One of my insprirations is Rob Black and Your Money show, airs weekdays at 10 a.m. on Kron 4 channel. His straight up advice and candid suggestions makes those who listen to him on a daily basis stand up, take heed in their financial future, and start thinking for themselves. It's the one of those live call in shows that you get to ask about your money matters, but be quick about it, Rob prefers those who has at least read one if not more of Ric Edelman books to be on board with his progressive way of thinking. Check out his other list of must reads: At his site view past shows as a PodCast and learn more about his free investment seminars - and don't worry he's not selling you anything. Just taking on, as his personal mission, educating the Bay Area to be more savvy and be healthy financially because we all know "one truly can't help those without helping himself". In my opinion that's probably what motivates Rob to get up and do what he does best, perhaps his main objective with his loyal 40,000 listeners - it's easy to steer people in the direction of his way of thinking financially when given a half hour televised show weekly. I'm sure it helps this poor kids bottom line and plays up his stocks sometimes. Anyhow, don't miss it, if anything he's got his thumb on the pulse of what is happening in our Silicon Valley market and also on those companies, many in our greater Bay Area, that are making money and affecting the world outside our Silicon Valley bubble.
Banks are having a tough time, aren't they? The fantastically lucrative sub-prime market has totally shut down, tightened loan approval standards have decreased the number of new loan applications and, worst of all, inventory is foreclosing in record numbers. Well not worst of all, actually. The bank doesn't eat every home it forecloses and the only monetary loss they incur is the cost of dumping it on the real estate market. Understanding this is key to understanding the next move you should make in Real Estate. Right now, it's the "Big Question."
Any [primary] home loan, any, requires a 20% cushion. In most cases it takes the form of a) a down payment paid by the buyer, b) Private Mortgage Insurance (PMI) or c) a second loan to cover. If the house goes into foreclosure then the first lender only needs to recover 80% of the cost of the property to get it's principal back. Their only real loss was the interest not collected from the delinquent borrower plus the hassle of selling the property.
If a second loan was used to cover then the holder of the second loan will most likely lose all their money b/c the bank will dump the property for less than it's worth, leaving nothing for the second lender to collect. If PMI insurance was used, then the insurance company would cover the remaining 20%, less any amount over the 80% the lender was able to sell the property for.
If the buyer dropped 20% in cash, it's gone. Recovering anything over 80% is next to impossible.
So the bank will always get it's money back. Except. Oops. There's one big problem here, and it has to do with economics. If one bank dumps a property for 80% of it's value, no problem. If 100 banks dump 1,000 properties at 80% then they are adding to the supply of houses on the market that will ultimately decrease demand. The first wave will liquidate. The subsequent waves will drive prices down. If prices go so far down that they surpass the magic 80% loan-to-value ratio, then, oh boy, are the banks in trouble.
In layman's terms, this is what will happen: the mortgage backed securities they sell will devalue, their credit ratings will suffer and as a result will not be able to lend as much money to consumers. Less loans, less revenue, bad news.
Right now foreclosures are starting to hit the market. My agent, Jill Suarez, had a running mix of a handful of listings over the past 5 years. (she has a special relationship with some local banks). REO stands for "Real Estate Owned." It should be REOBTB, for "Real Estate Owned By The Bank." These are foreclosed properties that didn't get liquidated at a trust sale that the bank now owns and needs to sell. In a down market, the best deals are REOs.
One strategy to the "Big Question" is to wait for a few waves of foreclosures to hit the market. Since rate adjustments on variable-rate loans happen every quarter, the start of a new quarter pretty much starts the new cycle. By next April, I imagine the real estate market is gonna be crying for mama. And this time, I'm putting my money where my mouth is (or, at least, seriously exploring).
So that's my idea today, September 27th. I might change my mind.
One side note: you don't actually lose everything if you hold a second loan. Assuming it's recorded, as it should be, when the first loan forecloses you have the right as holder of the second to buy the first loan. Some sharks made a killing off this in the early 90s. What you'd do is go to a trustee auction, buy the second loan for pennies on the dollar and then immediately buy the first loan from the property owner. In almost all cases, the first was... you guessed it, 80%... and the buyer of the second would turn around and liquidate the property. The only issue was that you had to evict the resident if they were still living in the house...
The way Southern California is zoned currently, it can only accomodate 1 million people in the next 30 years. 18 million people are coming! Land must be rezoned to accomodate these people, so capitalize on this!
Private equity firms and hedge funds are snapping up cheap land in markets where real estate has gone from boom to bust. Fortune's Katie Benner reports.
By , Fortune reporter
September 17 2007: 10:00 AM EDT
In California, Forestar Land Partners, a joint venture between real estate investment firm Starwood Capital and developer Foremost Communities, is emerging as a buyer to watch. Run by local building veteran Steve Cameron, Forestar was formed in June to buy $250 million worth of land in Southern California over the next several years...
House Prices by the Futures markets, more accurate than NAR speak or Bernake. I always trust the traders first and this is what traders are saying with their money.
Jim Cramer goes on Today Show to tell people . Hey, nice advice Jimbo. Boo-yah!
Have you ever gotten pre-qualified to buy a home, searched for a home, done all the paperwork associated with submitting an offer, had your home inspected, provided all the needed documentation to your lender, and actually made it to the closing table? You thought you had it made, right? Home free (no pun intended...)?! But, what happens when the lender doesn't pay up? When a currently undisclosed condition stops the closing, and the lender won't pay until that condition is met?
This situation is called "Closing in Escrow" and it happens on an occasional basis, no matter how good all the parties are.... Once in a while, it happens, most of the time as a surprise. Occasionally, you go into the closing knowing that it will "Close in Escrow" and the best thing you can do is prepare all parties involved. All the paperwork is signed, for all intense and purposes the closing is complete, only no money is exchanged, and the Seller still owns the home, and the Buyer is homeless!
Now don't panic!!! More often than not, the condition is able to be met with a little bit of work from the offending party. Once the condition has been met and the attorney verifies with the lender, approval is gained, funds are released and ownership of this wonderful home is exchanged! Yippy!!! NOW YOU ARE HOME FREE!!!!
I hope this is helpful to you! Please email me any ideas that you would like to see me cover! Some topics are specific to Georgia, where I practice Real Estate, and some are pretty accurate across the board.
The U.S. dollar is at another record low against the Euro and most other major currencies, the SIXTH CONSECUTIVE TRADING DAY where the dollar tests another bottom.
U.S. new home sales are at a SEVEN YEAR LOW. Prices of new homes will fall for the first time year-over-year on a national basis since the Great Depression.
World oil prices reached a new intraday trading high of $84 a barrel.
I'm glad the President had time to order the FAA to impose new rules so air travelers don't experience excessive flight delays. While Rome burns, Nero plays the jukebox.
The Fed has pegged interest rates too low and every world market is telling, no screaming, this to Washington but the Fed has its hearing aid turned off and is contemplating further rate cuts. Let's forget about inflation which is real, growing as a threat, and now with oil pushing $100 a barrel a disaster in the making.
At the same time U.S. capital markets are whining like spoiled brats with a curfew about the lack of liquidity, the weak U.S. dollar is pulling cash out of these very same markets. Investors aren't stupid. Why buy the dollar when interest rates are higher elsewhere?
And you expect residential real estate to prosper in this environment?
The same brilliant strategists who are giving us victory in the war in Iraq are now applying their same reasoning to the U.S. economy---with the same predictable results.
Foreign investors are buying U.S. assets with currency reserves sold to them by U.S. consumers through a record trade deficit. Plus they get to buy these U.S. equities, real estate, businesses, stocks, and even the exchanges the stocks themselves sell on all with strong foreign currencies converted into the weakest U.S. dollars on record.
Sounds like a winning plan to me. I mean for them, not us.
The U.S. economy will be in recession by early 2009. The U.S. commercial real estate market so far spared the damage of its smaller residential cousin will wobble and fall around the time our new President is sworn in---if not sooner. With all the emphasis on the subprime mortgage mess few people pay attention to the excesses, greed, and just plain dumb underwriting practices that have been occurring in this market. These guys make the subprime sector look like models of chastity and virtue.
As a real estate investor, don't expect any financial relief in prices or sales through at least 2010. And I'm being optimistic here.
Most sellers are intimidated by the expertise required in real estate marketing, negotiation and closure. Rather than risk making errors and possible financial loss, your ultimate goal should be to have a relationship with a reputable consultant you can trust to look after your interests. When it comes to selling your largest investment, employ a MPRE Harcourts professional. MPRE Harcourts consultants have recommendations that create further business. A MPRE Harcourts consultant will provide you with evidence of quality marketing methods and satisfied clients. MPRE Harcourts consultants do their homework by keeping abreast with market changes. They will supply you with information regarding current trends and statistics on the type and locality of real estate specified. MPRE Harcourts consultants work actively toward creating competition to enable the best price for sellers. MPRE Harcourts consultants are service orientated, before, during and after sales. MPRE Harcourts consultants desire a long-term relationship with sellers and buyers alike and will be prepared to go the extra mile to meet client needs. Finally, look for enthusiasm. A MPRE Harcourts consultant loves their job, as they know from experience that they add measurable value to the buying and selling process. Finding a good consultant is priceless and worth the effort.
Great News!!! Did you know that Mortgage Insurance is now tax deductible?! When you bought your home, if you did not put down at least 20%, you are most likely paying mortgage insurance as part of your monthly payment. It could be as little as $30 per month or up to hundreds of dollars! If your anual gross income is less than $100,000 a year it is 100% deductible. If your income is between $100,000 and $110,000 it is slightly less.
See your tax preparer for more information! If you live in Northwest Georgia, I have a great tax specialist I can refer you to!
Blessings to you all! If there is a topic you would like me to write about please email me!
--Darcy
Found a vacant, single family waterfront home on saltwater canal for only $215,000.
Home was recently renovated, all assessments paid, with concrete dock for your boat and a two car garage. Drive by 1106 SE 15th Terrace, Cape Coral and if you are interested call Millard Brown at 437-5034.
