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Are you ready to get 2009 rolling?  Then it is time to come to our LIVE “Recession Proof Real Estate Investing” webinar tomorrow, Saturday, at 4 PM ET and 1 PM PST! 

https://www2.gotomeeting.com/register/521115603

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GMAC Financial Services got a huge Christmas present this week when the Federal Reserve approved its application to become a bank holding company, thereby enabling it to tap into $700 billion of TARP rescue funds.  Not only will GMAC be able to tap into the bank stabilizing funds, it will also be able to borrow from the Fed’s discount window for virtually no interest. 

Somber retailers took note that the Grinch showed up this holiday season.  According to Mastercards’s SpendingPulse division, total retail sales dropped 5.5% in November and a whopping 8% in December as most Americans kept their money in their bank accounts.  Luxury items were hit the hardest, with a drop of 35%, while electronics dropped 27% and women’s apparel slid 23%.  But there was so positive news from retailers, but it just so happened to be online…

There’s more proof that Americans are tired of crazy malls and rude drivers that steal your parking spots: Amazon.com announced that its 2008 holiday season was its “best ever.”  Get this: orders came in at a record-breaking 72.9 items per second! 

Here are some pretty cool amazon.com holiday facts they released today:

• Amazon.com sold enough “Breaking Dawn” books that stacked end to end they would reach the summit of Mt. Everest eight times.
• During the period from Nov. 15 – Dec. 10, Amazon sold one copy of Microsoft Office Home and Student 2007 every 2.5 minutes.
• The weight of all GPS devices sold from Black Friday through December equals the combined weight of 151 Mini Coopers.
• Amazon sold enough high-performance headphones that everyone attending the last three Super Bowls could grab a set and rock out.
• Amazon Grocery sold enough coffee to give each resident of the highly caffeinated city of Seattle a cup per day for two months.
• Amazon sold enough Casio G-Shock watches to outfit every Kanye West fan attending the 2008 Glow in the Dark Tour concert at Madison Square Garden, N.Y.
• Amazon sold enough Coldplay CDs that laid side by side they’d stretch from Seattle to Violet Hill (a street in London and the album’s first single) and more than halfway back.
• Amazon sold enough Munchkin Mozart Magic Cubes to fill every seat in the Sydney Opera House five times over.
• Amazon sold enough Wild Planet Hyper Dash games that the total weight of sets sold is over 81,000 pounds — almost the size of two 747 aircrafts.
• Amazon sold enough Spalding basketballs to fill three C-130 cargo planes.

Now, on to our real estate education section…

The Misery Index and Short Sales Negotiations

The Misery index is derived from taking the unemployment rate and adding it to the rate of inflation to gauge the economic and social climate of the nation. The higher the misery index, the more negative and desperate the average consumer tends to become. The low was 2.9 percent in July of 1954 with the high reaching 21.9 in June of 1980. Today the misery index stands at 7.77 and rising as of the end of November 2008.

So, how should short sale investors use this information? Well, in a couple of ways. First of all, watch the macro trend…as the index increases so too does the uncertainty of the average American consumer (and by proxy, business owners). Their spending habits tend to decrease and they often start to save for a rainy day.  People, business owners and even banks in this stage tend to think it is short-term and less inclined to negotiate more than a minimal reduction.

Next, watch for a shift. The second stage takes place as momentum builds and the rate of change increases at a faster and faster pace. Uncertainty gives rise to outright fear as people begin to worry about their own job or financial future. Banks and business owners begin to think this could last longer than expected and begin to pad their own balance sheets for the long run. There is a decidedly motivated response to downsize unnecessary assets, overhead or other non-performing holdings.  Short sale investors will find these individuals and banks much more motivated especially if approaching with fast closing and minimal escape clauses. The emphasis of 90 percent (or more) of people will be a flight to “safety” during this  stage as evidenced by the purchase of government bonds or other items that provide little to no real return.

The third and final stage is recuperation. Banks, investors and others realize the properties or other holdings were now over-sold and represent financially desirable long term investments. Even more importantly, there is a renewed interest in actual earnings due to the erosion of real earning power. Every short sale investor will do well to remember that earned income represents only a relatively modest allocation of most income…over the long term few people can actually live entirely on their own earned income. At this point, the money tends to flood into tangible assets and commodities including oil, real estate, farm and agricultural lands or products, oil, minerals, natural gas and other related holdings resulting in rapidly rising prices…and profits for those with the foresight to buy during stage two.

So, where are we today…most experts agree we are now transitioning from stage one into stage two making this the perfect time to begin buying foreclosures and short sales in earnest.  To keep track of where the misery index is heading, visit http://www.miseryindex.us/default-pda.asp at least quarterly. 

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See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.S.:

Are you ready to get 2009 rolling?  Then it is time to come to our LIVE “Recession Proof Real Estate Investing” webinar tomorrow, Saturday, at 4 PM ET and 1 PM PST! 

https://www2.gotomeeting.com/register/521115603

——
Are you ready to crack the law of the lid?  Are you ready to get serious about your business and wealth heading into 2009?  If so, you have to go now and watch Nathan’s youtube video!  Leave some comments on it …this is AMAZING to watch, and all TRUE:

http://www.youtube.com/watch?v=KQu75ne01Vg

After you’ve watched it go here and learn how to make serious money in a recession:

http://www.webinarwizards.com/custom/index.cfm?id=169716

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Financial markets were a bit jittery in early morning trading as new unemployment claims jumped to 575,000, much larger than the 525,000 that was expected by Wall Street analysts.  This is the largest level of jobless claims since 1982 and represents a 26 year high.  The government attributed the unusual jump to administrative catch-up after the Thanksgiving holiday but the 26 year high is what it is … a sign of the financial times. 

Mastercard’s SpendingPulse, a division that monitors consumer spending habits, reported that overall retail sale (excluding cars) dropped 5.5% to 295.3 billion in the month of November.    Meanwhile, the Wall Street Journal reported America’s Research Group/UBS found in a study of 1,000 people that 40.1% of those surveyed said they would spend less this holiday season that last.

And there’s some good news for Realtors and investors.  The CEO of Wells Fargo, John Stumpf, spoke at the Goldman Sachs U.S. Financial Services Conference and was optimistic about real estate sales.  “We’re not at the end,” he said. “My suspicion is there is some more to go.  But we’re starting to see some early signs that maybe we’ve reached the bottom in housing or close to it.”  Stumpf noted multiple bidders have come out to make offers on foreclosed properties. 

Now on to real estate investing information …

The Magic Money Formula

Don’t worry; we aren’t suddenly promoting some financial equivalent of snake oil that promises an overnight cure to all your financial woes. Instead, we are revisiting a formula first popularized by Dale Carnegie and recreating it for short sale investors.

One of the most difficult things many new to short sale and foreclosure investing encounter is the fear or inability to effectively communicate with potential sellers, banks and other stakeholders. Fortunately, it is easy to improve your communication skills with just a few simple steps.

Step One: Engage. It is important to engage your listener rather than informing them. While education is important, it also has a tendency to put people on the defensive if used too soon. Instead, tell your listener an interesting story that demonstrates the main point of your conversation. Be sure to use the word “because.” Research has shown people are twice as willing to do what is requested of them when the speaker simply provides a reason…in fact, even a bad reason will suffice although a good reason is even more effective.

Step Two: Direct. The next step is to outline what action needs to be taken. Use the K.I.S.S. approach (Keep it Simply Stupid) and be sure not to overwhelm your listener. Focus on the main objective or point of action needed and be as specific as possible without pushy. Most important of all, don’t assume your listener knows of understands your needs. Even other professionals may inadvertently forget or simply not put a priority on your plan of action if not specifically requested to do so.

Step Three: Benefit. The final step is to clarify how the listener will benefit as a result of your plan of action. Make sure you spell out all the benefits in detail beginning and ending with a big benefit. This part of the conversation should be all about “them” – not you. Don’t be afraid or apologetic about making a profit; after all, that is a reasonable expectation for a business transaction; instead, demonstrate that this is a win-win situation for all parties involved.

If your short sale investments are not as strong as they could be or if you find yourself hesitating before negotiations, try this formula for yourself. It’s deceptively simple yet effective.

See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.P.S.: Interested in making a bundle of cash without having to do any of the work?  If you can click the SEND button on your computer and introduce others to Short Sales Riches, you can earn thousands of dollars in one month!   One affiliate was paid over $12,000 last month alone!   All the information to sign up as an affiliate is right here:

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