What do you call cutting out part of the marketplace to support a special interest. If it was done in the private sector the government would be screaming cats and dogs and investigators will be running rampant.

But when the Federal Government cuts a deal to remove the private sector from the market they call it progress… You have to be kidding me!

The Obama administration said Wednesday local officials could benefit from acquiring these properties and renovating them or using the land for redevelopment projects. Congress has provided $7 billion to buy the homes, but these groups are struggling to spend the federal money because they are often outbid by speculators who are snapping up foreclosures.
“The fear is that they will purchase the property, make very minimal to no improvements on it, and either put it back on the market as a rental unit or let it sit waiting for the market to come back,” said Sarah Greenberg, senior manager for community stabilization at NeighborWorks America, a nonprofit housing group.
The administration says the largest mortgage lenders in the country, including Bank of America Corp. and Wells Fargo & Co. have agreed to let the groups purchase the properties ahead of private speculators. The neighborhood organizations will have up to 48 hours to evaluate them. via MSNBC

Essentially what we are witnessing is the collusion between government and the big banks, again. First the government takes our tax money and gives to to the banks in the form of a bailout. Then, they take more of our money and then allocates it to “special interest groups” to buy the foreclosures.

But the evil private sector is still bidding up the property values so the special interest groups are  unable to buy the properties. Could it possibly be that they have value beyond what those who feel entitled to your money are willing to pay? Instead of partaking in the marketplace we have collusion happening.

So who gets screwed in the deal?

• Investors – Instead of buying the properties and returning capital to all parties, they are being pushed out of the marketplace.
• Contractors – They will not have the opportunity to fix up these homes. Remember Cash for  Clunkers? Because of it used car prices are much higher and inventory is down. Everyone loses in both situations.
• Renters  – Now  inventory is removed from the marketplace and either is destroyed or is under nominal government control.
• Bank Stockholders – Remember them? They have take a loss on the properties intially through foreclosure and now will be forced by the government to sell the homes at a discount to those favored by the govermnet.

There is a collusion going on between Big Government, Big Labor, and Big Business folks. That is why main street and the small business community is so worried. All regulation and government intervention is aimed at helping this triumpherant at the expense of the entrerpeneur. If you want to learn more about this, read Michael Barone’s article here.  

This is not good for America.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

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A new survey just released shows that 3 out of every 4 American’s have been affected by the recession.

The report, prepared by Rutgers professors Carl Van Horn and Cliff Zukin, find that 73% of Americans have either been unemployed themselves (14%) or saw an immediate family member (12%), another member of their family (30%) or a close friend (17%) lose a job. via the Huffington Post

Sobering news for sure, but since this is a real estate blog the question that comes to my mind is this;

What is the best way to model my real estate business to handle today’s clients?

We can all be optimists and expect things to turn around next quarter, but when our future clients are feeling this pessimistic that does not make a whole lot of sense. And let’s be honest, there will still be millions of homes sold in the coming year. But to be a great real estate salesperson these days you need more than a business card and a smile.

Here are a couple bits of advice that I have to offer.

1. Be Honest and Realistic – Let’s face it, between the advertising by the NAR and other agents, there is a great deal of scepticism amongst the general public over optimistic pronouncements by real estate agents. Most people put real estate agents in the same level of trust as used car dealers and Congressman.

However, coming to a client with an honest and accurate portrayal of the market will get you good clients. Maybe not as many clients as someone else will be eager to blow smoke up their tailpipe, but  the ones you will get will trust you and work with you. And when the deal is done they will not feel used. In fact, this is the best way to get recommendations.

2. Understand Where The Seller is Coming From – Most people in this market are going to have a very good reason why they are selling. The days of moving to lock in equity are gone for now for most people. Typically there is a life changing event that is causing the move and it is not always because of the fear of losing the house. If the seller is moving to a new market for their job, research the market where they are moving too, it may have also taken a hit with their housing prices and you can explain why selling the home for less than they expected quickly is a much smarter move in the long term.

3. Be Empathetic – If your seller is a short seller or trying to get out of the home because they are unemployed, show empathy. Leave your sympathy at the door as it is a wasted emotion. Being empathetic means you understand the pain the seller is going through but you also are part of the team and will work to alleviate the suffering.

Folks, 5 years ago your typical clients were optimistic and eager. Now they are more likely to be scared and paranoid. To be a great agent you need to spend the time to understand the client, provide amazing service and communications, and be a trusted source of honesty.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

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Back in 2008 as property values were plummeting one thing was going up. Your property taxes. Local governments were on a spending binge on the tax money that had been pouring in as property values continued to rise.

Property taxes were the Golden Goose for local politicians and they could not believe that the goose was dying.

According to census data recently released, in fiscal year 2008 (July 2007–June 2008) property taxes rose 4.2 percent as home values fell 16 percent.

For those of us in the real estate business, this was a jarring disconnect. So many families were watching their equity in their home

s disappear or go upside down, yet the politicians were looking to fill their bloated pocketbooks even more without a clue on how it was affecting the population. Florida, Indiana, and New Mexico had the nerve increased their property taxes over 10 percent in the year.

Here is a list from the census bureau of the top 10 states that raised their taxes the most in fiscal year 2008.

Top 10 States With the Largest Property Tax Increases in 2008

Rank    State           Increase        Per Capita Tax

1       Florida         11.7%           $1,649
2       Indiana         11.6%           $1,089
3       New Mexico      10.2%           $568
4       Hawaii          9.7%            $977
5       Nevada          9.2%            $1,241
6       Alabama         9.1%            $495
7       West Virginia   8.7%            $683
8       Oklahoma        8.4%            $582
9       Minnesota       7.6%            $1,273
10      California      7.6%            $1,449

via the Tax Foundation

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

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Fannie Mae is taking a dim view of mortgage borrowers who try to scam the system by taking out new loans while their mortgage is being processed. Typically banks will check your debt to income ration in the beginning of the application process.

Some borrowers took that as a green light to add debt right after they qualified for the new loan. Now banks will be expected to monitor for new debt or take out a 2^nd credit report just before the mortgage closes.

It is a smart move for both lenders and borrowers alike to have this check in place. Banks know what kind of debt limits families can live with, and what debt limits get them in trouble. The limits are a protective layer for all involved. To circumvent them will give the homebuyer a short term gain, however the long term pain will be felt for a long time to come.

So I applaud Fannie Mae for this move. It is an example of smart lending and good for all parties.

Although Fannie made no reference to specific services in its recent clarification letter to lenders, some commercially available programs claim to be able to monitor mortgage borrowers’ credit activities on a 24/7 basis, flagging such things as inquiries, new credit accounts and previous accounts that did not show up on the credit report that was pulled at the time of initial application.

One of those services is marketed by national credit bureau Equifax and dubbed “Undisclosed Debt Monitoring.” Aimed at what Equifax calls “the quiet period” between application and closing — often one month to three months — the system is “always on,” the company says in marketing pitches to mortgage lenders.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

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The Housing and Urban Development Secretary Shaun Donovan has announced that a new emergency loan program for homeowners is on it’s way. There have been no details announced with the program, but it looks like the White House feels it needs to respond to the poor housing numbers with another program.

The Obama administration plans to set up an emergency loan program for the unemployed and a government mortgage refinancing effort in the next few weeks to help homeowners after home sales dropped in July, Housing and Urban Development Secretary Shaun Donovan said.

“The July numbers were worse than we expected, worse than the general market expected, and we are concerned,” Donovan said on CNN’s “State of the Union” program yesterday. “That’s why we are taking additional steps to move forward.”

The administration will begin a Federal Housing Authority refinancing effort to help borrowers who are struggling to pay their mortgages, and will start an emergency homeowners’ loan program for unemployed borrowers so they can stay in their homes, Donovan said. via Bloomberg

Of course, the housing numbers fell because we are in the hangover from the last “bailout by the Federal Government of housing financing, the new homeowner tax credit. But that was so yesterday.

Instead, let’s belly up to the bar and have another round of taxpayers money to get the housing party started.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

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