Are you responsible for the Financial Crisis and the consequential Government bail out, or the state of the current national and Florida Real Estate market? Are you responsible for Foreclosures and Short Sales.
In recent weeks volumes have been written regarding state of the real estate market and its impact and cause of the financial crisis. The purpose of this article is not to explain in detail or dissect the cause of whose is responsible however it is to open a discussion on one very important aspect that few are talking about.
Due to my education and business experience I have said many times that the real estate market is an economic market and as such the laws of economics apply. Excess supply and low demand drives prices down. In general buyers worry that the prices will continue to fall and they are reluctant to make commitments to purchase. The continuing lack of demand exacerbates the over supply problem and it is a downward spiral. This raises the question what is the market value for property, defined as what a buyer is ready and willing to pay.
In the absence of buyer’s confidence and sales, the question of how to value any property is extremely difficult. That creates the liquidity the problem that banks and financial institutions are experiencing. What is the value of the bundles of mortgages they are holding? Without a clear way to value these holdings investors are reluctant to purchase these bulk packages of mortgages again causing a downward spiral.
My opinion of what is causing the over supply is as follows:
First, the cost of home ownership has risen dramatically due to rise in energy and insurance costs. Owners that purchased based on marginal affordability put their homes on the market in an effort to stem the financial bleeding.
Second, the number of rising completed foreclosures dump bank owned properties on the market at sacrificial prices that undermine the value of other properties in the area.
Third, the number of “Possible Short Sale” listings has exploded.
I find this last reason as the most disturbing. The definition of a short sale is when a property owner has a buyer ready, willing and able buyer to pay a price less then what the lender is owed. Short sales are not new to this market. They have always existed but to a much lesser percentage of the total homes for sale. If a borrower has a life changing hardship such as a death of the primary income earner, or a serious and sudden health issue, or a change in family status such as multi births of divorce, personal bankruptcy or even a business failure, it is prudent to the lender to consider accepting less than what they are owed to avoid a lengthy and expensive foreclosure process to clear the loan from their books. However there is no language or implication in a mortgage document that if the real estate market prices fall that the lender should share the risk and the pain.
Yet I continually experience intelligent owners saying that the property is now worth less than I owe so I will list the property as a possible short sale and ask the bank to be my partner in the loss of equity. This thinking is so immature and ridiculous that it is almost funny. In fact, I sat in front of one owner the other day explaining the short sale process and the fact that he has income and assets and just because the market dropped does not make him a good candidate for a short sale. The CNBC news was on the television in the back ground and he asked me my opinion of the United States of America government bailout of financial institutions. That is when a light bulb went off in my head and I came to the conclusion that owners who did not read or understand their mortgage document to know that the loan was not predicated on the value of the property staying stable or continuing to rise, who have no legitimate hardship are artificially increasing the supply of property in the market. While this is not the sole reason for the increase of supply it adds a very dangerous incremental component to the total inventory available and drags the market further down making the situation worse.
I strongly recommend that property not be listed or advertised as a short sale unless the lender has been contacted, presented with a short sale package, has agreed that no other restructuring of the loan is possible and is willing to entertain offers on the property.
I am not naïve enough to be suggesting that this will solve the entire Financial Crisis and collapse of the real estate market, but I do believe it is a first step and an important element of stabilizing the excess inventory.
About the author
Business Management Degree from Fairleigh Dickinson University. Over twenty five years of Senior Sales and corporate management in the Consumer Electronics Industry. Real estate license in California for eight years and a real estate sales license for 3 years and a brokers license for the past year in Florida.
As real estate market softens, players need to adapt
Ben Bernanke, chairman of the Federal Reserve, was more opaque. In congressional testimony, Bernanke said, "the downturn in the housing market so far appears to be orderly." In classic Fed-speak, Bernanke managed to simultaneously soothe -- and unsettle -- his rapt listeners. An "orderly" real estate downturn sounds OK, right? But what about "so far"? What does that mean in practical terms for people who need to sell a house in the coming months? Could things unravel? And what about buyers -- could the property they buy be worth less a year from now? Part of Bernanke's job description is to avoid specific predictions at all costs, so you won't get answers out of him anytime soon. But top housing economists such as Berson are paid to make specific projections and he offered them July 20 in a midyear forecast teleconference with Wall Street analysts. Here is part of what he said, followed by some thoughts on what it all might mean for prospective sellers and buyers, or those already in the marketplace. Berson thinks the Federal Reserve "is not done tightening" the ratchet on interest rates, and will move up short-term rates once again this month. After that, rates are likely to stabilize, bringing at least a temporary cessation to rising home mortgage rates. He expects average home price appreciation, which had been running at a double-digit annual clip nationally for the past year, to drop to 3 percent or below by the end of the year. (On this point Berson is more bearish than most of his housing and mortgage industry colleagues, who project average appreciation in the 4 percent to 6 percent range.) If speculative investors dump rental houses and second homes purchased during the boom years onto the market later in larger than expected numbers, Berson believes price appreciation could drop to a 1 or 1.5 percent annual rate -- a level not seen since the recession years of the early 1990s. Swaths of Florida In a handful of markets where investors accounted for large shares of boom-time property purchases and where price increases soared for years, Berson believes "there is a good chance of declines" in average home values. Though he avoided naming all of the markets that Fannie Mae worries about, he did identify San Diego and parts of California -- "though not all" -- plus large swaths of Florida "but not Orlando." Like many analysts, Berson says the weakest link in the housing market -- and the most vulnerable to price declines and investor dumping -- is the condominium sector. Many markets are glutted with unsold inventories of new and converted condo units already, and Berson is concerned that significant price corrections could be just over the horizon. The projections What to make of such sobering projections? Here are a few thoughts: • Neither Berson nor Bernanke foresees widespread property value declines as part of the current down cycle. Only in those markets where speculation was rampant in 2003-2005, and where job and population growth are anemic, are there risks of price declines. • Neither anticipates mortgage rates to rise significantly higher than today's rates, which are still on the low side by historical standards. As long as financing is available and affordable, buyers will find ways to purchase houses. • For all-weather real estate players, a flattening market means changing one's tactics, not burrowing away to hibernate until the market warms up. For sellers, it means getting acquainted (or reacquainted) with the toolbox of techniques developed during the down periods of the 1970s, '80s and '90s to move houses. For example, seller financing, where you take back a second note on concessionary terms to push the sale, take back a first note if you can afford to, or "buy down" your purchaser's interest rate to lower monthly payments. Experienced real estate brokers can fill you in on these strategies, along with their pros and cons. They can also guide you on how to price realistically to sell now, not five months from now. For buyers, down markets often offer exceptional opportunities to acquire real estate at prices and on terms that were unthinkable just a few years before. Again, the message is: Don't go to sleep. To the contrary, get off your duff and scour the market for properties that may never be cheaper, or even available. Heads-up real estate is, as the industry adage goes, the art of the possible. You've simply got to adapt to the changed market conditions. And probably work a little harder. Kenneth Harney, president of a Maryland consulting and publishing firm, is executive director of the National Real Estate Development Center. Copyright © 2006 The Miami Herald, Kenneth Harney. Distributed by McClatchy-Tribune Business News.
Posted: 13 Mar 2010 10:06 PM PST
Short sales make up a significant amount of the inventory available on the housing market and they hold substantial opportunity for generating great profit, but there are some serious landmines in these transactions.
One of the biggest obstacles in buying short sales for maximum profit is the hurdle of educating and getting the Realtor in the deal to cooperate.
Like oil and vinegar, Realtors and investors have not exactly gotten along. They call us names like “bottom feeders” and “snakes”. They feel we are trying to “steal” a property or only submit “low ball offers”.
Yet in today’s marketplace the irony of the situation is that we as real estate investors now are needed to help clean up the mess. You see, because the foreclosure debacle has infected so many homeowners, the proverbial laws of supply and demand dictate the need for liquidators.
I love that term. I love being called in to salvage a deal. Why? Because being able to buy when the market is at the bottom means I can find great deals. Not good deals…great deals. However, the problem is dealing with inexperienced agents who are new to the liquidation game and don’t understand the market we are in.
We call agent after agent and read listing after listing and when we actually get someone on the phone we run into the same problems over and over again.
So in this post, in an effort to offer an olive branch to Realtors who actually want to get deals done, I am going to outline the reality of a short sale and what needs to be done to make sure the deal gets bought and approved by the bank.
Actually let me qualify that statement just a bit. I am going to outline what needs to be done in a short sale transaction if you want to have a successful closing and if you’re an investor…how to have a profitable one.
Most agents don’t want to do the work and take the necessary steps to make buying a short sale worthwhile. Many of my investor associates are simply bypassing the short sales on the market and are relying on the REO and auction markets to get the really good deals.
The reason being is that most agents don’t know how to work with investors and think that everything they hear is a “scam” or “illegal” or “unethical”. This is probably due to the fact that most of us who run an real estate investing business actually put our time and effort in learning how to get deals done, rather than following the crowd and doing just the opposite.
Do you think that I’m being a little bit harsh in my criticism? Well when the national averages in comparison look so wildly different, how can anyone dispute what I am saying? What numbers am I speaking about… well only 14% of short sales successfully close nationwide according to the National Association of Realtors, yet nearly 100% of REO properties close. Pretty revealing stats, you’d have to agree.
Which is made even weirder when you take into account that most short sales you call that are listed, seem to have a contract on them. So what happens? Why are these deals tanking? Are you really saying that 86% of the short sales that fail are the bank’s fault for taking so long? As a professional are you really saying that?
How about a little introspection and a modicum of ego reduction and realizing that you can probably increase your income 200%-300% if you just take the time to learn how to execute a short sale the right way.
So let’s identify some of the biggest problems with short sales failing and not not closing and what you as an investor needs to look for and what you as an agent need to learn.
1. Taking The Listing – While you can pretty much open your front door and find someone who is upside down on their mortgage, that doesn’t necessarily mean that all short sales are created equally. You need to recognize from the outset what kind of Buyer is even appropriate for your listing.
If the house is going to need some work and is missing some key items like a refrigerator, stove…or you know, something vital like windows, you may need to understand that unless you or the homeowner are going to effect some repairs, the property probably isn’t going to be “financeable”.
That means you probably need to be looking for a cash buyer. Yes, there are some loan programs out there that will finance homes that are unable to be financed, you are going to waste a lot of your time trying to fit the square peg into the round hole and then your deal blows up in your face and you’re left wondering how it happened. Well it happened because you did not realize the landmines in your deal.
For that matter, and to raise the closing ratio above the incompetent zone, maybe you should look at listing all of your deals as cash only. You may have to work a little harder but the foreclosing bank may take a lot better notice when you are submitting a cash offer.
Think about that for a moment. What kind of deals most appeal to you when you are selling conventional deals? When you get a cash offer doesn’t it make you seriously pay attention? Then why are you sending banks deals on short sales with a boat load of financing contingencies?
As an investor, make sure you either have cash or your hard money inline and start making cash offers. Hopefully more agents will see this and begin to understand the strength of an all cash offer over one with a financing contingency…even if it may be for less money!
2. The Listing Price Is Wrong – Nothing drives me nuts more than seeing incorrect listing prices on short sales. People listen up…YOU ARE NOW IN THE LIQUIDATION AND SALVAGE BUSINESS! You need to aggressively price your short sale listings.
In order to price your listing correctly it means that you have to be well versed in properly understanding the value of the property. I know that you have been taught to keep the price high and then expect offers below the list price, but that game is for suckers. It’s for losers and it’s a game that is long dead and buried.
It’s not difficult to price a short sale. All you have to do is look for the correct comparables and start your list price accordingly. We are seeing short sale listings priced as much as $100,000.00 OVER the actual value of the property.
It’s absolutely insane. Truly it is insanity. If the last 3 or 4 sales are in the $100,000.00 range, pricing your listing at $210,000.00 means you are setting yourself up for failure. If you are an investor and you run into this type of a deal, don’t even bother talking to the agent. Simply write down the address and check back in 30 or 60 days and get ready to buy the house at auction. It will definitely end up there. Unfortunately you may have to wait until it becomes an REO and buy it then.
But you can pretty much count on it being on the market in a few months! Agents, if you think I’m joking, check some of the real estate social networks out there and see how many agents are lamenting that the bank took a lower offer after declining their short sale. There’s a big reason why that happened.
We offer a course as that includes info on how to list a house and how to be strategic in pricing so I’m not going to go into great detail here, but suffice it to say that I can tell you in 200 plus deals that it has NEVER happened to us…and never will.
3. Short Sale Flipping Is Not Illegal And Can Be Highly Profitable – Yeah…I know that there are some scammers out there who try to game the system but done correctly it is absolutely legal. Agents, perhaps you should sneak away from the water cooler and learn the anatomy of a short sale flip. We’re going to be doing a case study on a short sale and it should give you great insight as to how such deals are structured.
As an investor, you should be trying to structure all of your short sale purchases as flips and the way to get them done is to find an agent who is willing to work with you and show them how you can legally and transparently help them make a ton more money.
We show agents that work with us how they can make as much as 15% of the purchase price and how they can do so with complete confidence that they are not doing anything that even remotely crosses into any aura of impropriety.
4. “The Bank Will Never Accept Your Offer” – Investors, if you hear this spoken from an agent, say thank you, hang up and look for another deal. The agent who mutters this statement has already screwed up this deal so bad that it is more than likely toast. In fact if you are a homeowner and hear your agent say this, you may want to start packing and ready the bankruptcy paperwork. You’re toast!
When we hear that from an agent it’s like a neon blinking sign of incompetence. The only statement worse is “the bank’s already approved the price”. Either of those two statements coming from a real estate agent spells doom for the deal. Simply move on and like I said above, ready yourself for the auction or the REO phase.
So now I have probably ticked off a few agents and they are thinking that we have no idea what we’re talking about. So let me explain it very clearly. We NEVER ask the bank what they will take. That question NEVER gets asked. If you ask that question you’ve already lost the game.
In fact, other than sending in an LOA, we don’t have any communication with the bank until we’re ready to bring them in for negotiations. By the time we bring the bank into the loop, we have already managed the listing, strategically aligned the price, received and executed an all-cash offer, done some other very necessary paperwork and research, sent in our corroborating 100 + pages of documentation and THEN requested the BPO. Then AFTER we have managed and coordinated the BPO with great influence…that’s when the games really begin.
If you are having ANY discussions with the bank relative to “what they will take” prior to the BPO being completed and successfully managed, then you are wholly missing the boat on short sales.
If you are talking to the bank about anything other than the LOA until it’s time to talk turkey, then you have more than likely blown your deal. Am I wrong? I have one thing to say. Only 14% of short sales succeed.
One of the big reasons this ineptitude is taking place is because agents don’t want to take the time to get these deals done in the best way possible. They’re outsourcing these deals to uninterested third parties who are running short sale mills.
Here’s a hint…if someone tells you that they got a 10-15% discount and they acted like they have done something heroic, laugh…and I mean laugh heartily. You see, my 14 year old niece could get a 15% reduction on any deal approved.
To make the really big dollars and to see your closing ratio shoot through the roof, you need to take some very defined steps to orchestrate your short sale transactions. If you do, I will PROMISE you that you will see your income rise exponentially.
After all of this time and with tons more foreclosures and short sales coming in 2010, isn’t it time to realize that you are actually cheating yourself out of a lot of money by doing short sales wrong?
If you’re hanging out with people who are also ineffective and you keep hearing everyone talk about how long it’s taking and that the bank won’t respond, maybe you need to look at the company you are keeping.
Success breeds success. I would hate to hang out with those who lament and bemoan the short sale process. Wouldn’t you rather associate yourself with the crowd busting their bank accounts and having a good deal of fun doing these transactions one after the other?
Seems a pretty easy choice, but it’s your choice to make. In upcoming posts we’re going to delve into the manner in which an agent and investor can work together in cohesive fashion and make a lot of money together.
Hopefully you’ll get something out of our short sale case study and turn things around. You’ll be amazed when you experience the bliss of short sale success.
Florida Has Four of the Top Ten Hottest Markets for Job Creation
A recent Inc. Magazine study showed why Florida remains and will remain at the top of job creation cycle by placing four cities in the top ten list, led by Ft. Lauderdale which came in second to Las Vegas in the large city category. Orlando was ranked third and West Palm Beach-Boca Raton came in fourth. Tampa-St. Petersburg was ninth on the survey. Jacksonville narrowly missed the top ten by ranking 11th, while Miami-Miami Beach rounded out the top twenty by coming in 18th. According to the highly respected survey Ft. Lauderdale growth was attributed to several high-tech businesses relocating there due to the low tax climate. Technology, bio-med, and health services top the list of growth industries. West Palm Beach was spurred by a 20% increase in business and professional services jobs since 2002. Also driving the increase in the region’s economy is the dramatic growth in bio-med and life-sciences with the prestigious Scripps Institute forming a nucleus for further expansion in these high paying arenas. Miami’s surging economy is enhanced by Latin American and South American trade and the area is starting to attract more and more trade with China and Europe.
NEW YORK-- Oct. 4, 2006 --A first-time public opinion survey asked the question: Where do you want to live? Americans picked Florida as their third favorite state, with North Carolina first and Virginia second. Internationally, Florida ranked No. 2, surpassed only by California.
The Anholt State Brands Index -- www.statebrandsindex.com -- recently looked at the responses of 9,000 U.S. citizens and more than 12,000 foreigners regarding the appeal of all 50 U.S. States. The poll, created by government advisor Simon Anholt and powered by global market intelligence solutions provider GMI, found that American panelists ranked North Carolina and Virginia as the top two states where they would like to live, while neither state made it into the top five of the global ranking.
Foreign panelists ranked the big-name states -- Florida, California and New York -- in the top five, while home-turf panelists reserved the top five slots for some of the smaller-name states, such as Colorado and the afore-mentioned North Carolina and Virginia. In fact, some of the more obvious big names did not make the overall domestic top five, and Florida was the only state to make the top 5 on both rankings.
For instance, foreign favorites California and New York ranked nine and 39 respectively to Americans, while foreign panelists ranked them four and one. In some cases, the foreign panelists chose American states based on misperceptions. Generally, they judged all of New York State, for example, based on the image they had of New York City. And many mistakenly believe that Washington, D.C., is located in Washington State.
The study looked at each states' "brand," or the perception of that state held by residents within the U.S. and throughout the world. It looked at six perception areas: tourism, exports, people, governance, culture and heritage, and investment and immigration. In tallying the total marks for each state, the study finds "a big gap between the megabrands of California, Florida" and the other states. "Hawaii and New York are in the second league of brand power," the report notes, "and then there is another sizeable gap between them and the remaining 46 states."
"The brand images of U.S. states, as a rule, are more up to date, more detailed, and more likely to be based on fact than fiction amongst domestic audiences than overseas respondents," says study author Simon Anholt. "The most noticeable difference between how Americans rank the importance of their states and the way foreigners do so is the presence of Virginia and North Carolina in the U.S. panel's top 10, and their absence from the non-U.S. panels' list. The high domestic profile of these three states probably has much to do with their relevance to American history, which is not as familiar to foreign audiences as it is to domestic ones."
"Brand image is critically important to the prosperity of all communities, yet it is hard to identify, hard to explain, and remarkably hard to alter," says Anholt. "It is critical for the political, cultural, social, educational and business leaders of each state to understand their brand, and to see how potential visitors, investors and future citizens view them. If the image doesn't match up to the reality, they can decide what to do to close the gap."
Top five ranking
Responses of U.S. residents:
1. North Carolina
Responses of foreigners:
4. New York
The survey was conducted between May 25 and June 12, 2006. A representative sample based on age, gender, and where applicable, geographic region, race and ethnicity, was collected in the United States (9,000 completes) and the top 15 inbound tourism markets (12,410 completes) for a total of 21,410 completes. For further information about the Anholt State Brands Index methodology, .© 2006 FLORIDA ASSOCIATION OF REALTORS®
Despicable Real Estate advice from the Miami Herald
I have enclosed below is a reprint of and article in the Miami Herald today. While there is enough blame, finger pointing and culpability from investment banks to Fannie Mae and Freddie Mac, to mortgage brokers practices etc. which is fair, the owner of real estate who follows the ridiculous thought process and advice of not paying or walking away from their mortgage is the source and will be the continuation of our real estate and financial crisis.
If you buy a stock and the price drops and you sell it at a loss, you have no right to ask the stock broker to share your loss. The same is true when you take a mortgage and sign a promissory note to pay the lender. There is nothing in the document that says if the value of the property changes you will share the upside or the downside of your sale with the lender.
The thought that you can be totally irresponsible and stop paying your loan is incomprehensible.
This kind of advice and thinking will cause the real estate and fiscal markets to spiral further down and we will all suffer.
Incidentally, I purchased a property in May of 2005 that has dropped in value on paper. I pay my mortgage on time and I am not thinking of or suggesting that the lender share in my loss. By the same token I did not share the significant profits that I made on the last three properties I purchased and sold.
If you want the markets to return to normalcy and you do not want the socialization of the United States of America stop whining and continue to lead your lives as responsible citizens.
About the author John Kavazanjian
Business Management Degree from Fairleigh Dickinson University. Over twenty five years of Senior Sales and corporate management in the Consumer Electronics Industry. Real estate license in California for eight years and a real estate sales license for 3 years and a brokers license for the past year in Florida.
Short Sales, Foreclosure, Deed In Lieu of Foreclosure, Strategic Default Impact On your Life and Credit
The economy is struggling back from the lowest point in our history since The Great Depression. The real estate market is 20 to 40 % off its highs in the year 2005. You purchased property and it is now worth a lot less than you owe on the mortgage. You have choices you can list the property for sale and try to get the bank to accept an offer, which is less than you owe them, which is called a short sale. You can let the property go through the foreclosure process and be taken away from you. You can ask the bank if you can sign over the deed to them, which is called a Deed In Lieu of foreclosure sometimes, called a strategic default.
Sounds like a simple way of eliminating the problem. Wrong!
Any of the above strategies will impact your credit to varying degrees. On a short sale you will not be able to get an FHA loan for 7 (Seven years). The short sale will be reported to the credit bureaus even though you may get a full release and satisfaction of the mortgage recorded publicly.
How is a short sale sellers credit affected?
Sellers may wonder whether doing a short sale would affect their credit less than completing a foreclosure and whether there are other advantages between the two. While in foreclosure, and depending on state laws, a seller could possibly stay in the property, essentially rent free, for four months to a year before being forced to vacate. But that fact alone does not mean a foreclosure is better.
Fair Isaac released a report that says credit scores are affected about the same, whether a seller does a short sale or foreclosure. Fair Issac says the average points lost on a FICO score are as follows:
30 days late: 40 to 110 points
90 days late: 70 to 135 points
Foreclosure, short sale or deed-in-lieu: 85 to 160
Bankruptcy: 130 to 240
Foreclosure or Deed-in-Lieu of Foreclosure
Both of these solutions affect credit the same, says David Steep of Vitek Mortgage.
Sellers will take a hit of 200 to 300 points, depending on overall condition of credit.
This means if a seller's FICO score before foreclosure was 680, it could dip as low as 380.
Unfortunately, a low credit score virtually guarantees that you will pay higher interest rates on home and auto loans, credit cards or other forms of credit. How much more will you pay? Experts say that a person with a low credit score, below 600, will likely receive mortgage interests rates that are nearly 3% higher than someone with a score above 700. In a worst case, you may be denied credit altogether.
Yourcredit historyis compiled by a credit bureau or consumer reporting agency (CRA). Currently, there are three major credit bureaus in the United States — TransUnion, Equifax and Experian. After gathering your information and storing it, credit bureaus, when authorized, provide your credit historyto a number of different people and organizations, including banks, employers, landlords, creditors and insurance companies, all of whom need to know your credit historyin order to make financial decisions about you.
So, please consider the loss of possible employment and higher costs to borrow on major purchases when making a decision about short sales, foreclosures or deed in lieu of foreclosures.
I recognize this does not solve the problem however I hope it provides important information to consider.
Faced with ballooning mortgage payments and the threat of bank foreclosure, more and more homeowners are turning to real estate auctions to sell their homes quickly, easily, and for a fair price...
Fact: The high-end auction industry is now creating more millionaires than any other industry in the United States!
In the past, many people mistakenly thought of real estate auctions as a last resort -- the only option left when a property failed to sell on the market.
In reality, homeowners using real estate auctions increase their chances of selling their property by up to 900%! Plus, 50% of all real estate auctions sell at fair market value or better.
Far from taking advantage of desperate sellers, real estate auctions are a win-win situation for everyone involved…
The lure of a deal is potent, and real estate auctions attract swarmsof potential buyers to a property. Homeowners are usually blown away by how much exposure their property gets in an auction, versus the traditional route of hiring a realtor, listing the property, and passively waiting for buyers to show up -- usually with low ball offers.
Properties sold at auction usually sell in record time for a fair price, close to or above market value.
And in just one afternoon, real estate auctioneers typically rake in tens of thousands of dollars in commissions (the average auctioneer collects 10% in commissions! … In the form of a buyers premium).
In today's sluggish economy, auctions are becoming increasingly popular, and this trend shows no sign of slowing down -- the National Association of Realtors estimates that 1 out of every 3 properties sold in the U.S. in the next three years will be sold by auction.
For people trained as real estate auctioneers, it's the gold mine opportunity of a lifetime!
Fortunately, becoming a professional real estate auctioneer is easy...
One of the country's top training programs provides you with everything you need to get started, including step-by-step mentoring where an experienced auctioneer holds your hand on every deal, a custom website, and all of the marketing materials you need to easily attract eager clients and potential buyers to your auctions. They even have a person show up to call the bids so you don't have to stand up and call out the numbers at the auction.
Don't miss out on the right business at the right time. To find out how you can start profiting from the real estate auction bus
iness and get into the forefront of this gold rush now.
No meaningful recovery in commercial real estate before 2011
If you need real estate help with commercial Delray Beach real estate,commercial Boca Raton Real estate, commercial Boynton Beach Real estate, commercial Wellington real estate,Manalapan real estate,Hypoluxo real estate or any commercial south Florida real estate ,please find my contact information at the bottom of this article.
The article enclosed states the opinion that the Commercial real estate market will improve in 2011. For everyone's sake I hope that the forecast is correct. However in my opinion the key element is the creation of new jobs. If the creation of new employment is stalled the commercial real estate market will take longer to rebound.
"No meaningful recovery in commercial real estate before 2011
WASHINGTON – Feb. 24, 2010 – Although the economy has been growing lately, fallout from the recent recession continued to negatively impact commercial real estate sectors in the fourth quarter, but there is hope for some improvement next year, according to the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said commercial real estate almost always lags the economy. “Because of the lingering impact from the deep recession over the past two years, vacancy rates will trend higher and many commercial property owners will need to make rent concessions,” he said.
“With the job market expected to turn for the better later this year, we’ll see rising demand for office and warehouse space, but that isn’t likely before 2011,” Yun said. “At the same time, improved consumer confidence would help sustain the retail sector and encourage more people to enter the rental market.”
Yun notes that commercial vacancy rates remain high in most market areas and are depressing rents.
The Society of Industrial and Office Realtors®, in its SIOR Commercial Real Estate Index, an attitudinal survey of more than 700 local market experts, suggests a flattening level of business activity in upcoming quarters with 55 percent of members expecting the market to improve in the second quarter.
The SIOR index rose a 0.2 percentage point to 35.5 in the fourth quarter, compared with a level of 100 that represents a balanced marketplace. This is the first gain following 11 consecutive quarterly declines. Although some indicators show that a decline in commercial property values is beginning to flatten, 86 percent of respondents report prices are below replacement costs.
Nearly nine in 10 survey participants said new commercial development is virtually nonexistent in their market areas, and rent concessions are reported almost everywhere.
An independent survey earlier this month showed a couple dozen banks are willing to expand commercial credit this year, which is critical. The lending expansion is aided by the Federal Reserve's Term Asset-Backed Loan Facility, which is encouraging issuance of commercial mortgage-backed bonds. In addition, regulators are prodding lenders to extend terms for many existing commercial loans.
“We have a long way to go for satisfactory levels of commercial credit, but these are important first steps,” Yun said. “Given that about $1.4 trillion in commercial debt will come due over the next three years, more extensive action is needed and the Fed needs to more actively help resuscitate commercial mortgage-backed securities. The credit improvement will mean more commercial property sales in 2010, even some at deeply discounted prices.”
Looking at the overall market, commercial vacancy rates generally will stay at elevated levels, according to NAR’s latest Commercial Real Estate Outlook. The NAR forecast for four major commercial sectors analyzes quarterly data in the office, industrial, retail and multifamily markets. CBRE Econometric Advisors provided historic data.
With a lot of sublease space currently on the market, vacancy rates in the office sector are forecast to rise from 16.3 percent in the fourth quarter of 2009 to 17.6 percent in the fourth quarter of this year; the longer term outlook is for vacancies to average 17.4 percent in 2011.
Annual office rent is projected to decline 7.2 percent in 2010, following a drop of 12.7 percent last year. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be a negative 27.3 million square feet in 2010.
There is proportionately less industrial sublease space on the market than in the office sector, but obsolescence remains a factor. Industrial vacancy rates will probably rise from 13.9 percent in the fourth quarter of last year to 14.9 percent in the closing quarter of 2010; they could average 14.5 percent next year.
Annual industrial rent is likely to fall 9.6 percent this year, after declining 10.9 percent in 2009. Net absorption of industrial space in 58 markets tracked is seen at a negative 93.5 million square feet in 2010.
Retail vacancy rates are expected to edge up from 12.4 percent in the fourth quarter of 2009 to 12.7 percent in the same period of this year, and may hold at that level in 2011.
Average retail rent is forecast to decline 2.4 percent in 2010, following a drop of 4.0 percent in 2009. Net absorption of retail space in 53 tracked markets should be a negative 3.4 million square feet this year.
The apartment rental market – multifamily housing – is poised to gain from a rise in household formation. Multifamily vacancy rates are likely to decline from 7.4 percent in the fourth quarter of last year to 6.6 percent in the fourth quarter of 2010, and possibly edge down to 6.1 percent next year.
Average rent is projected to decline 3.4 percent this year, following a decline of 3.6 percent in 2009. Multifamily net absorption is expected to be 115,000 units in 59 tracked metro areas this year."
© 2010 Florida Realtors
To Buy Real Estate or Not to Buy Real Estate
The decision can be Residential Real Estate or Commercial Real Estate.
Residential: You need a roof over your head. You need to consider your needs for location and lifestyle. Once you decide your needs, you can determine how much property that meets your needs currently rents for and what comparable property sells for. When purchasing you need to include the cost of maintenance, real estate taxes and the associated tax deductions, Home Owners Associations or Condo Association dues. You can then compare the cost of rental vs. Purchase. I would make this comparison on a yearly basis. In previous markets a strong consideration for buying was the appreciation on the sale of the property. Under the current conditions it is very difficult to factor this. However keep in mind that most properties are priced lower that the cost of acquiring the land and building a replacement structure.
Commercial: Covers many categories such as Offices, Industrial/warehouse Retail etc. Are you going to use the property for your business or are you and investor?
If you are going to use the property for your business you need to make a comparison of the cost of Rent vs. Buying. In my experience as a business broker I have found that businesses that own real estate are easier to sell and finance due to the equity and tax advantages of ownership. Keep in mind that when you lease it is an expense for the business but other than using the space for your business on a short term and producing income you only have a cancelled checks and cost in the long run.
If you are an investor there are a number of analyses in the decision process. However the main question is does income property with its tax advantages produce a greater rate of return and lower risk than your other investment choices?
This is a basic overview. In each case there are a number of other considerations, which is why you need a knowledgeable professional real estate broker to help you.
I would be pleased to have the opportunity to assist you.
A housing recovery is key to the country’s future economic strength
I do not believe in over simplifying things as complicated as the United States Economy, nor am I a trained economist. I do have a business degree and I worked at high levels in the Consumer Electronics industry before putting my knowledge and experience to use specializing in Commercial real estate.
I was happy to read today that President Obama is trying positively to address the issue.
Real estate has always been one of our economies most important economic markets and the demand that is created through the purchase and sale of properties trickles through every aspect of our consumer based economy.
Any positive changes we make as a country to address the real estate market will be positive steps to our overall economic rebound. It was the fall of the real estate market that has put the rest of the economy in a downward spiral.
Delray Beachreal estate has survived the downturn in the economy and is well positioned to explode when the economy rebounds.
Be carefull with companies that claim to be Mortgage Modification experts
If you need real estate help with Delray Beach real estate,Boca Raton Real estate, Boynton Beach Real estate, Wellington real estate,Manalapan real estate,Hypoluxo real estate or any south Florida waterfront real estate including Intra coastal real estate you will find my contact information at the bottom of this article.
As the real estate market in Florida continues to be uncertain, prices of homes have fallen below the 2002 level prior to the run up or bubble. Many home owners are finding their property is currently worth less than their mortgage. Consequently they are contacting the banks for mortgage modification and relief many time they turn to a new breed of home loan rescue companies. The article below indicates the state of Florida is cracking down on many of these companies. Please use care and judgment before you pay any company an upfront fee to attempt to get your mortgage modified. Your best bet is to speak directly with your lender.
State cracks down on five South Florida home loan rescue companies
SOUTH FLORIDA – Feb. 19, 2010 – State regulators took the first step Thursday in what they said will be an ongoing effort against unlawful mortgage modifiers, ordering several South Florida operations to immediately stop doing business.
The Florida Office of Financial Regulation cited five companies Thursday morning: Foreclosure Solution Specialists Inc., of Tamarac; the Federal Housing Assistance Program, west of Fort Lauderdale; Liberty Home Solutions, of West Palm Beach; Keep Living in Your Home, of Boca Raton; and Saving Your Home, of Miami.
They were alleged to have violated two state laws by taking money upfront for mortgage modifications and by not being licensed to perform those services.
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