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Smart Real Estate News & Commentary by Chris McLaughlin June 9, 2011

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Financial Times – return of housing optimism

As the housing market started to weaken earlier this year, analysts feared that the seasonal bump would not materialize at all – a sure sign of deepening problems that could tip the economy back into recession.  From January through to March, home prices fell so far that they are now back to levels not seen since the middle of 2002, according to the widely watched S&P/Case-Shiller Index.  Slowing job growth and declining consumer confidence added to the perception that the market was worsening.

And yet interviews with realtors in half a dozen cities around the country paint a different picture. They say that the volume of sales and prices started to strengthen in April and have continued to gain momentum through the first weeks of June.  The housing market in many US cities is performing better than recently released national data would suggest.  List prices rose in 24 of 26 cities tracked by Altos Research in May, with San Francisco, Washington and San Jose, California, showing the biggest gains.  New York and Las Vegas were the only two cities in the index where prices declined.  A separate index compiled by CoreLogic that tracks prices in 6,507 postal codes rose slightly in April compared with March – the first such increase since a homebuyer tax credit that helped prop up the market expired in April 2010.  It may well be the beginning of a reversal,” said Mark Flemming, CoreLogic’s chief economist.

No one is suggesting there is a boom under way, only that the market may not be as bad as some recent analysis has suggested.  Most predictions call for at least a 5% price decline this year and no bottom until 2012. Despite the hand-wringing, there are encouraging signs.  California, hard hit by the housing crisis, has seen a notable pick-up. “People are still unsure, because there are a lot of mixed signals,” said Jim Hamilton, the former head of the California Realtors Association. “But, overall, more buyers are coming into the market.”

Unemployment above 400,000, again

There were 427,000 initial jobless claims filed in the week ended June 4, the Labor Department said today. That was up 1,000 from the week before, and slightly worse than the 423,000 claims economists surveyed by Briefing.com had expected.  Continuing claims — which include people filing for the second week of benefits or more — edged lower to 3,676,000 in the week ended May 28, a decline of 71,000 from the week before.  The stubbornly high jobless claims data follows a recent string of other disappointing reports on the labor market. The government’s most closely-watched jobs report, released last Friday, showed that the economy gained only 54,000 jobs in May, down from 232,000 in April.  While a level below 400,000 is typically associated with payroll growth, claims have now topped this mark for the last nine weeks.

MBA – commercial/multifamily delinquency rate mixed

Delinquency rates among different commercial/multifamily mortgage investor groups were mixed in the first quarter of 2011, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report.  The delinquency rate for loans held in commercial mortgage-backed securities (CMBS) reached the highest level since the series began in 1997, but the climb was slower than in recent quarters. Delinquency rates for other groups remain below levels seen in the last major real estate downturn during the early 1990s — some by large margins.  Between the fourth quarter of 2010 and first quarter of 2011, the 90+ day delinquency rate on loans held by FDIC-insured banks and thrifts remained the same at 4.18%. The 30+ day delinquency rate on loans held in CMBS increased 0.23 percentage points to 9.18%. The 60+ day delinquency rate on loans held in life company portfolios decreased 0.05 percentage points to 0.14%. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae decreased 0.07 percentage points to 0.64%. The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac increased 0.10 percentage points to 0.36%. 

The first quarter 2011 delinquency rate for commercial and multifamily mortgages held by banks and thrifts was 2.40 percentage points lower than the series high (6.58%, reached in the second quarter of 1991). The rate for loans held in CMBS was a record high for the series. The delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.23 percentage points lower than the series high (7.37%, reached during the fourth quarter of 1993);  the rate for multifamily loans held by Fannie Mae was 2.98 percentage points lower than the series high (3.62%, reached during the fourth quarter of 1991); and the rate for multifamily loans held by Freddie Mac was 6.45 percentage points lower than the series high (6.81%, reached in 1992).

Trade gap narrows

The U.S. still imports far more than it exports, but the gap between the two narrowed slightly in April, according to government data released today.  The difference between the nation’s imports and exports narrowed to a $43.7 billion deficit in April from a revised $46.8 billion in March, the Commerce Department said.  Economists surveyed by Briefing.com were expecting the deficit to grow by $48.7 billion.  Exports totaled $175.6 billion in April, a 1.3% rise from the month before.  Meanwhile, the nation imported $219.2 billion in goods and services from other countries, a 0.5% decline from imports in March.

Olick – REIT winner is storage

“Hundreds of investors in real estate investment trusts are hunkered down at the Waldorf Astoria, touting tremendous returns and talking tactics for the next great play. It’s ‘REIT Week,’ in New York, or for those of you less excited about it, it’s the annual conference of the National Association of Real Estate Investment Trusts (NAREIT).  REITs overall are on a tear, with the FTSE NAREIT All Equity REITs Index up 14.13% on a total return basis in the first five months of the year.  But when I read down the fact sheet to the winners and losers, imagine my surprise to see the least sexy of the bunch at the top of the list: Self storage.  Forget the run on multi-family in the new rental age, forget the trophy office properties in the big metro markets, it’s those giant, brightly colored, enormous metal container communities just out beyond the mall that are reaping REITs rewards.  It’s simple, and it’s about housing. As fewer people choose to buy, and more people lose their homes, that’s where all their stuff goes. It’s also a product of overall downsizing. I realize that’s not a very highbrow explanation, but it just so happens to be the case, and it’s behind an 18.4% sector gain in the first five months of the year. In the last 12 months, self storage REITs returned 29%.”

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 150 high-value, high-profit
      properties

    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     420 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!

   * In 2010, Chris’ 4 Central Florida real estate offices

      closed 2,786 sides for a closed sales volume of

      $392,912,927!  

    * 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:

Smart Real Estate News & Commentary by Chris McLaughlin October 25, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

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

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

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

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

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Bernanke takes foreclosure problems seriously

That’s always good to know.  Federal Reserve Chairman Ben Bernanke said Monday that a federal agency review of foreclosure procedures at the nation’s largest mortgage servicers should be completed next month.  “We take violations of proper procedures seriously,” Bernanke said in remarks prepared for delivery at a joint conference in Arlington, Va., with the Federal Deposit Insurance Corp. on Wall Street’s foreclosure procedures.  “I would like to note that we have been concerned about reported irregularities in foreclosure practices at a number of large financial institutions,” Bernanke said. “The federal banking agencies are working together to complete an in-depth review of practices at the largest mortgaging servicing operations.” 

“We are looking intensively at the firms’ policies, procedures and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures,” he said.   “Now, more than 20% of borrowers owe more than their home is worth and an additional 33% have equity cushions of 10% or less, putting them at risk should house prices decline much further,” he said. “With housing markets still weak, high levels of mortgage distress may well persist for some time to come.” Bernanke said the conference will also focus on results from the ongoing program by the Federal Reserve Bank called the Mortgage Outreach and Research Effort, or MORE.

Hiring outlook slightly improved

In its October industry survey, the National Association of Business Economics (NABE) said Monday that employment conditions improved in the third quarter to the highest level since the start of the 2008-2009 recession.  Looking ahead, expectations for hiring over the next 6 months rose to the highest level since 2006, according to the survey.  A little over half of the economists in the October survey expect gross domestic product, the broadest measure of activity, to expand by more than 2% this year, down from 67% in July.  While the overall employment picture appears to be getting better, the job market is expected to remain under pressure into next year.  Earlier this month, NABE economists forecast the unemployment rate to rise to 9.7% this year, and then fall to 9.2% by the end of 2011. Unemployment in the United States currently stands at 9.6%.  Still, the October survey showed the percent of respondents reporting a decline in employment fell to 12%, a large improvement from the 31% reporting declines a year earlier.  The survey also found that profits at U.S. companies are increasingly being driven by sales in overseas markets, suggesting the weak dollar continues to be a boon for exports. 

According to the survey, more than half of respondents indicated that some portion of their firm’s sales came from operations outside the United States, while 16% said that over half of their sales came from foreign sources.  Meanwhile, a majority of respondents believe current regulatory policies and federal taxes will be a drag on business next year. However, they also expect the Federal Reserve’s move toward more easy monetary policy will support business in 2011.  The private sector is still struggling to adapt to changes in the regulatory landscape after President Obama signed a sweeping financial reform bill into law earlier this year. In addition, Congress has yet to decide the fate of tax cuts that are set to expire at the end of this year.   At the same time, the U.S. central bank is widely expected to announce additional stimulus measures next month. Fed officials, including chairman Ben Bernanke, have signaled recently that the bank is prepared to pump more money into the economy by purchasing Treasuries.

Dollar falls after G20

The dollar fell toward a one-week low against the euro after Group of 20 leaders vowed to avoid weakening currencies to lift exports.  The yen approached a 15-year high against the dollar on speculation Japan will refrain from intervening in foreign- exchange markets. The Australian dollar was within two U.S. cents of parity with the greenback on prospects the G-20 pledge will calm trade tensions and the Federal Reserve may signal a second round of bond purchases at its Nov. 2-3 meeting, boosting demand for higher-yielding assets.  The dollar fell to as low as $1.4012 per euro, near its weakest since Oct. 15, as of 9:57 a.m. in Tokyo from $1.3954 on Oct. 22.

It declined 0.3 percent to 81.11 yen, close to its 15- year low of 80.85 which it touched on Oct. 20. The euro gained to 1.3672 Swiss francs, the most since Aug. 11, before trading at 1.3665 from 1.3632 on Oct. 22.  G-20 officials pledged to refrain from “competitive devaluation” and to let markets set foreign-exchange values as they sought to calm fears that a trade war may break out if nations use cheaper currencies to spur growth.  Officials called for more sustainable current-account gaps without embracing a U.S. proposal for targets, as they ended talks in South Korea on Oct. 23. The G-20 Seoul Summit will be held on Nov. 11 and 12.

Freddie – foreclosure pipeline slowing

Freddie Mac, one of the two government-owned entities that finance about half all US mortgages, says that homes are taking as long as eight months to work their way through its foreclosure pipeline, two months longer than was typical before the housing crisis began.  The delay is the result of more borrowers staying in their homes for months after foreclosure proceedings have begun, requiring Freddie Mac to evict them before it can put those homes back on the market.  Fannie Mae, the other government-owned mortgage finance company, declined to say how long its process took.  A record number of foreclosures is contributing to the slowdown, but so are mounting legal questions surrounding bank procedures to repossess homes from delinquent borrowers. Some 6.7 million homes are either in some stage of delinquency or foreclosure, and nearly 30 percent of all home sales are of distressed properties, according to Core Logic, a real estate data tracker. In some hard hit markets, such as Phoenix, Arizona, the number is far higher. 

“People understand that it’s difficult for lenders to get them out of their homes, and so they are staying longer,” said Mark Zandi, of Moody’s economy.com. “In the past, if you got an eviction notice, you were likely to leave quickly. Now people are staying until there is a sheriff at their door.”  Some sheriffs are refusing to evict homeowners, following disclosures in court depositions that banks flouted state laws by filing thousands of foreclosure documents without verifying the accuracy of the information they contained. A Chicago-area sheriff has ordered deputies to stop carrying out foreclosure evictions over concerns that banks may be reclaiming properties from the wrong people.  In the case of Freddie Mac and Fannie Mae, which together sit on more than 190,000 foreclosed properties, the process of getting distressed homes ready for resale can take months and cost millions of dollars. If borrowers still occupy the homes, Freddie Mac will offer them financial assistance with relocation, a program known as “cash for keys”. Eviction proceedings are a last resort.

Home sales jump 10%, but that’s not saying much

Sales of previously occupied homes rose last month after a dismal summer but remain well short of healthy levels.  The National Association of Realtors says sales grew 10% in September to a seasonally adjusted annual rate of 4.53 million. They were still down 19% from the same month a year earlier. August’s results were revised downward slightly.  High unemployment, tight credit and the prospect of future declines in home prices have kept people from buying homes. Plus, the prospect of lawsuits from former homeowners claiming that banks made errors when seizing their homes is making some consumers fearful about buying foreclosed properties.  The median sale price was $171,700, down 2.4% from the same month year ago.

Now for our real estate education section…

Out-of-State Listing Lawsuits Likely to Have Major Implications

Just when you thought things couldn’t get much worse in the real estate industry, comes the news that out-of-state listings are now in the limelight. As most of the nation is glued to the news about robo-signers and banking bail-outs, the little noticed headlines about out-of-state listings has failed to gain much attention. That doesn’t mean it’s not important. In fact, this little tidbit might have a more immediate impact on the average short sale or real estate investor than other events making the evening news night after night.

The Crux of the Issue

The out-of-state listing lawsuit(s) primary deal with sites like ForSaleByOwner.com and other flat-fee listing sites who place their listings on MLS related sites like Realtor.com or other MLS/Multiple Listing Service sites. This practice has become fairly common in recent years as a method to generate maximum visibility however regulators in states ranging from Alaska to Nebraska have issued cease-and-desist orders against at least one major broker in California who has used this strategy without being licensed in the named states. According to the states, only those with a current valid state license may negotiate listings, sales or purchase of a property or “….assist in procuring prospects”.  Traditionally, sites like ForSaleByOwner.com would pay a broker to list MLS properties in distant markets but other sites like Move.com objected since these properties were not represented by an agent or broker.

Potential Implications

What does this mean for the future of flat-fee sites? It depends. Certainly they are not in direct competition with major MLS listings as the majority of by owner and other flat-fee sites currently comprise a small fragment of the major market. However, without the ability to market via MLS listings, total viewership may remain so small as to create an early demise. Advocates of the current system claim the recent updates to state laws are not constitutional and do not apply because they are not providing real estate related services such as price negotiations etc., only a form of advertising for owners that wish to sell without the use of a Realtor.

Part of the problem comes in due to the templates used by MLS related sites such as Realtor.com which use language that repeatedly refers to the broker or agent which requires  a state license to conduct business in each state. Because this has already reached the federal level, experts believe it will have far reaching implications for states around the nation. Given the tax hungry status of most states, it is likely they will support anything designed to increase revenue including more stringent requirements toward licensing in order to post properties to the MLS listings. It would take a far sighted politician to realize that moving real estate is good for everyone. Critics claim this will lead to a situation of stagnation in the industry as a stringent interpretation will require 50 different state licenses in order to access 50 different MLS systems.

Bottom Line

If a state has laws on the books that can fine or prosecute people for performing the work of a real estate broker without a license and you place flat-fee listings on the MLS for that area, it’s time to start searching for alternative methods to make contact with prospective clients or work with a licensed broker. Realtor.com, the official National Association of Realtors site, is one of the largest and most popular MLS listings in the nation. Traditionally sites like ForSaleByOwner.com would pay a broker to list MLS properties in distant markets but other sites like Move.com objected since these properties were not represented by an agent or broker. In recent years the Federal Trade Commission/FTC has tried to force the MLS providers to adopt a more open and inclusive policy toward limited service and flat-fee brokers but critics point to this latest move as evidence of a tightening policy instead.

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
–

Smart Real Estate News & Commentary by Chris McLaughlin October 1, 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

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

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CNBC’s Olick – foreclosure delay means big trouble

“JP Morgan Chase told CNBC on Wednesday that it will delay more than 56,000 foreclosure proceedings due to paperwork that was signed, ‘without the signer personally having reviewed those files.’  That came on the heels of GMAC halting foreclosures and evictions in 23 states for roughly the same reason. All this leads anybody with a heartbeat to figure that other large servicers will likely follow suit, as potential lawsuits abound.  So what will that mean to the larger foreclosure crisis and the already weakening housing recovery?  ‘It’s clear the pace of foreclosures will slow down,’ says Laurie Maggiano, Policy Director in the Treasury Department’s Homeownership Preservation Office.  ‘As of right now this is a policy and procedure issue until proven otherwise, but never underestimate mid-term electioneering,’ says mortgage consultant Mark Hanson. ‘If this does go to the next level (i.e. national foreclosure moratorium, fear that hundreds of thousands of foreclosures have been performed illegally, etc.), the unintended negative consequences on the mortgage market, MBS investors, banks’ balance sheets and ultimately the housing market will be significant. ‘ 

We’re already seeing threats of ratings agency downgrades on all the major servicers, not to mention the threat to housing’s overall recovery. If the bulk of these cases are valid, then delaying them is only going to prolong the pain.  ‘Worst case is that the current foreclosure problems turn out to be industry-wide and trigger a landslide of legal challenges that lock up foreclosures resolutions for a year or more,’ says Guy Cecala, publisher of Inside Mortgage Finance.  That means all kinds of borrowers would sit in their homes free of charge, banks would be unable to get any return at all, and the housing market would still be facing the inevitable: ‘We may then see a [foreclosure] surge at some point in the future,’ notes Treasury’s Maggiano.  We’ve talked an awful lot about artificial government stimulus skewing the housing recovery as it tries to help; that’s nothing compared to the potential for this latest scandal to wreak havoc on housing yet again.”

Dodd-Frank bill more trouble for business

Acting Comptroller of the Currency, John Walsh spoke before the Committee on Banking, Housing and Urban Affairs Thursday, about the challenges facing his office in adapting to the Dodd-Frank Act — citing the transition as a “mammoth effort.”  His sentiment was reiterated in a letter to Congress from the National Association of Federal Credit Unions.  “The additional requirements imposed by Dodd-Frank have created an overwhelming number of new compliance burdens, which will take credit unions considerable time and effort to resolve,” the letter said. “A slightly longer period for implementation of Dodd-Frank — up to 24 months — would help alleviate some of these burdens and give credit unions more time to comply.”  Walsh said the biggest task right now is integrating the Office of Thrift Supervision into the Office of the Comptroller of the Currency, which requires the OCC to not only revise its rules, but review and republish the rules for the OTS also. 

The OCC duties under the bill also include supporting the Financial Stability Oversight Committee, whose first meeting is scheduled for tomorrow. Walsh expects that under Basel III, will help advance the Dodd-Frank Act and help absorb some of the present challenges.  The NAFCU, however, sent its own list of recommended changes and potential provisions for Congress to consider, including changes to the appraiser independence standard (mandatory reporting requirements on credit unions and other lenders who believe an appraiser is behaving unethically or violating applicable codes and laws, with heavy monetary penalties for failure to comply) and the Bureau of Consumer Financial Protection’s power to preempt consumer protection rules.

Personal income up

The Commerce Department says personal income rose 0.5% in August, the largest increase this year, while spending by individuals rose only 0.1 percent for a fourth straight month.  Personal income increased $59.3 billion, or 0.5% last month, said. That’s more than the 0.3% rise economists expected.  Meanwhile, spending by individuals rose $41.3 billion, or 0.4%, matching the gain from the previous month.  Analysts polled by Reuters had forecast spending, which accounts for about 70 percent of U.S. economic activity, rising 0.3 percent in August.  A consensus of economists polled by Briefing.com had also expected personal spending to climb 0.3% in August. In August, spending was supported by a 0.5 percent rise in personal income, the largest rise since December, the Commerce Department report showed.

The rise in incomes was above market expectations for a 0.3 percent increase and followed a 0.2 percent gain in July.  Spending adjusted for inflation rose 0.2 percent after a similar gain in July. The fourth straight month of gains offered hope that consumer s continued to prop up economic growth in the third quarter. Spending grew at an annual 2.2 percent pace in the second quarter, with overall gross domestic product expanding at a 1.7 percent rate, the government reported on Thursday.  With spending a touch below the 0.5 percent rise in disposable income, the saving rate edged up to 5.8 percent from 5.7 percent in July. Savings rose to an annual rate of $661.9 billion.

New York prices stabilize

Manhattan apartment prices were up year-over-year in the third quarter as more residents bought larger apartments, according to the city’s biggest brokerages.  The median price was $914,000, up 7.5% from a year earlier, according to a report from Prudential Douglas Elliman.  The Corcoran report said the median price was up 9% to $900,000 since last year.  “Prices are jumping because of a shift in the mix,” said Jonathan Miller, who writes the Elliman report.  Studio apartments’ share of the market fell by 8% while two-bedroom apartments’ share rose by the same amount, he said.  The median price of a two-bedroom is about three times higher than a studio’s median price.  “Market-wide price metrics have stabilized” and even in some cases improved, Liebman said.  Prices of new housing as opposed to resale on the West side rose compared with both last year and last quarter, while the median price of existing condominiums on the East side rose 28%, according to the Corcoran report.  This quarter, 27.7% of Manhattan’s listings sustained price cuts, but that is 14% less than last quarter and 29.4% less than a year ago.  Also, condo resales spent 17.5% less time on the market than last year, while co-ops spent 19% less time, StreetEasy.com said.  Manhattan’s Midtown East section, within walking distance of its main office district, saw the most home closings, with 300 closings at a median price of $687,500, according to StreetEasy.com.”

Stimulus gone, jobs gone

Tens of thousands of low-income workers lost their jobs Thursday as a stimulus-subsidized employment program came to an end.  About a quarter of a million people in 37 states were placed in short-term jobs thanks to a $5 billion boost to the Temporary Assistance for Needy Families program, according to the Center on Budget and Policy Priorities. States used about $1 billion to provide subsidized employment, with the remaining funds going to cash grants, food programs, housing assistance and other aid.  About half the jobs were summer employment for youth and the rest were for disadvantaged parents. Each state configured its initiative differently. Some covered all the workers’ wages for a few months, while others paid for a portion of their salary.  With the program expiring, many of the adults have been told not to report to work anymore.  A handful of states will continue to operate the programs for another few months, but most of those will be downsized considerably.

Now for our real estate education section…

Learn a Lesson from the Big Boys…aka What’s in the Works for 2011 and Beyond

Ever wish you had a crystal ball to know what is in the works for next year’s marketing campaigns? Today we are going to give you a taste of what is to come for 2011 and beyond. Not only is it a great way to position your own real estate and short sales messages to appeal to the same crowd as that targeted by the big boys but riding the wave of something “bigger” is a great way to cash in on the top trends for the coming year.

Cause Marketing -  Forget “shock and awe”…today’s hottest trend in the financial, service and even communication industry is “cause” marketing. Need a new credit card? Select one that automatically donates to your favorite charity. Savvy real estate and short sale professionals trying to reach a concerned target market should consider visible support for charitable or other common causes. It’s a great way to show your support and gain visibility while taking advantage of tax incentives.

Back to Basics – Making memories never goes out of style but it’s time to get serious about family, friends and social support networks when major outlets like Disney are making it the foundation of their upcoming promotional efforts. Family oriented neighborhoods and other areas that support lifestyle choices are prime targets for the back to basics marketing message.

Ambush Marketing – Have a rowdy crowd that tends to be impulsive, spontaneous and excitable? Build on it by creating exciting campaigns using the latest in technology combined with special events, location related incentives and other fun, festive ventures. Not only does it set you apart but it’s a great way to gain a bit of local press and notoriety.

Green – Eco friendly alternatives might sound like yesterdays news but everyone from car manufacturers to pet products are planning major marketing campaigns around healthy and sustainable living. Real estate and short sale professionals can tap into this growing trend via a number of new ways including environmentally friendly appliance upgrades, access to public transportation or even the re-use of older homes. Take stock of your properties to determine which are able to attract the green market segment.

Local Marketing – Everyone from LexisNexis to the farmer next door is interested in local visibility and because all real estate is essentially local – well, you should be too. Local is the new global in that the appeal extends beyond the normal reach of those buyers or sellers in the immediate area; instead, the new local creates customized opportunities and services that serve the needs of buyers and sellers from diverse backgrounds in a well defined area and context. Specialized expertise and experience is essential.

Price – Bargains still sell….use the recession to your advantage by competing on price whenever possible. Think it won’t work…how long does it take most people to complete this sentence…

“Five – Five dollar…..”

Yes, it’s the Subway theme that you love to hate but it does demonstrate the successful sales strategy of affordable quality. Stay away from “cheap” and emphasize the intelligent aspect of making a great sales transaction. This is an especially helpful solution to those less than impressive properties in need of extensive repairs or renovation.  Add a few discounts or free products (ie, home warranty for someone just starting out, big screen television for a retiree couple, Disney vacation for a family) to up the ante and make them feel great about the decision. Just do what it takes to close the deal and move on to the next transaction.

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
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Smart Real Estate News & Commentary by Chris McLaughlin August 5, 2010 

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20 million underwater mortgages by 2012?

More than 14 million borrowers were underwater as of Q110, and with a further 10.8% decline in house prices expected relative to Q409 levels, another 6 million borrowers are likely fall into negative equity by the end of 2011, according to commentary today by Deutsche Bank.  The presence of negative equity goes hand-in-hand with an increased likelihood of strategic default, as borrowers may sometimes not be willing to pay the mortgage when the house has lost substantial amounts of value.  The firm noted that, even when strategic default makes economic sense, many borrowers resist on moral and social grounds, as well as from fear of legal consequences.  The existence of recourse — when a lender is able to pursue a borrower’s other assets — also acts as a disincentive against strategic default. 

Deutsche Bank noted 11 states are considered non-recourse — though not all explicitly forbid deficiency judgments on homes or on purchase loans. Underwater borrowers are more likely to default in non-recourse states. The greater the negative equity, the higher the cumulative default rate.  “Walk away or strategic default from a house with negative equity makes economic sense, especially in locations that have less expensive rentals,” Deutsche Bank researchers said.  “Many existing academic studies model homeowners’ default decision based on the theoretical hypothesis that a borrower would exercise a default when it is in-the-money, i.e., when the borrower’s house has negative equity. Therefore, a homeowner with negative equity would default even though they can still afford to make their mortgage payments.

Final tax credit lift in prices

According to Clear Capital’s Home Data Index Market Report, July house prices gained 8.1% from the same point last year, slowing somewhat from the 8.8% growth measured in June as the effect of the homebuyer tax credit begins to fade.  July house prices increased 7.9% from the previous three months, an improvement from the 5.2% growth seen in June. Alex Villacorta, senior statistician at Clear Capital said home prices are continuing their growth from the beginning of the year.  “This trend indicates that the initial upward momentum created by the tax credit expiration is being sustained,” Villacorta said. “While quarterly gains are showing strong momentum across the country, these recent price advancements are just the latest turn in a volatile housing market that has seen ‘W’ shaped price trends over the last two years.” 

Morgan Stanley analysts warned that data from these large indices should be taken with a grain of salt as local markets can deviate from one another despite larger macro trends. Scott Sambucci, vice president of data analytics at Altos Research, brought up similar concerns when he predicted further declines through 2010.  Prices in the West have been stable compared to rest of the market, increasing 2.7% in July. It has bounced between a 1.6% drop to the latest gain in July since the start of 2010.  On the metropolitan statistical area (MSA) level, Charlotte, North Carolina demonstrated more stability than the nation, much like the West. Prices there declined only 13% since its peak in the middle of 2007, while, national prices have dropped more than 30% since its height in the middle of 2006.

Jobless claims up

The Labor Department says there were 479,000 initial jobless claims filed in the week ended July 31, up 19,000 from a upwardly revised 460,000 the previous week.  The weekly figure is the highest since April 10, when 480,000 initial claims were filed.  The number of claims was higher than the 455,000 claims expected in a consensus estimate of economists surveyed by Briefing.com.  The 4-week moving average of initial claims, which is calculated to smooth out volatility, was 458,500, up 5,250 from the previous week’s upwardly revised average of 453,250.  The government said 4,537,000 people filed continuing claims in the week ended July 24, the most recent data available. That’s down 34,000 from the preceding week’s upwardly revised 4,571,000 claims.   Economists surveyed by Briefing.com were looking for 4,530,000 ongoing claims.  The 4-week moving average for ongoing claims climbed by 25,750 to 4,575,500 from the preceding week’s upwardly revised 4,549,750.  The latest claims data has little bearing on the government’s closely watched employment report for July, due on Friday, as it falls outside the survey period.

Beazer homes posts larger loss than expected

Beazer Homes USA posted a bigger-than-expected quarterly loss as the expiration of the federal homebuyer tax credit caused orders to plunge in May and June.  For the third quarter, Beazer reported a loss of $27.8 million, or 41 cents per share, compared with the loss of 25 cents per share expected by industry analysts, according to Thomson Reuters.  Last year, the company reported a loss of $28 million.  Homebuilding revenue jumped 52 percent to $339.9 million.  Analysts on average expected the company to post revenue of $325.1 million, according to Thomson Reuters.  Home closings rose 73 percent to 1,643 homes as buyers and builders alike rushed to close on home sales before the tax credit’s June 30 deadline.  But orders fell 32.5 percent to 1,037 homes.  “Homebuyers continue to be concerned about employment, the impact of additional foreclosures and general conditions in the economy,” said Chief Executive Officer Ian McCarthy. “We believe employment growth and improved consumer confidence remain the keys to a sustainable recovery in the homebuilding industry.”  Atlanta-based Beazer, the eighth-largest homebuilder in the United States, operates in 16 states.

Tax the rich?

If Congress fails to act in extending the Bush tax cuts, taxes on most Americans would go up next year — adding $1,541 to the average household payment, by one estimate.  Taking that money, a total of $135 billion, out of the pockets of consumers and small businesses could be a devastating blow to the fragile economy.  Every American who pays federal income taxes would see them increase if the tax cuts expire, according to the nonpartisan Tax Foundation. A typical middle-class family with a median income of $63,366 would pay $4,964 in taxes next year if the cuts expire, well above the $3,423 tax it would pay if cuts were extended.  President Obama and Treasury Secretary Timothy F. Geithner want to continue the tax cuts for lower income people, but have made it clear they want big tax hikes on job creators – successful investors and entrepreneurs – by letting the Bush tax cuts expire in 2011. This is despite the troubling persistence of unemployment greater than 9 percent.   

According to Caroline Baum of Bloomberg, squeezing the rich is no way to spur the economy.  “What we do know, empirically, is this: Over time, federal revenue as a share of gross domestic product has stayed fairly constant at 17.9 percent. That’s true if the top marginal tax rate is 91 percent (1950s), 50 percent (early 1980s) or 35 percent (2000s). Now the government wants to take money from the rich and give it to the poor. “They are wrong,” Laffer says. “It doesn’t work that way. The rich can change the volume, timing, composition and location of their income. Poor people can’t.” The rich have the luxury to respond to incentives, to opt for more work and less leisure when the return on work is greater. They are motivated to take risks, maybe start a business, invent something, and get even richer while giving others the opportunity, through hiring, to do the same. 

The opposite is true for low-income workers. When the government raises taxes, someone struggling to put food on the table for his family may have to go out and get a second job to maintain his level of take-home pay. For this socio-economic group, higher taxes translate to more work.  The goal should be to incentivize individuals to work hard, save and invest in the future. It’s about growing the pie.  I, for one, would like to see the debate shift from class warfare over tax rates and targeted tax relief to tax reform. Either scrap the tax code and introduce a simple flat tax with no deductions, or scrap the IRS and move to a consumption tax.  If you want to get money out of politics, there’s only one way to do it. Take the tax code out of Congress’s hands.”

Now for our real estate education section…

Crisis Control

Real estate is like any other business…sooner or later you will encounter a crisis. It may come in the form of a nationwide financial meltdown that disrupts funding for millions or something as simple as an overtly negative individual. Whatever the form, learning how to mitigate damages and restore a positive attitude is a key component to success.

1. Don’t be Defensive. Many old-timers will tell you dog can smell fear…the same applies to an audience whether it be your banker or a real estate seminar. People understand power and often turn against those that are perceived as weak or on the defensive. Remember, actions speak louder than words so guard your voice, words and body language.

2. Never Repeat a Negative Question. Rather than reinforce a negative question, try to rephrase it or move ahead. It’s better to take a small hit than give more time to an issue unless it is absolutely essential.

3. Never Blame Others. It puts you in a bad light and tends to make people distrust you…plus, it leaves people wondering what you might say about them behind their backs.

4. Don’t Argue. You might be right but the chances of convincing someone else decrease the more they defend their position to you. Instead, validate their position and explain your own thinking or simply move ahead. Not only does it conserve energy but it frees your mind from the feeling of dependence and allows you to see things from a different perspective.

5. Irrelevant Questions. This is perhaps one of the most frustrating situations for an investor or real estate pro to encounter…endless, tiresome and totally irrelevant questions. Unlike overly aggressive, negative or argumentative clients it’s not possible to simply “agree to disagree” and move on; instead, you must assume the person simply doesn’t understand or has a different agenda. If it’s possible to anticipate where they went wrong, try to bail them out to help them “save face”…it shows concern and sensitivity.  For those with their own agenda, try to determine if it is “helps” or “hurts” your position then act accordingly.

6. Plan for Murphy’s Law. Remember Murphy? Whatever can go wrong will go wrong so plan ahead for it. Put contingencies in place especially when it matters the most. For example, when planning an open house be sure to plan for inclement weather. Putting together a big media blitz, find another venue to publish in case the first falls through. Taking out a private loan, have a second on standby.

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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