VA loans for veterans or Vendee loans for foreclosures.
• 3.5 – 5 Percent Down: FHA or HUD loan for purchase of primary residence only.
• 5 to 10 Percent Down: Conventional Loan with strong credit score.
• 20 Percent Down: Conventional Loan without PMI or inferior credit score.
• 20 to 30 Percent Down: Investment loans, vacation or second homes.

2. Determine the term. Right now fixed rate loans are at or near historic lows so if you intend to hold the property for any length of time, it’s a good idea to take a serious look at 15 to 30 year terms. Interest only and ARM (Adjustable Rate Mortgages) remain a solid investment for those who understand the pros and cons.

• 30 Year Term: Select a 30 year term if you intend to remain in the property for many years, plan to turn it into a rental property at a later date, are on a limited fixed income or are expecting to be on a fixed income in the future and want minimum payments with maximum flexibility. Remember, you can always pay more on the loan should you desire.
• 15 Year Term: Select a 15 year term if you want to obtain the lowest possible interest rate with steady fixed payments, become debt-free as soon as possible, save tens of thousands of dollars over the life of the loan and you have ample yet steady income.
• Interest Only: Select an interest only loan if you want to lock in a great price on a property, want to get started in real estate investments with a modest amount out of pocket, expect to have dramatically higher income within a few years (for example, you are in college, paying off significant debt or will have a spouse/other return to work) or are buying in an area experiencing rapid appreciation.
• ARM/Option ARM’s: Select an adjustable rate mortgage if you plan to use the property for cash flow then sell, need the minimum payment for a  short period of time then expect to have significantly more cash in the future and/or wish to use an alternative to a Jumbo Loan.

See you  at the top!

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

*************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

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

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
    * Add me on Facebook: http://www.facebook.com/mclaughlinchris
    * Join my Fan Page: http://www.mclaughlinchris.com
–

Real Estate News & Commentary by Chris McLaughlin, April 24, 2009
http://www.shortsalesriches.com/welcome.html

——–

No money, no credit – but an honest desire to succeed? 

That’s all it takes to get into the lucrative business of

finding and flipping short sale properties.  We’ve had

people go from zero to six figures in less than six months! 

 

See if there’re any spots left for this webinar this

Sunday at 8:00 PM ET, 5:00 PM PST:

 

https://www2.gotomeeting.com/register/386978354

———

 

BOA loosening short seller policy

 

Bank of America (BOA) says it will relax its policy on payoffs connected with short sales.  Large banks have been demanding money for home equity lines and second mortgages that would otherwise be worthless if the short sale property went to foreclosure.  BOA has been among the least cooperative of all banks in agreeing to short sale payoff terms, demanding 10 percent of what the homeowners owed on the equity line balance or second mortgage before signing off on the short sale, which is necessary for the deal to go through.  BOA spokesman Terry Francisco says the new policy is “less arbitrary, more rational.”

 

New policy

BOA’s new policy is to ask for five percent of the sale proceeds on the short sale, net of realty commissions, closing, and other costs. Some short sellers point to problems, though:  The bank’s previous 10 percent policy meant they’d demand $20,000 on a $200, 000 equity line balance, but under their new policy it will cost the short seller $15,000 if the net proceeds are $300,000″ on a short sale, even though the economic value of their holding may in fact be zero. Says the Realty Times:  “Bottom line for investors: If there’s a Bank of America second mortgage or credit line on the house you’re after in a short sale, work the new numbers.  At least some of the time you might be surprised that the answer from the big bank is now ‘yes.’”

 

MBA Chairman testifies

David G. Kittle, CMB, Chairman of the Mortgage Bankers Association (MBA) testified yesterday in front of the House Financial Services Committee at a hearing on H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009.  He expressed reservations about some aspects, including the patchwork of state and local mortgage lending laws and the requirement that lenders retain at least five percent of the credit risk of non-qualified mortgages.  According to Kittle, the risk retention provision would make it impossible for many lenders to compete, lessening credit availability increasing costs to borrowers.  He also asserted that the definition of “qualified mortgage” was too restrictive, including in its present definition some jumbo loans, fixed 25 – 40 year mortgages, FHA, VA, and even some Fannie and Freddie mortgages.

 

Freddie Mac grows portfolio and delinquencies

Freddie Mac, announced that its mortgage investment portfolio grew by an annualized 65.8 percent rate in March, while delinquencies on loans it guarantees accelerated.  Its portfolio increased to $867.1 billion, for an annualized 31.0 percent increase year to date, up from  $712.5 billion in March 2008.  The delinquencies that increased stress on the company’s capital jumped to 2.29 percent of its book of business in March from 2.13 percent in February and 0.77 percent in March 2008.  Freddie Mac said the temporary suspension of foreclosures, which expired on March 6, contributed to the increase in single-family delinquency rates.

 

Durable good sales fall again

The Commerce Department said today that new orders for U.S. durable goods slipped 0.8 percent in March, falling for the seventh month out of the last eight, even though the fall was less than expected.  Analysts polled by Reuters had forecast orders for long-lasting manufactured goods to drop 1.5 percent.  Anna Piretti, senior economist at BNP Paribas in New York says, “I wouldn’t really read this as positive news, but clearly I would say the momentum is less negative than we saw a couple of months ago.”  Where have we heard that before?

 

Now on to our real estate investing education section…

 

Ride the Green Tide: Timely Short Sales Tips

 

Short sale investors searching for unique ways to differentiate their property from the competition need only go green. Whether or not you are a tree-hugger or simply business savvy, riding the green tide is an excellent way to attract the attention of prospective buyers, qualify for potential tax breaks, take advantage of tax credits and actually increase the selling price of homes in your portfolio.

 

Use these calculations to determine if it is worth the time and money to transform a former energy hog into a lean, green energy efficient money machine:

 

Tally up the total cost of the improvement including labor, taxes and supplies.

 

Discount city, county, state or federal tax incentives or other credits you may be eligible to receive.

 

Calculate the long term potential energy savings as compared to standard builder’s model of the same item. Be sure to quantify this in very specific terms for each upgrade put into place. For example, let’s assume you install a new water heater expected to save an additional $20 per month or $240 annually. Over a 30 year mortgage that water heater would save $7,200 in energy costs alone.

 

Since most people don’t think that far ahead also include a five to seven year calculation…ie, in five years it would save an additional $1,200. Do this for each item in the home to show potential buyers how buying your home makes financial sense both today and in the future.

Add up the five, seven and thirty year savings then do a little bragging. Don’t assume it is obvious…make it a selling point to show how cost effective this home is compared to others on the market.

 

Get creative. Often some of the best ideas cost the least. For example, changing bulbs to energy efficient models is an inexpensive modification that adds significant savings to the bottom line of buyers. Here are a few other green ideas to get you started:

 

Appliances – stove, refrigerator, dishwasher, microwave etc…

 

Lighting – search for florescent and/or LED

 

Water Heater, Pool/Jacuzzi Heater

 

Local landscaping – less water and less time

 

Tile floors – easy to keep clean and never need to be replaced like carpeting

Ceiling fans, whole house fans and other alternative cooling methods

 

See you at the top!

 

 

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html  

 

P.S.

 

Don’t miss our webinar Sunday at 8:00 PM ET, 5:00 PM PST:

 

https://www2.gotomeeting.com/register/386978354

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

http://www.shortsalescoach.com
http://www.shortsalesriches.com
http://www.reomillionaireclub.com 
http://www.sixfigurebpo.com *************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

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

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 flipping of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties

    * Owner and Supervising Broker 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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook:

http://www.facebook.com/addfriend.php?id=709199143

—

Real Estate News & Commentary by Chris McLaughlin, March 27, 2009
http://www.shortsalesriches.com/welcome.html

——–

Brand New Investor Makes It Happen!  If you

missed the amazing testimonial from a newbie

real estate investor who made $51,000+ on her

first deal, go here now to watch this video:

 

http://www.youtube.com/shortsalesriches

 

Then grab a spot for yourself before they all

disappear in our no-cost, no-obligation
webinar right here Saturday at 3:30 PM

ET, 12:30 PM PST:

 

https://www2.gotomeeting.com/register/610039586

———

Taxman cometh

Tax reform is next up on Obama’s massive do-to list.  He’s planning to set up a task force to reduce the estimated $300 billion-a-year tax gap — the difference between what individual and corporate taxpayers owe and what they actually pay.  “Managing to make headway to reduce that gap often means difficult reforms,” said James Poterba, president of the National Bureau of Economic Research.  While compliance is high for small businesses reporting wages paid to workers, compliance is much lower in cases when there’s no third-party reporting, like small business owners who do mostly cash transactions.  The cash economy may account for over $100 billion of the annual tax gap, according to testimony from Nina Olson, the National Taxpayer Advocate.  The members of the task force will come from the Presidential Economic Recovery Board, headed by former Federal Reserve Chairman Paul Volcker.  We’ll get to hear its proposals on Dec. 4.  I can’t wait.

 

Good news…no, wait…less bad news

At least one home builder is less unhappy with the market.  KB Home, of California, slashed its quarterly loss by 78 percent, more than expected, reporting a 26 percent increase in new home orders as cost-conscious buyers flocked to the builder’s smaller, more affordable models.  For the quarter ended Feb. 28, KB Home reported a net loss of $58.1 million, or 75 cents a share, compared with a net loss of $268.2 million, or $3.47 a share, in the same period the year before.  The company has stepped up its rollout of smaller, more affordable homes called The Open Series aimed at competing with foreclosures and other previously occupied homes.  New home orders totaled 1,827, and the cancellation rate dropped from 53 percent to 28 percent in the year-ago quarter.  You’ll notice these are still losses we’re talking about here…just less of them.

 

US heads for inflation

While Japan tips into deflation and Europe coasts at near zero inflation, U.S. prices edged up in February.  Excluding food and energy, the index rose 1.8 percent after gaining 1.7 percent in January.  “The core price index was on the high end of expectations.  This will fan inflation fears.  The Fed is sowing the seeds of future inflation,” said Scott Brown, chief economist at Raymond James & Associates in St Petersburg, Florida, speaking of the massive money printing exercise taking place in the US.  Obama is set to quiz leaders of the biggest U.S. financial institutions on Friday about the economy and their businesses as his administration seeks broader power to regulate the financial system.  It’s a good thing China is still willing to grudgingly buy the US dollar…or is it?

 

Spending up, income down, saving up

The Commerce Department reported Friday that consumer spending edged up 0.2 percent in February following a 1 percent jump in January.  But the report says incomes fell by 0.2 percent in February, the fourth drop in the past five months — declines that reflected the sizable number of job layoffs because of the recession.  After-tax incomes also fell in February, edging down by 0.1 percent.  We’re doing a bit better at saving though…the personal savings rate dipped slightly to 4.2 percent in February, compared to 4.4 percent in January, but it’s the first time the savings rate has been above 4 percent in more than a decade.  Isn’t it ironic that overdrawn credit caused the problem, but saving will make it worse?

 

Now on to our real estate investing education section…

 

Make or Break Short Sale Deals with BPO’s

BPO’s or brokers price opinions are just one of the tools every short sale investor and real estate pro should become intimately familiar with; they can literally make or break a borderline deal. In a nutshell, as a short sale buyer you are searching for a low BPO – in fact, the lower the better in most cases.  This provides the justification necessary to submit a low…or ultra-low…offer on a home; after all, lenders are not likely to just take your word for it that the property is worth only x amount. They want a reliable estimate on the current market value of the property including reasons why it is less than previously sold or assessed for in the past.

On the other hand, the BPO is typically representing the interest of the bank or lender – since the bank isn’t likely to send employees all over the nation to ascertain the current value of each and every property facing foreclosure or reduce resale value they contract with local brokers to do it for them. The BPO must maintain a feasible rationale for the lower value or risk hurting their own hard earned reputation.

 

So, how can a buyer work with the broker to obtain the lowest possible BPO? Start with these simple steps:

 

Open communication. Let the broker know the purpose of the evaluation. Remember, a BPO is a brokers price opinion – although they have expertise in the area, opinions are highly subjective. The very fact that the property is likely to go into foreclosure or other adverse status can actually influence the price by thousands of dollars – especially if there are other pending foreclosures in the area.

 

Don’t make improvements yet. While you want the property to appraise for a higher value after making repairs and renovations resist the urge to improve or even clean it before the sale. Cosmetic blemishes are easy to fix but may dramatically alter the price point of a home.

 

Walk & Talk. Take time to introduce yourself and show up when the property is being evaluated. Be sure to point out easy to miss items and share any negatives they might have missed. This is where it can really pay to do your homework in advance; even bus schedules or annoying neighbors might further detract from the value of a home.

 

Make it Easy. As you might imagine, BPO’s are in hot demand right now so make their job a little easier by pulling up comp’s on your own. Especially if you are new to short sales this is a great way to further familiarize yourself with the area and learn even more about the property – plus, it helps strengthen your position and makes the brokers work easier.

 

See you at the top!

 

 

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html  

 

P.S.

 

Don’t miss out webinar Saturday at 3:30 PM ET, 12:30 PM PST:

 

https://www2.gotomeeting.com/register/610039586

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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http://www.sixfigurebpo.com *************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

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

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 flipping of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties

    * Owner and Supervising Broker 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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook: http://www.facebook.com/addfriend.php?id=709199143

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