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Foreclosures Fall

by admin on June 17, 2011

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

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Foreclosures fall

According to RealtyTrac, the online marketplace of foreclosed properties, foreclosure filings fell 33% In May from a year earlier and 2% month-over-month. The number of homes repossessed (referred to as REOs or real estate-owned properties) in May also declined to 66,879, down 3.8% from April and 29% year-over-year.  The huge year-over-year drop in foreclosures doesn’t necessarily mean the housing market is staging a recovery, however.

James Saccacio, the CEO of RealtyTrac, says the declines are likely due to lingering effects of the “robo-signing” scandal, which broke last September, when it was discovered that banks were playing fast and loose with foreclosure documents.  There’s another factor at play, as well. The banks can’t sell the homes they’ve already seized so they aren’t as incentivized to repossess more homes.  “There’s weak demand from buyers, making it tough for lenders to unload their REO inventory,” said Saccacio. “Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month.”  The banks don’t want to take on the expense of maintaining the homes — property taxes, heating costs, repairs and insurance — if they can’t sell them quickly.  Selling off the inventory of repossessed homes is crucial to the housing market.

The steepest drops in filings have come from judicial states, ones in which the courts are involved in repossessions. In these states, where foreclosure proceedings are subject to the scrutiny of the courts, it appears banks are taking special care to make sure they’ve stamped out the last vestiges of the robo-signing issues.  Nevada, where most cases are handled outside of court, continued to be foreclosure central. One of every 103 households received a notice of some kind in May. However, that was an improvement of 23% compared with May 2010. Arizona, with one filing for every 210 households, and California, one for every 259, were second and third.  The judicial state of Florida, where the housing market is no better, has seen a much greater drop-off in filings over the past year, down 62%. It now has the eighth highest foreclosure rate, of one filing for every 461 households. A year ago, it was in the top four, along with the other “Sand States.”

Nearly 50% of Americans see another recession coming

According to a new NBC News/Wall Street Journal poll, nearly half of all Americans, and two-thirds of Republicans, believe the country is headed back into recession. A 54% majority disapproves of Obama’s handling of the economy.  “The public is incredibly pessimistic about the future,” said Peter Hart, the Democratic pollster who conducts the NBC/WSJ poll with his Republican counterpart Bill McInturff.  President Obama’s overall job approval dipped back to 49% from 52% in May. That signals that the popularity boost he received after the special forces raid that killed Osama bin Laden has faded.  the challenge facing the president was evident when voters are asked whether they intend to support him or the Republican candidate in 2012. Obama led by a narrow 45 to 40 margin, down from 49% to 30% in May.  The survey showed continued deep concern about government spending; some 63% said Washington should focus more on reducing the deficit even if it slows economic recovery, and a 45% plurality of Americans believe the 2009 economic stimulus didn’t help the economy.  On raising the federal debt ceiling, Americans are split. A 39% plurality said it should not be raised, while 28% said it should be and 31% said they didn’t know enough.

Housing starts up

The number of permits for future housing construction jumped to a seasonally adjusted annual rate of 612,000 last month, up 8.7% from the revised rate of 563,000 in April, the Commerce Department said.  It was the highest monthly rate since December and was much higher than expected, with economists surveyed by Briefing.com looking for a 548,000 permit rate.  Permits for single-family homes, viewed as a more stable indicator of new homebuilding activity than permits for multi-family home construction, ticked up 2.5% from April to a rate of 405,000.  Housing starts, the number of new homes being built, rose 3.5% in May to an annual rate of 560,000 units from a revised 541,000 in April, the Commerce Department said.  Economists had expected an annual rate of 540,000 units, according to consensus estimates from Briefing.com.  Construction of single-family homes rose 3.7% to a rate of 419,000.

While permits are typically viewed as an indication of builders’ confidence in the housing market, the big jump in permits could have had a lot to do with seasonality, even allowing for the government’s adjustment, said Doug Roberts, chief investment strategist for Channel Capital Research.  Roberts said that this is the prime time of year to begin construction, given the better weather. And given the flooding and bad weather in April, many builders may have gotten off to a late start — leading to a jump in permits and housing starts last month.  “These are the months where the most construction occurs, so this increase could be more of a seasonal blip,” he said.

Financial regulators face limits

Under a bill released Wednesday by the House Appropriations Committee, the U.S. Securities and Exchange Commission would be denied a dramatic funding increase for the 2012 fiscal year.  The Republican-led committee’s bill would also strip the newly created consumer financial watchdog of its independent funding, subjecting it to the politically charged budget process starting in 2013.  “This new agency created by the Dodd-Frank legislation has not yet been fully constituted and many questions remain as to its authority and mission,” the committee said in a statement.  The funding for the SEC would be kept steady at $1.2 billion for the fiscal year that starts Oct. 1, according to the bill. The Obama administration had asked for a $222 million bump in funding for the agency that was given more responsibility to police markets in last year’s Dodd-Frank financial reform law.  Republicans are trying to attack the overhaul of financial regulations by denying funding to agencies responsible for overseeing the reforms.

Olick – foreigners jump into real estate market

“Falling home prices may be plaguing the US economy, but they are candy to foreign investors, who already have a weak dollar on their side.  Buyers from overseas spent roughly $41 billion on US residential real estate last year, a bump up from the previous year. US real estate agents report a surge this Spring especially, as foreign buyers see continued pressure on home prices and ample bargains.  ‘I don’t think they’re so concerned about the prices dropping as they are about getting value for their money,’ says Rick Ambrose, a Coldwell Banker agent in Lake Mohawk, NJ.  Ambrose and his colleague Mary Pat Spekhardt recently hosted two groups of Japanese investors searching for homes on the scenic lake just about an hour outside of New York City.  ‘They can work here, be close to the city, be close to their corporations and still feel like they’re on vacation. I think that’s really what grabbed everybody. That’s what got them,’ says Spekhardt.  The group of about 35 from Japan also toured properties in Las Vegas and Los Angeles, which are more popular choices among foreign investors.

A new survey by Trulia.com that tracks searches from potential foreign buyers found LA ranked number one in potential interest traffic, trailed by New York City, Cape Coral, Fl, Fort Lauderdale, FL and Las Vegas.  The greatest interest is from buyers in the UK, Canada and Australia.  ‘Prices now in the US are generally 30-40% off from the peak.  In addition, the weakness of the dollar gives the Japanese an advantage, as it does the Europeans, of another 20-25% off, so they’re seeing real bargains and opportunities,’ notes Ambrose.  The interest is pretty widespread, with Brazilians trolling Miami and Russians and Chinese hunting in Chicago, according to Trulia’s survey.  What’s so interesting to me, though, is that foreigners are so much more ready to jump into the market now than US investors. Granted, they have, as noted, the weak dollar on their side, but they also seem to have a longer term view. US buyers are so afraid to lose a little in the short term on paper, they don’t realize they could gain a lot in the long term. Of course foreign buyers are largely using cash, which many US buyers are lacking. Credit, or lack thereof, is playing against the US investor.  Prices in Miami are actually beginning to recover, especially in the condo market, thanks to foreign buyers, so much so that the foreigners are beating out the Americans.

I remember all the rage a long time ago when the Japanese were buying up commercial real estate in New York City.  Everyone was so appalled. Not so much now, even up in Lake Mohawk, NJ…’It isn’t popular. It is unforeseen territory, and it’s unique. I think it’s a very smart choice. It’s not where everyone is looking,’ says Spekhardt.”

Data hopeful for the economy?

Initial claims for state unemployment insurance slipped 16,000 to 414,000, the Labor Department said on Thursday, suggesting the jobs market was regaining some momentum after stumbling badly in May.  Initial jobless claims remained above the 400,000 level for a tenth straight week. Economists say claims would need to drop below that level to offer a clear sign of an improving labor market.  U.S. financial markets, however, were little moved by the data, which was eclipsed by concerns Greece could default on its debt.  “The broader theme we have to look at is that the pace of job destruction is slowing but the pace of job creation is also a bit tepid,” said Ian Pollick an economic strategist at TD Securities in Toronto. A report earlier this month showed U.S. employers added a scant 54,000 workers to their payrolls in May, with the jobless rate rising to 9.1%.  The report on jobless claims showed the number of Americans who continued to receive benefits under regular state programs after an initial week of aid eased to 3.68 million from 3.70 million in the week to June 4, the latest week for which data is available.  Under all benefit programs, including emergency benefits extended by Congress, 7.4 million were on the rolls in the week ended May 28, down about 200,000 from a week earlier.  The data suggested the long-term unemployed were finding it somewhat easier to find jobs, although if May’s dismal pace of job creation continues their hopes could be dashed anew.

Home builders confidence low

The National Association of Home Builder’s sentiment survey fell three points in June to 13, as builders face not only competition from distressed properties, but rising costs of materials. Fifty is the line between positive and negative sentiment on the survey.  “Roofing, copper, wallboard, vinyl siding and other components have made it extremely difficult to construct a new home and sell it at a price that covers the costs,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.  Builders reported weaker confidence in current sales and buyer traffic, which in turn pushed them to revise their sales outlook over the next six months.  The “expectations” component of the survey dropped four points to tie a record low set back in February of 2009.

As the big banks, Fannie Mae and Freddie Mac ramp up short sales and foreclosures and funnel ever more distressed properties onto an already overflowing market, pressure on home prices continues unabated.  Prices nationally fell 5.1% in the first quarter of this year compared to one year ago, according to the S&P/Case Shiller Home Price Index. Researchers there declared the “double-dip” in prices for the first time since home prices began recovering with the help of the home buyer tax credit in 2009.  “Potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements, and general uncertainty about the economy,” notes the NAHB’s chief economist David Crowe. “Economic growth must pick up in order for housing to gain the momentum it needs to get back on track.”

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: http://www.mclaughlinchris.com

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Fannie Freddie Mortgage Mods Drop 28% in Q1

by admin on June 7, 2011

Smart Real Estate News & Commentary by Chris McLaughlin June 7, 2011

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Fannie Freddie mortgage mods drop 28% in Q1

Fannie Mae and Freddie Mac servicers provided 86,201 modifications in the first quarter, down 28% from the previous quarter, according to the Federal Housing Finance Agency.  The drop comes after modifications fell 18% in the fourth quarter. Combined with repayment and forbearance plans, servicers retained nearly 144,000 homes in the period. Servicers also started 260,000 foreclosures, and although that is down from 310,000 from the previous quarter, it’s nearly double the amount of homes retained.  Servicers provided 26,000 permanent workouts under the Home Affordable Modification Program, up from 17,000 in the previous three months. Another 64,000 loans were put into active HAMP trials, meaning the majority of the modification activity for Fannie and Freddie mortgages went through HAMP.

Since the Treasury Department launched HAMP in March 2009, Fannie and Freddie servicers permanently modified more than 320,000 mortgages, according to FHFA data.  Short sales and deeds-in-lieu of foreclosure remained nearly unchanged from the previous period at roughly 27,500.  Roughly 44% of the borrowers said their reason for delinquency was a curtailment of income, compared to 14% who said they had too many obligations and 4% who pointed their continued unemployment.  Refinancing through the Home Affordable Refinancing Program totaled 130,204 in the first quarter, down 8% from the previous quarter. However, more than 16,000 of the refinancings were done on loans with a loan-to-value ratio of 105% or higher in the first quarter.

The amount of delinquent loans on Fannie and Freddie balance sheets declined.  Mortgages between 30- and 60-days delinquent totaled 553,000 in the first quarter, down 16%. There were 1.3 million loans more than 60-days delinquent, which dropped 7% from the previous period. And loans in serious delinquent or in the foreclosure process dropped to 1.19 million, down 5% from the previous period.  Seriously delinquent loans dropped to 4.02% in the first quarter, down more than 20 basis points from the previous period.

GOP says shrink federal workforce 10%

A new bill would shrink the number of government workers by 10% by 2015. For every three retiring federal workers, the government would only be allowed to hire one replacement.  The measure would save an estimated $127.5 billion over 10 years if adopted, according to Reps. Darrell Issa of California, Dennis Ross of Florida and Jason Chaffetz of Utah, the bill’s sponsors.  “Private sector job creators and families in my district have learned to do more with less,” Chaffetz said in statement. “So should the federal government.”  The idea is not exactly a new one. President Obama’s own fiscal commission included the basic plan in its final report, but would reduce the roughly 2 million member workforce at a less aggressive rate.  “Washington needs to learn to do more with less, using fewer resources to accomplish existing goals without risking a decline in essential government services,” the report said.

Olick – spring housing season

I don’t know what the official end of the spring housing market is, but it seems as if the experts have called the close, and it ain’t great.  Last week, after the folks at the vaunted S&P/Case Shiller Indices put a period on the home price double dip, which others had been reporting for months — and The New York Times did a piece on falling home prices — it seemed like suddenly the housing watchers got nervous again.  Over the weekend, JP Morgan Chase’s housing analysts revised their outlook lower for home price recovery, “largely based on existing home sales coming in lower than expected.” While they expect that regional divergences will increase, “Our new base case is down percent from here (Q1 2011) and bottoming in mid-2012. We expect home prices to modestly improve over the summer months.”  Soon after, Credit Suisse’s Monthly Survey of Real Estate Agents announced: “Weak ending to the spring season.” CS’s Daniel Oppenheim notes, “A lack of urgency continues as does a fear and hesitation of buying if prices still have further to fall.” This, we knew.

“Most worrisome was the lengthening time needed to sell a home, as there are few qualified buyers and those qualified buyers are waiting for the right price.” Buyer traffic is weak, and distressed markets are showing the best activity. This is a key point because of an argument that was going around the blogosphere last week.  Core Logic put out a price report showing that if you remove distressed properties from the equation, home prices are basically flat, not falling, as the rest of the reports scream. Housing bulls, including the former FHA commissioner, Dave Stevens, now head of the Mortgage Bankers Association, pointed to the report as evidence of recovery, but when I Tweeted about the Core Logic report, well-known mortgage analyst Mark Hanson protested:  “Why in the world would they discount distressed sales when they are the market, they support the market, and without them as support, house sales volume and sentiment would tumble. Further, MBS [mortgage-backed securities] loss severities and bank loan loss reserves are based on distressed sales not organic sales. In short, distressed sales carry more weight across the things that matter to the housing and financial markets.”

I’m watching a segment on MSNBC right now about how renewed trouble in housing might affect the 2012 presidential election. Suddenly housing is back in the headlines, not that it ever should have left.  Politicians may point to a slowdown in new mortgage delinquencies, and claim that the housing recovery is fine, but just slow. That should not be the focus. The focus must be on the more than 11 million underwater borrowers, and not just because some might walk away from their homes.  The plain truth is that not all homeowners who owe more on the mortgages than their homes are worth are going to walk away from said homes, and abandon their lifestyles and credit ratings in the process. Not near everyone.  But negative equity has a huge effect on lifestyle, spending and mobility. There is an enormous inventory of unsold homes on the market and about to come on the market, and if current homeowners can’t sell their homes, then they can’t buy new ones.  That may sound kind of “duh,” but I don’t think enough bankers or policymakers get it. You cannot rely on investors and first-time home buyers to eat up an unprecedented backlog of inventory.

Obama’s economic adviser leaving

President Obama’s top economic adviser, Austan Goolsbee, is leaving the administration to return to the University of Chicago, the White House announced yesterday.  The announcement came after a series of reports that showed the U.S. economy struggling to maintain headway after the housing bust, banking crisis and recession. On Sunday, Goolsbee told CNN’s “State of the Union” that despite disappointing employment, manufacturing and housing price figures, the long-term trends remain positive.  Goolsbee took over for Christina Romer, who stepped down last September from the job running the White House Council of Economic Advisers. Goolsbee was on the original White House economic team, serving on the council with Romer and Cecilia Rouse, that swept into office in January 2009 at the height of the financial crisis.  Only Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke remain of Obama’s original economic brain trust. Rouse left the White House earlier this year to teach at Princeton.

Goolsbee has been an outspoken defender of Obama’s policies as the U.S. economy struggles to find its footing following the steep recession of 2007-09. In a statement announcing Goolsbee’s departure, Obama called him “a close friend” and “one of America’s great economic thinkers.”  Last Friday, when dour-than-expected unemployment figures were released, Goolsbee was the first to give them an upbeat spin calling them a “bumps on the road to recovery,” a phrase repeated in Obama’s speech later that day and throughout the weekend.

But the financial markets weren’t so sure. Stocks closed lower again yesterday, as investors remained nervous about the nation’s economic future.

WSJ – mortgage misery

Almost 40% of homeowners who took out second mortgages—extracting cash from their residences to cover everything from vacations to medical bills—are underwater on their loans, more than twice the rate of owners who didn’t take out such loans.  The finding, in a report to be released today by real-estate data firm CoreLogic Inc., illustrates the consequences of easy borrowing amid the housing boom’s inflated prices. The report says 38% of borrowers who took cash out of their residences using home-equity loans are underwater, or owe more than their home is worth. By contrast, 18% of borrowers who don’t have these loans were underwater.  It’s not clear how much cash withdrawn from homes during the boom was used to acquire luxuries such as expensive automobiles, and how much went to basic necessities, including tuition expenses, or renovations intended to raise a property’s value.  What is clear is that home-equity loans, which account for about 10% of the U.S. mortgage market, have been a headache for homeowners and lenders alike. Second mortgages refer to any loan taken out on a property that is subordinate to the first mortgage, and include home-equity loans or lines of credit.

Second mortgages are weighing on a fitful recovery, in which housing has figured as particularly weak spot. The S&P/Case-Shiller National Index last week showed that home prices tumbled 4.2% nationwide in the first quarter, its third straight quarter of price declines after a modest recovery in early 2010. Nationwide, prices have fallen 34% since their peak in 2006. The inventory of unsold homes will take 9.2 months to sell, the National Association of Realtors said recently, about 50% higher than what is considered a healthy level.  CoreLogic found that borrowers with second mortgages had deeper levels of negative equity—an average of $83,000 compared with $52,000—than borrowers without second mortgages. In many cases, borrowers withdrew cash from their properties using home-equity loans or lines of credit, a type of second mortgage. The CoreLogic report doesn’t include cash-out refinancing, a common practice during the boom, where borrowers opted to extract cash while refinancing their first mortgage.  According to Federal Reserve Board data, homeowners took out a total of $2.69 trillion from their homes at the height of the housing boom between 2004 and 2006. That tally includes cash-out refinancing.  Overall, the CoreLogic report found that the percentage of underwater homeowners declined slightly in the first quarter. About 10.9 million Americans who borrowed to buy their homes, or 22.7% of all homeowners with a mortgage nationwide, were underwater in the first quarter, down from 11.1 million, or 23.1%, in the fourth quarter of 2010.  The modest decline wasn’t a sign of an improving market. Rather, the change reflected completed foreclosures, which reduced the total number of homeowners in the market, CoreLogic said.

Second mortgages have made it more difficult for troubled borrowers to negotiate loan modifications with lenders. Economists say borrowers with second mortgages on homes that are underwater are far more likely to walk away from their homes.  Homeowners seeking a “short sale,” in which they sell their property for less than the value of the outstanding mortgage, have a much harder time doing so when they have a second loan, because all the lenders involved must agree to take losses on the sale, and second-lien holders take the first losses in such a situation.

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: http://www.mclaughlinchris.com

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New Home Sales Rise 4.7%

by Chris McLaughlin on March 25, 2009

Real Estate News & Commentary by Chris McLaughlin, March 25, 2009
http://www.shortsalesriches.com/welcome.html

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missed the amazing testimonial from a newbie

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New home sales on the rise

It was reported that new home sales rose 4.7% to a seasonally adjusted annual rate of 337,000 in February from a revised 322,000 in January.  It was the first increase since July.  Economists were expecting a sales rate of 300,000, according to consensus estimates compiled by Briefing.com.  The report also showed that the median sale price of new houses in February was $200,900, down 18% from $245,300 a year ago.  Are we starting to scrape the bottom?

 

Mortgage applications jump

U.S. mortgage applications jumped last week as record low interest rates spurred a surge in demand for home refinancing loans, data from the Mortgage Bankers Association showed on Wednesday.  The MBA said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 32.2 percent to 1,159.4 for the week ended March 20.  Refinancing accounted for 78.5 percent of all applications.  Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.63 percent, down 0.26 percentage point from the previous week, reaching a record low, the MBA said. 


Approval rates fall
Most people who apply for loans still receive them, with the pull-through rate – the percentage of applicants whose loans are approved – running about 60%, but that’s significantly lower than the pull-through rate the Mortgage Bankers Association recorded during the height of the housing boom.  In 2003 nearly 79% got their loans.  Borrowers with scores of 750 or above accounted for 38% of loans issued during the second quarter of 2008, compared with just 23% just two years earlier, according to the MBA.  Those with low credit scores of 650 or less represented only 15% of loans during the first three months of 2008, compared with 28% during the first quarter of 2006.

Debt?  What debt?
President Obama used a prime-time news conference last night to defend his $3.6 trillion budget plan (or $9.3 trillion in debt over the next 10 years, if the non-partisan Congressional Budget Office can be believed) , digging in on his ambitious spending and tax proposals one day before the plan begins to move in Congress.   Obama says the government should spend now on renewable-energy development, education and a health-insurance overhaul that would put the economy on a sounder footing once it recovers.  However, a lot of people wonder how a “sounder footing” will come about by creating a system that will almost certainly create an inflationary bubble and demand high taxation on the middle class to maintain.  Just because it’s “the rich” today doesn’t mean it won’t be you tomorrow.

Markets up

Stocks jumped this morning after better-than-expected reports on durable goods orders and new home sales.  The Dow Jones gained 180 points, or 2.4%, 35 minutes into the session, and seems to be hanging onto its gains as of the time of this writing.  The S&P 500 index rose 19 points, or 2.4%, and the Nasdaq composite added 37 points, or 2.4%.  The Census Bureau reported that durable goods orders – an important gauge in measuring manufacturing – rose 3.4% in February.  Orders were expected to decline 2.5%, according to a consensus of estimates from Briefing.com.

 

Now on to our real estate investing education section…

 

Luxury Short Sale Homes – Bargain or Big Mistake?

If short sale real estate represents a buying opportunity for most Americans than luxury home short sales should really big a big bargain; after all, the relative decline for homes above the median sales price are typically experiencing even more dramatic declines than the housing market as a while. So, should investors and homebuyers take advantage of these once in a lifetime buying opportunities or pass due to the current economic climate? Here to help you sort through the clutter and confusion are the facts about buying luxury short sale homes including who should buy and who should think twice.

  1. Define Luxury. The first step is to actually define what luxury means to you; after all, luxury – like beauty – is often in the eye of the beholder. Many builders and real estate brokers attempt to make a home sound luxurious by mentioning upgrades like appliances, granite countertops and so forth. However, amenities alone do not make a luxury home. Neighborhood is a critical consideration as is the financial aspect. Typically speaking, a luxury home is one that is above the non-conforming limits and appeals to no more than the top 10 percent of income earners in the area.
  2. Negotiate Amenities. Standard home buyers searching for a home with luxury amenities and upgrades can save substantial sums on the cost of a home by discounting upgrades. This was previously covered in-depth on the shortsalesriches.com/blog in an article about Hedonic Pricing. Suffice to say, many upgrades simply aren’t worth what they used to be –especially those that require high maintenance and associated fees. Always go with the builder’s model pricing when possible.
  3. Shrinking Options. Thanks to the financial melt-down in the stock market, many retirees and upper middle income earners have watched savings and investments dwindle to nothing. This means very real buying opportunities for those interested in a true luxury home or condo. While the price of affordable housing may have declined by as little as 10 to 15 percent in many areas, luxury homes are selling at 30, 40 and even 50 percent from their former highs. Tight credit and dwindling investment portfolio’s mean a lack of liquidity for many would be former buyers. Those in the position to buy now are likely to realize tremendous savings whether buying their dream home or investing in the future.
  4. Keep Your Options Open. If you have always wanted to improve the lifestyle of your entire family now is the time to take action. Imagine purchasing a million dollar home for half that amount or a $750,000 home for only $375,000…it’s possible if you know where to look and how to structure the offer. A lifestyle formerly unavailable could suddenly be available to you and your children thanks to the current economic crisis – but it won’t last forever. Be sure you have the staying-power to avoid joining the ranks of sellers attempting to avoid foreclosure then consider searching for homes that may have formerly been out of your reach.

See you at the top!

 

 

Chris McLaughlin

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

 

P.S.

 

Don’t miss out webinar Thursday at 8:30 PM ET, 5:30 PM PST:

 

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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

—

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Obama to Restrict Bank CEO Compensation

by Chris McLaughlin on February 4, 2009

Real Estate News & Commentary by Chris McLaughlin, February 4, 2009
http://www.shortsalesriches.com/welcome.html

——
Yesterday’s webinar was a hit!  We were flooded
with hundreds of questions during … and even
more afterwards.

So we negotiated with our webinar host, and came
up with a solution – for 24 hours, we can offer a
replay.

Here’s a chance to go over anything you may have
missed.  Or to clarify something that wasn’t
quite clear.  Or even to show your spouse, co-
worker, boss, or friend this revolutionary approach
to exploiting this economy for a high six-figure
income.  Just click here:

http://www.webinarwizards.com/custom/index.cfm?id=170879

———

The outrage over extravagant spending on St. Regis parties by AIG and new corporate jet orders from Citigroup has now taken its toll on these poor, poor CEOs: if they get any more bailout funds, their compensation may be limited to $500,000, according to statements made by President Obama today.  This could be a real downer folks.  I mean really, when they are at 30,000 feet in the new corporate jet, they aren’t going to have enough money to pop a few bottles of Dom anymore.  Any the party at the St. Regis – they might now have to cut out the daily massages and keep them to just 1 a weekend.  We’ll see. 

But is this just government run banks?  Yeah, if you ask me the banking industry as we know it is over for the next few years until the market participants want to come back in from the cold.  This is a total loss of confidence in our financial system; it won’t just come back overnight.  Economic recovery takes leadership…and so far these banks haven’t exhibited much leadership.

Sure, there is concern that with the restrictions of compensation, the ability to adequately compensate top performers will be hindered, and all the good talent will leave.  You know, all that good talent that decided to leverage Lehman Brothers 40 to 1 on mortgage backed securities that went south.  That great talent that decided to pay billions in bonuses after receiving billions from the government.   I still can’t see why any American would be outraged …hmm..

And as these executives get less in pay, we’re reminded that there are a lot of people that just don’t have any pay.  ADP Employer services reported that private employers eliminated 522,000 jobs in January versus 659,000 in December – that’s over 1 million jobs lost in just two months.   In other job related news, the unemployment rate rose in 98% of all metropolitan areas of the country – 363 of 369 metropolitan areas rose in December 2008.  El Centro, California had the highest unemployment rate in the country – a stunning 22.6%, but Morgantown, West Virginia had the lowest – just 2.7%.  In the metro areas, Detroit had the highest rate of 10.6% and San Bernadino, CA came in second with 10.1%.

Now, on to our real estate investing section…

Negotiation 101

In college one of the most popular courses among those entering politics, business or even psychology is negotiation. With good reason since the ability to successfully negotiation is a skill that makes or breaks men and women of all levels of intellect, skill and background. Without strong negotiation skills the best and brightest are likely to find themselves working behind the scenes rather than taking the bull by the horns and forging ahead. Real estate is one area particularly well suited to strong negotiation strategy and fortunately, you don’t need to spend thousands of dollars or countless classroom hours to acquire this art form. Instead, start small with these simple tips:

  1. Stay on-point. Speak clearly, slowly and remain calm at all times. Think of negotiation like a poker game; practice to find out your individual “tells” then eliminate them from the table.
  2. Clearly define the deliverable. It is important to establish who “owns” what and how each party will benefit from the other persons contributions.
  3. Be the FIRST person to give up something. This might sound counter-intuitive but research has confirmed how well it works. By taking a lead role in “giving up” something first, you create an obligation for the other party to reciprocate. Make sure what you give up is meaningful but with the full intent of acquiring something even more meaningful in return.
  4. Use the other person’s name and maintain eye contact if you happen to be doing this in person (most short sale negotiating takes place over the phone, of course).
  5. Don’t be afraid to use silence strategically. When the other party makes an offer or counter-offer consider it slowly and silently; don’t speak for several seconds even if it is everything you hoped for and more.  You never know what their bottom line may be so wait a few seconds to see if they respond further.
  6. Once you have a tentative agreement on the table, take time to outline the specifics including time, price, limitations or exclusions. Once again, remain calm and offer something in advance to create an obligation or reciprocation on the part of the other party.
  7. Put it into writing then and there. Anyone who has ever bought a car knows the tactic; make them sign something even if it isn’t legally binding. The very act of acknowledging the agreement makes them take ownership and creates a strong motivation for follow-up.
  8. Act Fast. Move from the talking stage to the doing and delivery portion of the transaction as soon as possible. When dealing with short sales and real estate in general it isn’t unusual to encounter cold-feet, second guessing or other attractive offers.

 See you at the top!

 

Chris McLaughlin

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

P.S.

We’re holding a LIVE webinar this coming Saturday at 3 PM EST, 12:00 PM PST…all on the strategies of recession proof real estate investing.  Go here now to make sure you reserve your spot, last time they filled up quickly!

https://www2.gotomeeting.com/register/583681653

Don’t miss the replay, only available for the next 24 hours:

http://www.webinarwizards.com/custom/index.cfm?id=170879

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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

 —

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