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NAR seeks extension of government programs

Chris McLaughlin — Wed, 15 Jul 2009 01:48:08 +0000

NAR seeks extension of government programs

Real Estate News & Commentary by Chris McLaughlin, July 14, 2009

http://www.shortsalesriches.com

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

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NAR seeks extension of government programs

Testifying in a hearing titled “Commercial Real Estate: Do Rising Defaults Pose a Systemic Threat?” sponsored by the Joint Economic Committee of the Senate and the House, Jim Helsel, treasurer of the National Association of Realtors (NAR) called for an extension of government programs such as the Term Asset-backed Lending Facility (TALF) and the Public Private Investment Program (PPIP). Commercial real estate, which accounts for 9 million jobs and contributes billions of dollars in taxes, has been badly hit by economic downturn.

In the first quarter of 2009, office investments were down 75% compared to a year ago, while industrial sales volume dropped 83%. Helsel, in his testimony, said: “Delinquencies on commercial loans 30-plus days past due almost doubled from the first quarter of 2006 to the fourth quarter of 2008.” Helsel expressed dissatisfaction on the “slow and inadequate” response of the banks to the crisis. Commending the government on initiatives such as TALF and PPIP, Helsel said it is important to extend such programs in order to ensure liquidity and facilitate lending.

Retails sales rise for the second straight month

According to data released by the Commerce Department, retail sales rose 0.6% in June, after a 0.4% gain in May. Analysts say consumer spending, which is critical to economic recovery, is showing encouraging signs. “We’re seeing more signs that consumer spending is stabilizing,” said James O’Sullivan, an economist at UBS Securities. Sales of autos and auto parts rose 2.3% in June, the best performance since January. Excluding autos, retail sales rose by 0.3% in June. Consumers seem to be focusing on necessary items and looking for bargains. “Many middle-to-upper-income consumers are coming into our stores for the first time for their household needs due to the recession,” said Eric Schiffer, Chief Executive Officer of 99 Cents, which sells groceries, electronics and health and beauty items. Economists say jobless rate has to decline for consumer spending to show signs of sustained recovery. “Ultimately, we need to see improvement in the labor market to be confident that the spending gains will be sustained,” said Sullivan.

Goldman Sachs reports blockbuster quarterly results

Goldman Sachs has reported a net income of $3.44 billion or $4.93 per share for the second quarter of 2009; surpassing the $3.65 per-share average estimate of 22 analysts surveyed by Bloomberg. Goldman’s performance was bolstered by strong trading and stock underwriting performance. This is the highest ever quarterly net income reported by Goldman so far. The profit was impacted by a one-time $426 million charge due to repayment of $10 billion in loans from the Troubled Asset Relief Program. “Goldman’s got a sweet spot in here, they were the go-to players,” said Peter Sorrentino, a portfolio manager at Huntington Asset Advisors. “For the time being, they’ve got kind of an open playing field all to themselves.” Goldman’s results have tremendous significance given the bank’s status as the fifth largest bank by assets, and the largest surviving investment bank. The share price of Goldman Sachs has risen 77% since the beginning of this year and has almost tripled from a low of $52 last November.

Downgrades on the rise

According to Standard & Poor’s (S&P), ratings on 15 companies were downgraded to “junk” in June. This is the third highest total since 1987. Ratings of 60 issuers pertaining to debt worth $209 billion have been changed to junk so far in 2009. About 75 issuers with a debt of $255 billion are close to becoming junk. S&P has downgraded 19 banks and financial institutions to junk this year. The financial sector holds the dubious distinction of witnessing the most number of downgrades to junk status this year. S&P says some 17 financial institutions are close to becoming junk. Nouriel Roubini, an economist known for dire predictions, believes that default on corporate bonds will increase significantly. “Once a severe recession is underway a massive wave of corporate defaults will take place,” says Roubini. “In a typical year US corporate default rates are about 3.8% (average for 1971-2007); in 2006 and 2007 this figure was a puny 0.6%. And in a typical US recession such default rates surge above 10%.”

Proposal to introduce surtax on wealthy to fund healthcare

Analysts say the House Ways and Means Committee is likely to propose a surtax on incomes exceeding $250,000 as a source of funding healthcare costs. The surtax may not find favor with Republicans. “The surtax is obviously more attractive to Democrats in the House because it’s more progressive, which they find attractive in and of itself,” said Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities, a research group. Matthew Beck, a spokesman for the Ways and Means Committee, without commenting on the surtax option, said that “everything’s on the table.”

Analysts say there are 4.3 million U.S. households filing tax returns earning more than $200,000. The surtax is likely to be levied on income, before deductions such as mortgage interest and charitable gifts. Some are worried about the impact of surtax on small business owners whose business incomes get taxed on their individual returns. “With unemployment nearing double digits, we need to help small businesses grow and create jobs, not squeeze the life out of them with even higher taxes,” said Michael Steel, a spokesman for House Minority Leader John Boehner.

Now on to our real estate investor education section…

Information Seminar – Short Sales Marketing Made Easy

Every successful short sale entrepreneur will tell you the secret to their success is less about some extraordinary marketing ability but rather their ability to identify good prospects. One of the best ways to do this is to employ multi-stage marketing in the form of a seminar.

Creating a short sales information seminar or class allows you to identify high potential prospects as well as expand your center of influence in the local community. Rather than purchasing out of date lists or running blind ads, having the direct and undivided attention of those seeking to sell puts you face to face with motivated clients. At a minimum, be prepared to cover the following topics:

How to sell your home fast even in a down market.
Traditional sales – MLS, fees, repairs, time and other considerations.
Options when you owe more than your home is worth.
What happens when you can’t refinance – other alternatives.
Short sales versus bankruptcy, foreclosure and just “walking away” including the pros and cons of each decision from a personal, tax and practical stand-point.
Who benefits from short sales.
Why banks and lenders like short sales.
How to determine if a short sale is the right opportunity.
How to find a short sale investor.
What to expect and when.
How to spot frauds from the “real deal”.
Resources & References
How to get a free evaluation of your property.

Sort. Based upon your criteria, eliminate prospects that do not meet your criteria while encouraging those that do to meet individually with you or your representative for a follow-up visit to discuss their specific situation.
Meet & Debrief. At this point you should be in a position to begin bargaining in earnest should the opportunity meet your expectations. Find out what needs and objections are to be dealt with and be prepared to act swiftly.

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.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 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 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
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Add me on Facebook: http://www.facebook.com/mclaughlinchris

Caution is the watchword for potential home buyers

Chris McLaughlin — Thu, 09 Jul 2009 14:36:06 +0000

Caution is the watchword for potential home buyers

Real Estate News & Commentary by Chris McLaughlin, July 9, 2009

http://www.shortsalesriches.com

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

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Caution is the watchword for potential home buyers

According to a survey conducted by Realtor.com, home buyers in the U.S. are hesitant to jump into the housing market, given the current economic downturn. Nearly 53% of the survey participants said they have postponed their home plan on account of their negative outlook. Uncertainty on the job front was the main factor for not buying a house for nearly a third of the survey participants. Nearly 16% said they worry about selling their current home, while 8% said they fear home prices will keep falling. Home buyers recognize that the housing market currently offers great deals; however, financial worries far outweigh attractiveness of the deals available. Nearly 20% said they were interested in foreclosed homes with an attractive price, while nearly 15% said they want to receive incentives such as the $8,000 tax credit for first-time buyers. Errol Samuelson, president of Realtor.com, said buyers feel that purchasing a foreclosed home is more “complex” than other transactions. Among the survey participants, only 28% said President Barack Obama’s plan to tackle the foreclosure crisis is working, compared with 41% who said it isn’t and 27% who didn’t know.

12 plead guilty in $100 million mortgage fraud

New York City prosecutors have charged 25 people, including lawyers, bankers, mortgage brokers and appraisers, and a mortgage company, with committing mortgage fraud. Robert Morgenthau, Manhattan District Attorney, said AFG Financial Group Inc. (AFG) and its accomplices inflated property values, created phony loan packages, forged W-2 forms, and bank documents to get loans from banks for unsuspecting buyers. Buyers did not know that the transactions were a sham. AFG, through its attorneys, would ask that the mortgage money be deposited in escrow accounts. Instead of paying the seller, AFG would take the money for itself. “These attorneys often did not meet or communicate with their so-called clients until the day of the closings … and were paid off by AFG for their efforts,” Morgenthau said. Buyers were left with bad credit while the lender foreclosed the seller’s property and took ownership. Banks which were cheated include New Century Mortgage Corp., which lost $32.2 million; Countrywide Home Loans, which lost $7.9 million; and Washington Mutual, which lost $8.6 million. “This is one of the reasons for the mortgage crisis,” said Morgenthau. Among those charged, 12 have pleaded guilty. All those convicted face up to 25 years in prison.

Analyst says AIG’s equity value could be zero

Joshua Shanker, an analyst at Citigroup, says American International Group (AIG) will have no value left after repaying bailout funds. “Our valuation includes a 70% chance that the equity at AIG is zero,” said Shanker. AIG has received over $182 billion as bailout funds from the government so far. Edward Liddy, the outgoing chief executive officer of AIG, said last month at the firm’s annual meeting that the company has an “excellent chance” of repaying the government. Liddy had earlier informed the Congress that the company can pay back bailout funds within 5 years. AIG said last week that its recent losses in derivates could have a “material adverse effect” on its results. “The company has not been forthcoming about the sequence of events that would result in a loss,” Shanker said. “Even a proportionally small loss could be significant.” The outgoing CEO has been under pressure to sell some of AIG’s assets to repay government funds. “The CEO’s motivation and ability to lead may be compromised by his preparations to transition the company’s top seat to another,” Shanker said.

Monthly retail sales data denotes weakness in consumer spending

Retailers, across segments, posted weak monthly sales in June on account of continuing unemployment and rising gasoline prices. Merchants such as Limited Brands Inc., teen merchant Wet Seal Inc. and The Children’s Place Retail Stores Inc. reported poor sales figures. Low-priced retailers too were not spared. Costco reported a sales decline of 6% compared to a year ago. “Consumers are under severe pressure on the job front, so discretionary spending is just not happening, “said Ken Perkins, president of Retail Metrics, a consultancy. “This is not setting up well for the back-to-school season.” Customers continued to trade down to essential goods. Costco said food was among the categories which exhibited strong sales. Recession has taken its toll on consumer spending. “Obviously, the consumer has been under severe pressure here throughout this recession,” said Perkins. “There just were no catalysts for consumers to spend in June.” Weather also played spoilsport. Consumers buy items such as light clothing and beachwear in June which marks the onset of summer weather. However, this year, June had a cool weather with record rainfall in cities like New York, Boston and Chicago. As a consequence, consumer interest for summertime merchandise dropped significantly.

UBS caught in diplomatic row

The U.S. government believes that the Swiss bank UBS has about $15 billion in secret accounts meant to evade taxes in the U.S. UBS says it cannot reveal the identity of its account holders on account of Swiss banking laws. Switzerland has made it clear that it would prevent UBS from revealing the identity of account holders. “Switzerland will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS,” the Swiss government said in a response to U.S. authorities. Analysts believe that this issue souring diplomatic relations between the U.S. and Switzerland. Alan Gold, a district judge in the U.S., has asked the U.S. Justice Department if the government will shut UBS in the United States if the bank does not provide information on its account holders. The Justice Department will have to be careful in answering the judge’s question. “They’re going to have to be very delicate and thoughtful in terms of how they respond to this,” said Peter Hardy, a partner at the Post & Schell, a law firm.

Now on to our real estate investor education section…

Top Reasons Short Sale Investors Get Side-Tracked

Sooner or later you are likely to encounter a potential short sale investor filled with anticipation, eager to get started and checkbook in hand…who dwindles away with little to nothing to show. Find out the top reasons short sale investors get side-tracked and what actions are required to get back into the race.

False Start. The excitement of doing something new overrides their discipline and true desire for success. Plain and simple, they don’t have realistic expectations or the knowledge to get the job done right. Start slow and invest in success by acquiring proper training, surrounding yourself with the right professionals and expect to confront a few bumps now and then.
Justification. These would be investors tend to be cautious and perform well once they convince others it is the right track. Unfortunately, it can be tough to justify your position to everyone around you. If you need to prove your position before moving forward, either take the time to crunch the numbers in more detail or do a reality check on your readiness to invest. Having someone agree with you might feel good but does little for your bank account at the end of the day. Learn how to rely upon yourself rather than the opinions of others.
Guilt. Paying for Past Mistakes can be a long and difficult journey especially if you are involved with someone that simply wants to “punish” you. Recognize that investment involves elements or risk and reward then move forward. Make what amends you can then walk away from the issue once and for all. Remember, investing is about the future –not the past.
Recruiting. Investing isn’t like joining a golf club; there are very real reasons why it can be good to go it alone. This doesn’t mean you can obtain expert advice and surround yourself with professionals – that is always a good idea – but it does mean you are able to move forward without having half your friends and associates involved. Set the pace and believe us, they will show up once the profits begin rolling in!
Going it Alone. Likewise, trying to do everything your self is another major reason many short sale investors get side-tracked. It’s simple too much to handle alone. In fact, even if you are able to do so for a short period of time, it’s not always the best use of time. Establish a process that makes the most of your valuable time with the greatest possible reward then hire out or subcontract the rest.
Avoidance. Those that attempt to avoid all risk will rarely experience anything but the most limited gain – if not actually increase their total risk. It’s one thing to inform, educate and prepare yourself but quite impossible to avoid risk altogether. The reality is this is fear of the unknown which you are weighing more heavily than fear of that which is familiar…sadly, that isn’t always the least risky. Something familiar might initially seem harmless but in reality can be deadly. The same goes for finances – inflation can erode away even the safest investment making it the most risky route by far

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

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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.

running 4 different offices, supporting nearly

450 agents, uniquely positioning him to help

thousands of investors make money in the