real estate

Smart Real Estate News & Commentary by Chris McLaughlin August 10, 2010 

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Olick – no new bailout

“It all started with a Reuters article titled, “An August Surprise from Obama?” It suggests that a forced principal writedown program would be funneled either through the existing Home Affordable Refinance Program—which allows borrowers with current Fannie and Freddie loans who owe up to 25% more on their loans than their homes are worth, to refinance to lower interest rates—or through the Bush-era Hope for Homeowners program.  The article suggests that this new bailout would be forced by political pressure, “less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses.”  The trouble is it doesn’t make a whole lot of sense. First of all, Fannie and Freddie don’t own all the loans they guarantee, and forgive me for not being a lawyer, but I’m not exactly sure that the government can just force investors to write down principal on loans those investors own.  “It’s hogwash,” writes mortgage consultant Mark Hanson, who rightly points out that the government is just now releasing guidance to lenders on its FHA short refi program (which includes principal writedown) and its largely GSE 3-year earned principal balance reduction program— both of which were announced last March and both of which are voluntary and require the consent of all lien holders.

Next Tuesday the Administration will be holding a “conference on the future of housing finance”, which, “will help provide critical public input as the Administration continues its work developing a comprehensive housing finance reform proposal for delivery to Congress by January 2011.”  I have been told over and over by Administration officials that there will be no big news announcement at the summit. No mandate that the government will suddenly infuse every troubled borrower’s home with palatable equity. Now I’m not saying something new couldn’t happen, but as HUD and Treasury now launch the new principal writedown phase of the housing bailout, I’m just not sure it makes sense, politically or otherwise, to turn all that on its head.”

Economy slowing

According to a Labor Department report, U.S. non-farm productivity declined by an annual rate of 0.9 percent after rising at a revised 3.9 percent rate in the first quarter, the first time since the fourth quarter of 2008 that output per worker fell.  Analysts surveyed by Reuters had forecast that productivity, a measure of hourly output per worker that is taken as an indicator of the economy’s vitality or lack of it, would expand at a 0.2 percent annual rate in the second quarter and that unit labor costs would rise 1.3 percent. 

Unit labor costs, a gauge of potential inflation pressures closely watched by the Federal Reserve, edged up at a 0.2 percent annual rate after shrinking at a revised 3.7 percent rate in the first three months this year.  The weak productivity figure is in line with other broad signs that the economic recovery is losing momentum. The overall economy grew at only a 2.4 percent annual rate in the second quarter, down from a 3.7 percent rate in the first quarter.  Fed policymakers were holding a one-day meeting on Tuesday to consider interest-rate policy, but with rates already near zero the speculation was that the U.S. central bank may be mulling other fresh steps to stimulate the economy amid signs that inflation poses little or no current risk.

Senator calls for investigation into Fannie Mae

As we reported yesterday, last week Fannie Mae denied allegations made by Caroline Herron, a former employee at the government-sponsored enterprise (GSE). Herron said the company, which was allegedly hired by the Treasury Department for $113 million to run the Home Affordable Modification Program (HAMP) runs the program to better its own balance sheet, not to help homeowners. Herron is suing Fannie Mae for firing her for requesting reform in the program. Now Sen. Spencer Bachus (R-Ala.), the ranking Republican on the Financial Services Committee, sent a letter to committee chairman Barney Frank (D-Mass.) requesting an investigation into the recent allegations against Fannie Mae.  Bachus requested that the committee hold a hearing this month to “examine whether Fannie Mae executives mishandled and mismanaged Federal foreclosure mitigation programs, including the Home Affordable Modification Program (HAMP).” 

Bachus requested testimony from Herron, and he wrote if her allegations were true, it would “help explain why HAMP has been such a failure.”  A spokesperson at Fannie Mae said the investigation found “no merit,” and Herron did not participate in it.  Lynne Bernabei, Herron’s attorney in the case, said they told Fannie they would participate, but Fannie said they would not be allowed to respond to the findings or view the report.  But a source familiar with the situation says that Herron and her attorney received one oral request to participate in the investigation and three written ones.  Frank’s office said the senator was traveling, and it was not immediately known if the letter was under consideration.

Small business still pessimistic

The National Federation of Independent Business (NFIB) said its optimism index fell 0.9 point to 88.1 in July. “We don’t have any confidence that the economy is going to get fixed, that it’s going to improve,” William Dunkleberg, the group’s chief economist, told CNBC. “We really crashed when it came to expectations for business conditions. Not good.”  Only 2 percent of respondents said they had plans to create new jobs. That actually represented an improvement from June’s 1 percent reading. 

Just 12 percent of small business owners reported raising average selling prices, while 24 percent said they were cutting prices.  “With no pricing power and real sales volume weak, profits are not able to recover,” the report said. “Inflation is clearly not a problem.”  Respondents said they are fearful of the political climate in terms of taxation issues as well as increased costs for national health care and financial reform.  “The index is pretty much full of forward-looking components, and looking forward—not too good,” Dunkleberg said.

Housing not at the bottom yet?

According the US Housing Market Monthly report by Capital Economics released yesterday, home sales have yet to hit the trough of the recession.  Further, the economics firm states that pending home sales will do little to push home sale numbers higher. In fact, the number of pending home sales is so diminished, down 32% in the wake of the tax credit expiration, that existing sales will only dip in the coming months as these mortgage agreements are finalized.  Analysts at Moody’s Investors Service agree, stating that the odds of a near-term double-dip recession increased to one in four from one in five predicted this spring. If this double-dip happens, Moody’s estimates home prices will fall along with sales — an estimated 20% before stabilizing in early 2012.  However, mortgage tech company Fiserv predicted only a 4.9% decrease in housing prices over the next 12 months. 

Pending home sales fell another 2.6% in June from May after deteriorating 29.9% in May from April. According to Capital Economics, this will be reflected in existing home sales in the months to come. Existing home sales in June fell by 5.1%.  The housing market is currently experiencing an excess of inventory as Capital Economics reported an 11% homeowner and rental vacancy rate in the second quarter of 2010, a new record high. Capital Economics states, “relative to the rising trend of the last 30 years, that suggests around 0.6m [or 600,000] properties than normal are currently sitting empty.”  Capital Economics also suggested that builders are adding to the excess supply, noting a 28% annualized jump in residential investment in Q210 alongside a 19% decline in housing starts from April to June (down 14.9% in May and 5% in June). All of these statistics in addition to macroeconomic conditions is what economists at Moody’s believe are hindering economic recovery.  “We expect real GDP to advance nearly 3% this year, monthly payroll employment gains to average close to 125,000, and the unemployment rate to end the year back over 10%,” Moody’s reported. “With the economy slowly recovering, we expect home sales and residential construction to end up slightly stronger this year than last year while house prices will depreciate a bit more.”

Now for our real estate education section…

Six Biggest Blogging Mistakes & How to Correct Them

Real estate and investment pros alike are turning to blogging with good reason; over 80 percent of buyers and sellers indicate they enjoy the ability to get to know who they do business with by reading their blog first. Unfortunately, blogs are not all created equal. A poorly managed blog is worse than a waste of time…it can actually act like negative publicity. Learn how to spot the top six biggest blogging mistakes and find out how to correct them with these quick tips:

1. Publish or Perish. Anyone who ever went through graduate school is familiar with this old refrain but it holds true in the blogosphere as well. Publish on a regular basis or perish. A significant number of blogs are abandoned shortly after being started. Others seem to do fairly well then hit a plateau after a few months. Both are deadly sins in the blogging world. Readers (ie prospective clients) expect regular content that is updated frequently.

2. Findable. Even the best blog is worthless if people can’t find it! Search engines must index a blog by using keywords and search terms, author or subject. Be sure to include all relevant information so readers are able to locate your blog. For example, your name, city/state, business, topics/keywords.

3. Viral. Blogs are meant to be shared so make it easy for readers to include your content in other forms of social media. Periodically check your blog on different browsers, mobile applications and other methods of access to assure it is viewable by as many people as possible.

4. Social. Although there are pros and cons’ to allowing reader questions and/or interaction, the social aspect of blogging shouldn’t be ignored. Whether you opt to integrate every question/feedback or simply a representative sample, make sure readers feel they are appreciated and included.

5. Syndicated. RSS is one of the most important and frequently used features of most modern day blogs. Readers are automatically notified when the blog is updated and content is sent to their desired preference setting. Make sure your blog is set-up for syndication rather than rely on visitors to return over and over in the hope of finding the latest update.

6. Lost Links. Encourage people and other sites to link to your blog; not only does it help increase visibility but also provides important information to relevant ancillary sites and services that may benefit both parties.

Still getting up to speed on how to best integrate your blog into other social media methods? Why not attend one of our free webinars or other informational sessions designed to get you going in a fraction of the time typically required to master this every evolving field.

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 August 4, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

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

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

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Mortgage Applications Increase

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 30, 2010 increased 1.3% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 1.4% compared with the previous week.  The Refinance Index increased 1.3% from the previous week. The seasonally adjusted Purchase Index increased 1.5% from one week earlier. This third straight weekly increase in the Purchase Index was driven by government purchase applications which increased 3.4% from last week, while conventional purchase applications were essentially flat.  The unadjusted Purchase Index increased 1.5% compared with the previous week, was up 7.1% relative to four weeks ago, but was 33.7% lower than the same week one year ago.  The four week moving average for the seasonally adjusted Market Index is up 0.3%.  The four week moving average is up 0.9% for the seasonally adjusted Purchase Index, while this average is up 0.2% for the Refinance Index.  The refinance share of mortgage activity remained flat at 78.0% of total applications from the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.4% from 5.7% of total applications from the previous week.

More Private sector jobs

We won’t have the official figures for two more days, but two employment reports released early today gave a mixed picture.  According to a report by payroll processing firm Automatic Data Processing (ADP), private-sector employers added 42,000 jobs to their payrolls in June, following an upwardly revised 19,000 increase in June.  Economists polled by Briefing.com had expected the report to show the private sector added 25,000 jobs in July.  According to outplacement firm Challenger, Gray & Christmas Inc., employers announced plans to eliminate 41,676 jobs last month -  up 6% from June, when job cuts rose to 39,358.  Economists forecast that employers cut payrolls by 87,000 jobs in July after cutting 125,000 jobs in June. 

Since hitting a four-year low in April, job cuts have risen nearly 9% over the past three months, but downsizing remains well below 2009 levels and cuts in July were down 57% from a year ago.  So far this year, employers have announced 339,353 job cuts, down 64% from the same period last year.  For the fourth month this year, employers in the government and non-profit sector shed the most jobs, announcing plans to eliminate 7,193 employees in July, up 36% from the 5,306 job cuts in June.  Government and nonprofit employers have announced plans to eliminate 105,969 jobs so far this year. That’s nearly triple the number of planned cuts in the pharmaceutical industry, which has announced 30% fewer layoffs this year but remains the sector with the second highest number of cuts.

Pending sales down

According to the National Association of Realtors (NAR), the Pending Home Sales Index (PHSI)declined 2.6% to 75.7 based on contracts signed in June from an upwardly revised level of 77.7 in May, and is 18.6% below June 2009 when it was 93.0. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.  Lawrence Yun, NAR chief economist and perpetual optimist, said lower home sales are expected in the short term. “There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,” he said.

“Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices.”  The PHSI in the Northeast dropped 12.2% to 58.8 in June and is 25.4% lower than June 2009. In the Midwest the index fell 9.5% to 64.1 and is 27.8% lower than a year ago. Pending home sales in the South rose 3.7% to an index of 85.8, but are 13.3% below June 2009. In the West the index slipped 0.2% to 85.1 but is 14.2% below a year ago.

Uncertainty and inaction hurt economy

A panel of economists told the Senate Budget Committee yesterday had gloomy outlooks for growth in 2011, offering annual GDP forecasts ranging from 3% to 4%. and arguing that Congress needs concrete plans for tax cuts, stimulus and deficit control because the economic uncertainty this administration and congress have created will mean slow growth.   Joel Naroff, president and founder of Naroff Economic Advisors, predicted even slower growth of 2% to 2.5% — if Washington fails to make major “changes in fiscal or monetary policy.”  “Market participants are used to thinking that political gridlock is good because it keeps politicians from interfering with the marketplace,” said Richard Berner, a top economist at Morgan Stanley. “Well, today gridlock is more likely to be bad for markets as our long-term economic problems require solutions with political action.”  The problem is that it’s possible Congress won’t tackle big decisions — such as extending the Bush-era tax cuts — until after the November elections.  Berner suggested that uncertainty over tax policy — as well as uncertainty on how health care and Wall Street reforms will play out — played a role in the sluggish consumer confidence levels of the past few months.  “That is not the only reason, but I think it’s an ingredient,” Berner said.

More foreclosure bailout

As many as 50,000 homeowners in 5 states with high unemployment may receive help from a special $600 million federal fund intended to head off some foreclosures.  State housing agencies in Ohio, North Carolina, South Carolina, Oregon and Rhode Island can use money from a so-called “Hardest Hit Fund” for foreclosure mitigation that was announced in March, says Herb Allison, Treasury Assistant Secretary for Financial Stability.  The five states have counties where the unemployment rate exceeded 12 percent in 2009.  Allison said the program is targeted at those who need it most and is not designed to prevent all foreclosures.  Obama announced a $1.5 billion “Hardest Hit Fund” in February for California, Nevada, Arizona, Florida and Michigan, where home price declines were most pronounced. 

Under pressure from lawmakers, the administration expanded the program in March to the five states now eligible for an additional $600 million.  The $2.1 billion fund shifted money from the existing $50 billion program: Home Affordable Modification Program (HAMP).  Some of the programs that states proposed will help unemployed or under-employed people keep up with their mortgage payments.  Others will try to assist homeowners who are facing negative equity by reducing the principal of loans that they owe or will be used to finance short sales of homes to avoid foreclosure.  Ohio, for example, would allow unemployed workers to get mortgage payment assistance for longer than the three months allowed under the nationwide program.  Ohio will get up to $172 million for these purposes while North Carolina gets up to $159 million and South Carolina up to $138 million.  Oregon has been approved for up to $88 million of funding and Rhode Island up to $43 million.

30 year rates set record low

According to Zillow Mortgage Marketplace’s weekly update, the 30-year fixed-mortgage rate (FRM) dropped week-to-week nationally averaging 4.28% — down 0.1% and a new record low.  Regionally 30-year rates are varying, but the majority of states saw a drop.  California’s current rate is 4.33%, down from 4.34% last week, as is Colorado’s at 4.26%, down from 4.28%. 

Rates substantially decreased in New York to 4.23% (from 4.46%), Massachusetts to 4.28% (from 4.61%), Florida to 4.18% (from 4.33%) and Washington to 4.36% (from 4.56%) from last week.. Texas is down to 4.27% from 4.36%  and Illinois state average is down to 4.33% from 4.31%.  Zillow reported the rate for 15-year fixed home loans at a national average 3.85%, while the rate for a 5-1 adjustable-rate mortgage (ARM) is at 3.27%.  Zillow’s rates are based on real-time mortgage quotes from lenders registered with, but not exclusively bound to the company. The national average comes from thousands of daily quotes given to anonymous borrowers through their website.  State averages are also available.

Now for our real estate education section…

How is Your Marketing Know-How?

Be honest. How is your marketing know how? Not sure how you really measure up? Take this quick quiz to determine if you use guerrilla marketing to the max or just monkey around. Answer true or false to each of the following questions:

1. I routinely use a publicity campaign to build my professional identity, increase visibility and create name recognition.

2. I’m not comfortable “tooting my own horn” or I commonly encounter more aggressive people that seem to steal my thunder.

3. I am the product. My expertise, experience and/or education set me apart from the crowd.

4. I’m not comfortable asking clients for testimonials, letters of praise or endorsements.

5. I am nothing if not persistent. I’m able to overcome lack of interest, rejection, competition and even rudeness in order to achieve my goal(s).

6. I tend to focus on today rather than the long-term outlook. For example, I focus on the effectiveness of advertisements rather than campaigns or measure results in terms of days or weeks rather than months or years.

7. I position myself well in advance. For example, by collaborating with upcoming events, publications calendars and offering my services or expertise before it is requested.

8. I try never to extend myself.

9.  I look for opportunities everywhere.

10. I focus my attention on the buying audience and forget the media.

What’s Your Score?

Give yourself 1 point for every “true” answer to each odd numbered item above. Give yourself 1 point for every “false” answer to each even numbered item above. Subtract 1 point for every “false” answer to every odd numbered item. Subtract 1 point for every “true” answer to every odd number.

0-3 points: You are in dire need of marketing help. Run – don’t walk – to find immediate help.

4-6 points: Chances are you spend a lot of time with minimal results…ie, you monkey around but not very effectively. Either get serious or outsource it.

7-9 points: You have a solid foundation and could quickly become a master with a bit of tweaking.

10 points: You understand the essentials of guerilla marketing. Keep up the good work!

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 July 23, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/

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

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

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

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Existing homes sales fall

According to the National Association of Realtors (NAR), existing homes sales fell 5.1% to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8% higher than the 4.89 million-unit pace in June 2009. Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said. “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”  AR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said softer home sales expected this summer don’t tell the whole story. “Despite these market swings, total annual home sales are rising above 2009 and we’re looking for overall gains again this year as well as in 2011,” she said. “Conditions have become more balanced in much of the country, which is good for both buyers and sellers. However, consumers find it even more challenging to navigate the transaction process, especially for distressed properties, which only underscores the value Realtors® bring to buyers and sellers in this market.”

Most Americans think things will get worse

A nationwide survey from Citigroup shows that nearly two-thirds of Americans believe that the economy has yet to hit bottom, meaning a double-dip recession is expected.  The quarterly report, conducted by Hart Research Associates, revealed that 62 percent of people asked were still not counting on a rebound, which is 3-point decline from the March reading and almost as bad as last September’s result of 63 percent.  The survey also showed that Americans’ expectations for when the economy will stabilize for their households have been pushed further into the future. Nearly two thirds think that their households will not see a stable financial situation for at least two or three years, it said.  On the positive side, Americans’ views on current economic conditions and the outlook for their own personal financial situations are improving or holding steady, the survey said.  Twenty-four percent said that the local economy where they live is good or excellent, which is up from 19 percent in March, the report said.  “The big question is, could the gloomy news become a self-fulfilling prophesy, prompting consumers to restrain their spending, thus hurting the economic recovery?” he added.

Inventories up, sales down

A NAR practitioner survey shows that first-time buyers purchased 43% of homes in June, down from 46% in May. Investors accounted for 13% of sales in June, little changed from 14% in May; the remaining purchases were by repeat buyers. All-cash sales were at 24% in June compared with 25% in May.  Total housing inventory at the end of June rose 2.5% to 3.99 million existing homes available for sale, which represents an 8.9-month supply at the current sales pace, up from an 8.3-month supply in May. Single-family home sales fell 5.6% to a seasonally adjusted annual rate of 4.70 million in June from a level of 4.98 million in May, but are 8.5% above the 4.33 million pace in June 2009. The median existing single-family home price was $184,200 in June, up 1.3% from a year ago.  Single-family median existing-home prices were higher in 10 out of 19 metropolitan statistical areas reported in June in comparison with June 2009. In addition, existing single-family home sales rose in 12 of the 19 areas from a year ago while two were unchanged.  Existing condominium and co-op sales slipped 1.5% to a seasonally adjusted annual rate of 670,000 in June from 680,000 in May, but are 20.5% higher than the 556,000-unit pace in June 2009. The median existing condo price was $180,100 in June.

Bush did it … another perspective

In office 18 months, Obama is still running against the policies of George W. Bush and cites “nearly a decade of not paying for key policies and programs” such as the wars in Iraq and Afghanistan, big tax cuts and a costly Medicare prescription drug program.  Bush came to office with a $236 billion budget surplus in 2001, says Obama. “The day I took office, eight years later, America faced a record $1.3 trillion deficit.”  But blaming the country’s economic woes on Bush tax cuts and spending is a stretch.  It ignores the fact that as recently as 2007, the budget deficit was just $162 billion — long after Bush’s tax cuts of 2001 and 2003 kicked in and spending on the two wars and on the Medicare program was in place.  Furthermore, the projected surplus reflected a continuation of the bubble economy of the late 1990s, when the stock market was soaring, high-tech businesses were on a roll and corporate profits were surging. Those surpluses would have evaporated no matter who became president in 2001.  The rise in the annual deficit from $162 billion in 2007 to over $1 trillion now is largely due to collapsing tax revenues from the recession that began in December 2007, and stimulus and bailout spending by both Bush and Obama, said Brian Riedl, a budget analyst at the Heritage Foundation.  The Bush tax cuts and other policies are “a convenient scapegoat for past and future budget woes,” he said, but can’t be blamed for today’s trillion-dollar deficits — or future ones.  “Over the next 10 years, virtually 100 percent of the rising deficits” will be driven by “entitlement” programs such as Social Security, Medicare and Medicaid and interest payments on the $13.2 trillion national debt, Riedl said.

Olick – don’t be fooled

“Don’t be fooled by the little uptick in home prices in today’s Existing Home Sales report from the National Association of Realtors.  Even the always glass-is-half-full chief economist Lawrence Yun made clear several times in the briefing before the report’s release, that he expects home prices to come under significant pressure over the coming months, as inventories rise.  The report today showed inventories up 2.5 percent to 3.99 million units. At the current sales pace, that represents an 8.9 month supply. The current sales pace ticked down 5 percent in June, even though those numbers are still under the sway of the home buyer tax credit (remember, EHS represent closings in June, so contracts likely signed in April before the credit expired).  But more importantly, the Pending Home Sales Index, which represents contracts signed, fell off a cliff in May, down 30 percent, indicating that closings will be way off as well.  Bottom line, experts who follow housing are having a hell of a time predicting just where home prices are headed nationally.”

“A new monthly report, Macro Markets Home Price Expectations, a venture by price guru Robert Shiller, found that the results for 2010 vary widely, anywhere from plus 4.9 percent to minus 12 percent. “In July 60 percent of the panelists projected negative home price growth for 2010,” writes Shiller in the report. The longer-term results, however, were less optimistic.  “Although still positive, the average outlook for five-year cumulative home price appreciation fell in July for the second consecutive month, and is now in single-digit territory,” writes Terry Loebs, MacroMarkets Managing Director. “This new consensus suggests a less robust housing recovery scenario – one that, all other things equal, would result in U.S. household wealth by year-end 2014 being about $500 billion less than the level implied by the average of panelist responses just two months ago.”

Now for our real estate education section…

Friday File – 15 Minute Short Sales Resolution…is Your LinkedIn Profile a Liability?

For this week’s 15 minute short sale resolution, it’s time to take a critical look at your LinkedIn profile…specifically, your professional headline.

Face it, if you are like most people, yours probably leaves a lot to be desired. In fact, it might just be a liability if you tend to use it like most people. Find out how you measure up and how to transform your LinkedIn profile from a lackluster liability to a lightning fast lead with this quick quiz:

Question: Do you have a professional headline?

Response: If not, it’s time to get one…NOW!

Actionable Item: Assuming you have a LinkedIn professional headline, continue to the following questions…

1. Did you include a title in your professional headline?

and/or

2. Did you include the name of your company?

Response: Your headline probably needs work!

Gotcha right? Yes, traditional wisdom holds that you should include your name or the name of your company in the headline but is this always true? Let’s examine the wisdom of this little gem for someone named “Joe Smith”. Great name, easy to remember…even easier to forget. Oh yeah, and shared by a zillion others of the same name.

Likewise, title is meaningless. Are you a big title in a little company or a little title in a big company. Perhaps you have some really odd title that tells the reader next to nothing. See the point? Plain and simple, titles and names don’t always mean a lot. So, what should you do to make a great professional title?

3. Explain what you do and why the reader will care. Use a bit of flair and keep it short and simple. Use the WIIFM approach to explain “What’s in it for me?” to the reader. Not sure how to write a great professional headline? Check out our free webinar or other social media marketing for real estate and short sales to learn more.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

*************************************************
About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

Smart Real Estate News & Commentary by Chris McLaughlin July 22, 2010 

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Failed HAMP may benefit from HAFA

With the amount of canceled trial modifications in the Home Affordable Modification Program (HAMP) passing permanent conversions, some are anticipating that the Home Affordable Foreclosure Alternatives (HAFA) program will be more effective in keeping homeowners out of foreclosure.  As you’ll recall, HAFA was designed to give borrowers who failed to make those payments a chance at a short sale or deed-in-lieu of foreclosure.  Based on survey data of the eight largest HAMP participants, the Treasury found that 45% of the canceled trials from HAMP are in an alternate modification. More failed HAMP modifications could enter HAFA after falling into delinquency after the conversion into permanent status.

For modifications that have been permanent for more than six months, 6% have fallen into 60-plus day delinquency again. The default rate, or the percentage of modified loans that are now 90 or more days delinquent, is less than 2% at six months after the conversion. Cary Sternberg, president of Excellen REO, an asset management firm and subsidiary of Titanium Solutions, said that HAMP was designed for those who want to stay in their home, but as prices continue to deteriorate, more homeowners are looking for a way out, either through short sale or deed-in-lieu.  “Then comes HAFA. In recognition of the fact that some borrowers simply could not make payments even if the payment were lower, a more dignified exit strategy was created,” Sternberg said.  “It is too early to tell what the success rate of the HAFA program will be, but I am betting it will be far better than HAMP,” Sternberg said. “HAMP is a Band-Aid, HAFA is an exit strategy.”

Dodd-Frank Act bad for business

Surprise!  The Dodd-Frank Act signed yesterday by President Barack Obama could have a range of unintended consequences on the mortgage securitization market, according to various commentaries.  Standard & Poor’s (S&P) president Deven Sharma warned the legislation could expose rating agencies to greater liability for — and lawsuits over — ratings of mortgage-backed deals.  According to Barclays Capital analyst Joseph Astorina, Moody’s Investors Service, Fitch Ratings and S&P “have instinctively pulled back from the new issue securitization market until they are better able to asses this new liability.”  The law’s reforms concerning securitization are designed to remove the incentive of the “originate-to-distribute” model, according to a client alert from law firm K&L Gates. 

Other “unintended” consequences cannot be known until the legislation is enforced, noted accounting firm Deloitte in commentary.  “By way of example, a driving element of the law has been to address the ‘too big to fail’ issue, reducing the risk that large firms might take excessive risk because they are in effect guaranteed to be bailed out in the event of a failure,” the firm said. “But because this is an extremely complicated problem, no one actually knows what the consequences of the new law will be — the new systemic regulator will probably make this a central issue as it sharpens its mandate in the coming months.”

Jobless claims up

The Labor Department says there were 464,000 initial jobless claims filed in the week ended July 17, up 37,000 from a revised 427,000 the previous week.  The number of claims was much higher than expected. A consensus estimate of economists surveyed by Briefing.com expected new claims to rise to 445,000.  The 4-week moving average of initial claims, which is calculated to smooth out volatility, was 456,000, up 1,250 from the previous week’s revised average of 454,750.  The government also said 4,487,000 people filed continuing claims in the week ended July 10, the most recent data available. That’s down 223,000 from the preceding week’s upwardly revised 4,710,000 claims.  Economists surveyed by Briefing.com expected ongoing claims to edge lower to 4,600,000 from the unrevised 4,681,000 in the previous week.  The 4-week moving average for ongoing claims fell by 21,500 to 4,567,000 from the preceding week’s revised 4,588,500.

Commercial real estate coming back?

Analysts have been warning for months that commercial real estate could be the next shoe to drop in the subprime mortgage collapse that came to a head in 2008, but there may be some good signs in the thawing of securitization markets and indications that investors are ready to come to auction when properties are on the block.  Marc Halle, managing director of real estate investments for Prudential Financial executives, acknowledged that distressed conditions are likely to intensify in the market but does not expect to see “wholesale foreclosures.” Instead, real estate investment trusts could become a more attractive asset class in a slowing economy as interest rates stay low and REIT dividends remain solid.  The banks are expected to launch $1.4 billion in two offerings of commercial mortgage-backed securities, according to a report Wednesday in the Wall Street Journal, which cited sources familar with the planned sales. 

The offerings pale in comparison to the more than $1 trillion coming due in maturing debt over the next five years, but offer some glimpse that Wall Street may be getting back on board.  Uncertainty among borrowers regarding whether banks will go back to more normalized lending practices is at the root of criticism against the Frank-Dodd financial regulations that President Obama signed Wednesday.  Banking analyst Dick Bove, at Rochdale Securities, said there is a persistent rumor that the Federal Reserve is looking at loosening capital requirements. Bove, a harsh critic of the new law, said that would be a welcome development.  “It demonstrates that the Fed understands that it must help the banks so that the banks can help the economy,” Bove said in a note to clients. “It implies that the Fed will not be very hasty in putting into effect the onerous rules being mandated by the banking legislation. If the Fed truly understands this, the outlook for banking and, more importantly, the economy is beginning to change in a positive manner.”  Banks themselves have been voicing some slightly encouraging sentiment regarding the direction of commercial real estate.

20% of Americans suffered major economic loss

The new Economic Security Index, constructed by Yale political scientist Jacob Hacker and a team of researchers, estimates that 20% of Americans suffered a significant economic loss last year – the highest level in the past 25 years.  The Index looks at the interaction of three key variables that have a direct bearing on a person’s economic security: income loss, medical expenses and debt.  The ESI defines people as economically insecure when their situation meets two criteria. First, within a year’s time they have lost 25% or more of their available gross income. Available gross income is the money they have left over after paying for medical costs and debt. Second, they don’t have enough in an emergency fund or other liquid reserves to make up the difference.  According to the index, which tracks Census Bureau data since 1985, 12.2% of Americans were economically insecure in 1985. By 2009, Hacker and his team estimate that 20.4% of Americans could be classified that way. The actual number of people affected increased by more than half, from 28 million in 1985 to roughly 46 million by 2007, the last year for which hard numbers were available.  In the past, some economists, such as Stephen Rose of the moderate-progressive think tank The Third Way, have conducted research that counters the broadly negative view about how the middle class has fared economically over the years.

Now for our real estate education section…

How to Price Any Property for Maximum Profits

Although the classic definition of the “right price” is whatever a willing buyer is willing to pay a willing seller (yes, we know it’s redundant), pricing is also a value proposition. In order to price a property for maximum profits, it’s essential to understand how to communicate and evaluate the value proposition to both the buyer and the bank.

What to Measure

1. Capacity – Any given area or builder has a set capacity. The more less capacity, the higher the price assuming demand is in place. During the height of the real estate boom, savvy builders capitalized on desirable locale’s by creating a sense of urgency related to capacity…often to the detriment of the eventual buyers who later learned there was a glut of unsold condo’s or other properties waiting in the sideline. However, despite the recent decline in real estate, many markets and specific neighborhoods remain highly desirable with limited capacity.

2. First Offering – Closely related to capacity is the concept of “first offering”. Face it, everyone likes something that is “brand new” but have you ever stopped to ask yourself why? A new house or neighborhood is somewhat “unproven” but the excitement of being “first” tends to create anticipation that can be tapped into. Take a note from developers that routinely price high to create a sense of value, then discount to provide customers a sense of a “good deal”.

3. Enhanced Value – Everyone likes to feel like they are appreciated and nothing says “appreciation” like a free upgrade or other valuable service. Make a list of amenities included in the sale of the property and/or consider including a few low-cost additional enhancements. Popular ones include free lawn-care for a year, electronic device or home warranty.

What to Exclude

1. Acquisition Cost – Without a doubt, this is one of the most common mistakes made by novice investors; the tendency to use acquisition cost as a basis for the sales price of a property. As millions of Americans have learned, what you pay for a property may have little to no bearing on the eventual price of a property….good and bad. Although the media is filled with horror stories about people that paid too much for a property (of more often…obtained bad financial terms), there are equally impressive numbers of people that made a lot of money after paying very little for a property. Price the property based upon value…not acquisition cost.

2. Expenses – If acquisition cost is the most common errors, surely expenses are the next. The tendency to add up the cost of repairs, insurance, broker and agent fees, taxes and other expenses in order to derive a figure is outdated at best and limiting at worst. Again, price the property based upon perceived value rather than cost or expenses. It’s often possible to perform inexpensive upgrades that dramatically alter the appearance (and desirability) of a property for very little investment. Don’t deny yourself the benefit of a fully priced property if in fact, it’s possible to price higher.

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
–