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Wednesday, December 31, 2008

Reflections upon a tough year…

As I sat down to try to reflect on 2008, I realized that is was a tough year all around. Most of my listings made it through the year unsold – not a good thing. It seemed like we were always “chasing the market” down in value, always just a little behind what the price needed to be to sell in this foreclosure-driven market. As I looked at the numbers and the charts that were contained in my last two days worth of posts, I realized that I had been focusing upon a dramatically shrinking segment of the market – traditional retail sales – and had properties listed that primarily would have appealed to the move-up buyer segment, itself also shrinking. No wonder I was having such trouble selling those listings.

I actually sold more homes in 2008 than ever before, it was just that some of the “sales” were really leases and all of the real sales were for lower priced homes – pretty much what how the market did overall. My listings above $300,000 pretty much just sat there and the one million dollar listing that I had only had two showings all year long. There just aren’t that many million-dollar buyers out there these days. I had the pleasure of helping two couples move to Milford this year, both of whom had seen my Web site – http://www.movetomilford.com/ and contacted me because of it.

I also helped four first-time buyers find their first homes and that was fun. Three are young, just married couples and it was nice to be able to share in their enthusiasm at getting their first place. All of them got great deals and were able to buy more house than they had imagined that they could afford. I focused my Web site – http://www.mihomebuyer.com/ - on first time buyers this year and hope that it has been a help to those seeking information about home ownership for the first time.

On the sell side, I had to watch one of my clients slide into foreclosure and that was tough, because he is a hard-working guy who really didn’t do anything all that wrong – he just lost all of his overtime and his wife got laid off. A couple of would-be clients just gave up before we could get their houses listed and walked away from them. I had several potential sellers decide to just hold off listing their houses, once I told them what the current market price would be; and that’s OK, too.

Late in the year I opened a new Web site – http://www.mishortsales.net/ - to try to reach out to distressed homeowners who might need information about alternatives to going all the way through foreclosure and help with the short sale process. I’ve already got a potential client from that site.

I enter the New Year with a renewed sense of hope and a commitment to do the things that I’ve been avoiding doing or just don’t particularly like doing; but, which need to be done in order to be successful. Most of that has to do with sitting down and making the calls that I need to make in order to get more business. Some of it has to do with having the conversations that I need to have with some of my sellers, to get them to a more realistic market price. But mostly it has to do with working every day with a positive attitude and a sense of enthusiasm.

This is a wonderful business to be in. I get to work with lots of really nice people and I get to help them all be happier because of what I do. How great is that? I’ve said before that I live with Pollyanna and work for Little Mary Sunshine. Now, even my daughter is in on the act. She gave me one of those self-coaching books call 212° the extra degree (the temperature at which water become steam and is able to power engines) about taking the extra step, making the extra effort, doing the extra thing (adding that extra degree) that can make the difference between being OK and being great. So excuse me, I have to run off and boil some water to power my little steam engine. 2009 is going to be great!

Tuesday, December 30, 2008

Optimal Home Location site helps conscientious buyers

From a recent addition of the Iconocast News that I get comes this story. GEN X homebuyers who are concerned about their carbon footprints and commute times can use the Optimal Home Location website to find a neighborhood that's central to all their activity. Trying to strike a balance between family and commute times, and gas expenses and shrinking budgets, homebuyers are craving tools that empower them to make prudent decisions.

Buyers enter their hot spots like work, school, daycare or the gym and Optimal Home Location will pinpoint the ideal location in-between all of them and compare commute times. I do get a lot of questions from younger buyers about commute times and they seem to be more concerned about staying relatively close to work areas. While many Boomers just wanted to “get away from it all,” most Gen-X and Gen-Yers seem to want to get in the thick of it all. There is also a growing movement amongst the older Boomers to get back to the city, a return to urban environments, mainly to allow walking to places.

The Optimal Home Location site uses stats from Zillow to provide area details like property tax, median home values and median home age. It also maps out schools, libraries, supermarkets and shopping centers.

The site is http://www.optimalhomelocation.com/. Remember too that you can also go to http://www.walkscore.com/ to determine the walkability of that location, which can contribute greatly to reducing your carbon footprint. For more on the whole carbon footprint issues and things that you can do to reduce yours, go to http://www.treehugger.com/.

As I get older, I've started the journey back from being an indifferent, consumption-oriented and possession-centric member of the Boomer generation (although I am actually a pre-Boomer by a year or two). While perhaps not yet certifiable as a tree hugger; I, none the less, am much more conscience of the resource consequences of my actions and activities. Thus, my move from my big old Cadillac to my new Scion xB. I live in a very walkable little village and need to take more advantage of that to further reduce my own carbon footprint. The other result might be a healthy reduction in the substantial print above my feet, which would be a good thing, too.

Monday, December 29, 2008

Oh my, how things have changed - part 2

Yesterday we looked at the changes that have solidified this past year in the makeup of home sellers, which unfortunately just served to document what we already know from reading stories in the papers and listening to the news – The huge majority of homes being sold are being sold by distressed homeowners, those behind in their payments or already in foreclosure.

Today we look at who is buying. We know what they’re buying but who are they and what can we learn from knowing who they are.

First we need to establish a historic context. For decades before the current market meltdown the distribution of buyers was as shown in the chart below.


The biggest group in the “normal” market were move-up buyers. These were people who had been in their first or maybe second or third homes for a while and now wanted something a little bigger, a little better, a little more expensive. Maybe they just got a raise at work or a promotion that meant more money or maybe this was a buy in conjunction with a move to a new job. In any case, they fueled the home sales above what could be called started homes – generally above $200,000 in price. They were the engine behind the growth of the market sweet spot of the 70’s, 80’s and 90’s – those homes priced between $200-400,000 that were the stock of most upscale subs of those eras. At the upper end of that band, and certainly above it. one was into the “luxury” homes market.

Next came the first time buyers and then tenant leases and finally investors, who were a very small part of the overall market. First-time buyers were those generally younger buyers who were coming out of apartments or maybe even right out of college. Some first-time buyers had stayed with mom and dad after school until they saved enough for a down payment. They bought both condos and smaller, “starter homes.” Many of the first time buyers contributed to the success of trendy older communities (Royal Oak comes to mind in this area) where they bought up and fixed up the older bungalows of those communities. They bought the homes that the move-up buyers needed to sell in order to move up. There were also always a few owners who decided to lease rather than sell, and a few investors who bought in order to have lease properties, but both of those groups were very small.

Now look at the current distribution of buyers. Indeed things have changed.


First time buyers dominate the market, with most out looking for a foreclosure bargain and they are finding them, as the sales numbers verified. These are still the same people who have been living with mom and dad or in an apartment or condo (leased) and now see the golden opportunity to buy more house than they though they could afford on their first purchase. Some are even joining the ranks of investors and buying up 2-3 houses as investments for their future.
Move-up buyers are still a good sized group but way down from their historic position. Many would-be move-up buyers are no longer looking at promotions, but rather fearing downsizings and plant closings and companies going out of business. This group has been literally paralyzed by the economic downturn and indeed a large number of what would have been move-up buyers are contributing their current houses to the foreclosure inventory because they got in over their heads or lost their jobs.

Tenant leasers and investors make up 34% of the current buyers. Many of the leasers are those who have lost their homes to foreclosure and now need to lease for a few years while they try to rebuild their credit. The rise in investors is also to be expected when there are such great bargains. A few of these are the flipper who buy up distressed homes, put a little money into fixing them up and then resell them. The key to success in that game is to be disciplined about what you put into the house and to make your money on the buy – that is to make sure that you get a good enough price up front to allow you top put money into the place and still be able to put it on the market at a good price.

Some agents have shifted their attention to the investors and are doing quite well helping them find and flip houses. Many agents are doing lots of leases and many agents have refocused their client prospecting to concentrate on first-time buyers. Agents who have resisted changing the traditional way that they do business find themselves squeezed into ever smaller portions of the business on both the buy and sell sides.

So now you have the picture from both the buyer and seller sides of the business. I’ll take a year-end look at the impact that these changes have had on property values and the whole real estate sales cycle in a future blog.

Sunday, December 28, 2008

Oh my, how things have changed (Part 1)…

It’s appropriate at this time of year to look back over the year past and reflect on things and how things have changed. The charts below were created based upon data that our Real Estate One corporate people collect and analyse about our market here in southeastern Michigan. I can’t really say that the real estate market changes that are reflected in the charts took place in just this year; they didn’t, they have been evolving over the last 2-3 years. I would say that this is the year that they came into sharp focus for all of us in the real estate business.

Today and tomorrow, we’ll look at the real estate world form the two natural perspectives – that of the sellers and the buyers; but in reality this entire change in patterns can be traced back to the seller side and the chaos that has accompanied the housing market/mortgage meltdown. The changes in motivation for sellers (read that as being in distress and facing foreclosure) drove behaviors on that side of the real estate equation that naturally lead to the changes on the buyer side. Perhaps this is a classic example of supply-side economics at work in the real estate market.

The first chart shows the historic home seller distribution, i.e. what was driving the sale. The “Traditional/Retail” category includes all of the moving up, moving on or just moving reasons that people used to sell their homes, as well as the new home builds. For years and years that was over 90% of the market. Things like short sales and bank repos were almost unheard of and leases were a relatively small portion, too.






Now look at the seller side of the current market. Can you believe that the single largest category is Bank Owned – foreclosed houses – at 50%? Leases are now the second “sales” category, as more and more distressed home sellers turn to leases, rather than get nothing at all to help pay for the house. Many of these people are those who took a job somewhere else and then discovered that they couldn’t sell their current house for what they owe on it. They actually make up more than their share in the statistics, because they likely lease on the other end, too.





The traditional sales that most Realtors® have depended upon now tie with leases, followed by Short Sales, which is really a foreclosure (Bank Owned) precursor. So, really, distressed sales - those being made because the owners can't keep up with the payments anymore - represent 66% of all sales these days. Thanks how bad things have become. One could easily lump in the majority of the leases being done today (16% out of the 18%, if historic trends are accurate) and conclude that 82% of all "sales" being made these days involve a property and owners who are distressed and have been forced into those transactions.

A big issue for traditional Realtors is that banks have tended to list their foreclosed properties with the real estate equivalent of wholesalers – agents and companies that agree to take very little commission in exchange for a high volume of business. Quite a few of the "companies" involved are little more than quickie LLC's that were set up just to do this business and many are "lone-wolf) operations (one-man shows) or two clowns and some signs. Many of these operators are listing and managing (a loose term when used here) tens or even hundreds of REO (Real Estate Owned) properties for various banks and many, now-defunct mortgage companies. Some of them are as much a part of the problem as they are a part of the solution.

Fortunately for me and for our customers, Real Estate One has a complete division focused upon REO Management and another division (under Capital Title) that deals with short sales. Real Estate One is probably the only real estate company in Michigan that is large enough and that has the enlightened leadership and financial wherewithal to have operations like these in place. More and more banks are starting to see the folly of dealing with the little one-man-band operations that have had this business and are starting to entrust their REO properties to professional companies with real organizations in place to do the work, like Real Estate One. And many distressed sellers are opting for the professional approach of a Title Company division for help with short sales, rather than just handing their home over to "Slick Willie, the short sale guy."

The Current Market numbers are a little misleading, so far as the actual listed market is concerned. These number reflect what is actually selling, not what is listed for sale. In fact the majority of listings are still privately owned and being offered by the owners, and not a bank. Some of those “privately owned” homes likely fall into the distressed or short sale category in the chart above, but the majority are still homes that are being offered for regular sales. What the chart really shows is how hard it is to compete in this market, with so much attention from the buyers being turned to foreclosed and short sale homes. It is possible, of course, to sell a home that is not distressed or foreclosed, just a bit harder.

Tomorrow we’ll look at the buyer side of things – how has the makeup of the people actually buying homes these days changed; and, oh my, what a change that is too.

Friday, December 26, 2008

Choosing a home inspector…


It’s a wonder to me that people, who have spent weeks or months searching for the right new home and who are about to make the single biggest purchase (up to that time anyway) of their lives, will give such little thought and attention to choosing a home inspector to give it the inspection before actually buying it. Most of that, I suspect is driven by a lack of knowledge on how to pick an inspector and the fact that there are no real standards or licensing requirement (at least for now in Michigan) for home inspectors.

Now, before every home inspector who reads this sends me an email to complain, I know that there are national associations – ASHI, NACHI, MAHI (Michigan Association of Home Inspectors) and others. My experience has been that both the good and bad inspectors that I’ve watched do inspections belong to one of these associations, if for no other reason that to have its association logo to put on their cards and in advertising. Belonging to one of those associations does not guarantee a good inspection – only the inspector's experience and a commitment to thoroughness do that.

Since home inspectors are not currently licensed in Michigan, there is little state oversight of the trade at all. The only remedy available to the home buyer for a bad job or a missed issue that later causes damage or cost is the refund of the inspection cost by the inspector. It's probably of little comfort to get your $300 back because a bad inspector missed the $3,000 furnace replacement warning signs. That is scheduled to change with new laws coming that will not only require licensing, but also require inspectors to carry liability insurance to cover blown or missed inspection items. Likely, that will also drive up the cost of inspections, but it is long overdue.

So, how is the buyer to know whether an inspector is going to do a good job? Most of the time, the buyer just gets a name or list of names from his/her Realtor® or they may already know someone who is an inspector. Realtors are not really supposed to make specific recommendations for an inspector, but rather may provide a list of home inspectors from which the buyer may choose - it's a liability issue. Sometimes buyers make the serious mistake of having “someone in the building industry” that they know do the inspection. That’s a really, really bad idea! A friend who is a carpenter or a plumber or even a builder is not gong to know how to really inspect all of the areas of a resale house, especially the things that are not their specialty. Right now there are lots of "builders" running around passing themselves off as home inspectors, because they need the work. Many do really bad inspection jobs.

Here are some questions that you might want to ask a potential home inspector.

How do you inspect the roof? It’s tough right now, with snow covering most roofs. But the inspector should still get up at least on a ladder and look at critical roof elements – shingle and drip molding installation, flashing in valleys and around chimneys, chimney tops, and gutters and downspouts. For non-snow-covered roofs, the inspector should be up there and should walk around the whole roof.

What do you look for on the exterior? The inspector should tell you that he walks the perimeter of the house, looking for any loose siding or rotted wood and making note of any gutter downspout issues. He should also look at the landscaping around the house and advise the buyers on any trimming that might need to be done. If they are visible ( a bit tough with the snow cover right now) he will inspect the walks, patios, decks and driveway for any issues. He will check all exterior electrical plugs and any hose bibs.

How do you inspect the attic spaces? This is the underside of the roof, the trusses and insulation and anything else, such as powered bathroom vents, that can only be properly inspected by getting up into that space. Standing on a ladder and peering in through the scuttle opening with a flashlight is not a thorough inspection technique.

Do you include the appliances that are staying in your inspection? Some “inspectors” don’t even look at the dishwasher, the stove and oven(s) and other appliances that are staying with the home. I don’t understand that, but I’ve heard some of them spout off something about liability as they dismissed this request from the buyers. Find a different inspector. You want to know if the appliances that you are getting work.

How do you inspect the plumbing? A good inspector will flush every toilet, run every faucet, fill and drain every sink and tub and be constantly looking for leaks and slow drains. If the house has a water softener the inspector will cycle it to make sure that it works (or at least manually run it through the cycles to see if it actually works). Obviously if the house in on a well the inspector will run out enough water to make the well pump kick on, too, to make sure it works OK. The whole issue of inspecting the plumbing is very difficult in the winter with foreclosed homes that have been winterized. Ask you inspector is he can de-winterize and re-winterize the house properly and how he does it. If he doesn't mention bringing an air compressor to blow out the lines, maybe you should look elsewhere.

How about the mechanicals, how do you inspect those? A good inspector will obviously cycle the furnace and check for gas leaks on the lines leading to the furnace and the hot water heater and check the furnace for carbon monoxide leaks in the heat exchanger, In warm months he would also cycle the air conditioning unit (it might damage it to try that in the cold weather, so they won’t test the central air in winter; however, they should open the air conditioner breaker box out at the condenser and check for properly sized fuses in there). While they are looking at the mechanicals they should be showing the buyers how to change the furnace filter and how to use and service the humidifier and how to relight the hot water heater, if it is not electric ignition.
What about windows and doors and other areas of the house? A good inspector will attempt to open and close every window, while noting its condition (foggy windows mean a broken seal), and open and close every door and note whether the locks are up to code (deadbolt locks that require a key inside are not code compliant these days and the inspector should note that).

How about the basement? What do you look for there? A good inspector will walk the perimeter of the basement looking both high and low for any water intrusion evidence and for cracks. Some cracks in poured concrete walls and floors are inevitable, just due to settling; however, cracks wider than 1/3 inch and especially wall cracks that run at and angle across the wall are causes for concern and should be pointed out and explained. A good inspector will be able to advise the buyers on how repairs might be made to any cracks that are found. The inspector should also attempt to cycle the sump pump, if it is one that can be manually cycled. He may even put some water into the sump well to cycle the pump. He will also listen for water continuously running into the sump well, which could indicate a drainage problem. If there isn't a basement, but just a crawl space; the inspector should crawl around under the house, to check the foundation and all of the plumbing that can only be seen from that space.

How about the electrical system, what do you inspect there? A good inspector will check all wall plugs for the correct wiring polarity and will test all plugs in the kitchen, baths and garage for GFI protection. He will also open the electrical panel by taking the front cover off, so that he can inspect the wiring job and look for any doubled up circuit breakers.

Do you also do Radon and Mold testing? While having a Radon test done costs extra, as does getting a lab test run on mold samples to see what type it is; it is less hassle if you can find an inspector who can do all of these things, rather than having to contract with several people. Not having the training and equipment to do those things doesn’t make that person a bad home inspector, just a less convenient one.

If this list seems lengthy to you; just ask yourself, which of these things am I willing to not know anything about, before I buy this house? That's what the inspection is all about - making sure that you know what you are buying. Remember that the inspection is one of your "outs" - normally a point in the home buying process where you can walk away from the purchase contract, if you are not satisfied. It will do you no good to come back months later and complain that you didn't know that the sump pump didn't work or that there was mold in the attic. You had your chance at the inspection to discover those things and get them fixed before you bought.
Some of the worst home inspectors that I have hit over time were also some of the most expensive, especially those who consider themselves to be local celebrities. If you talk to an inspector who starts out by telling you that, “I don’t do appliances and I don’t climb up on the roof and, no, I will not be crawling around in the attic,” go get another inspector. You will not get a thorough inspection from that clown, no matter how famous he may be. Many home inspectors have a little contract that they ask you to sign before the inspection starts. Read it over to see what they say they are going to do and if you don't see all of the things listed above, ask them about the ones that are missing. Those are things that you will be taking a risk on, if you buy the house.

Thursday, December 25, 2008

Merry Christmas from my family to yours...


I live in an old Victorian home in Milford, Michigan and the scene at our house at Christmas is not unlike the painting above (except that we had to lay off the cook, the maid and the butler this year). We decorate the place to the nines (that dates me doesn't it) and have the whole family over on Christmas Eve, after church, for dinner and present opening. We get to enjoy the grandchildren and; best of all, they get to go home with their parents. We also have my wife's sister, Jean, with us every Christmas to help us celebrate and it wouldn't be the same without here. Then my wife and I and Jean get to spend a quiet Christmas day at home, enjoying our wonderful old house and entertaining friends who drop over every year.

Here's hoping that you and yours have a great Christmas and that we all have a Happy New Year. I'm certainly looking forward to getting on to a new beginning, in the hope that this is the year that things turn around for the economy and for housing. I look forward to Blogging about my little patch of the world in 2009 and hope that you'll all continue to read and send comments.

Wednesday, December 24, 2008

Twas the night before...

Twas the night before Christmas and all though the house just one thing was stirring and that was a mouse.
The house was dark, closed up and cold, it was a foreclosure that hadn’t been sold.

From out on the front porch came a clattering sound, ‘twas a Realtor® with buyers coming around.
He fumbled and cursed and the mouse heard him exclaim, “the lockbox is frozen, damn these repos are lame”.

Then finally he got it and opened the door, and in he walked with the buyers and more.

Mom and dad and a big sister named Blaine; the whole crew came in and began to complain.
“The carpet’s a mess and look down the hall, said mom, “there’s filth all over and mold on the wall.”

“They took all the light fixtures” said dad, “and the appliances are missing.”
“There’s a leak in the roof ,” said Blaine, who joined in the dissing.

They all looked upstairs and down in the kitchen and den; they went in and out and then downstairs again.
“I don’t like the wallpaper and the floor plans all wrong,” said mom and dad as they moved right along.

The buyers remarked, “Still the price is right and, look how much land; really there's nothing here that we just couldn’t stand.”
“We can replace the carpet and fix up the place, the mold’s not that bad; there’s really just a trace.”
“We’ll remodel the kitchen; make changes to the place, blow out some walls and open up space.”
Before you know it we’ll have a place that is grand; we’ll throw a big party and hire a band.

“Let’s go to your office and put in a bid,” the buyers enthused, “OK,” said the Realtor looking bemused.

“It’ll be a great Christmas”, thought the mouse, a smile on his face; “there’ll soon be people here to share this place.”
And as he curled up in his little mouse bed, visions of a full pantry danced in his head.

Then he heard the Realtor exclaim, as he drove out of sight; “a foreclosure for all and to all a good night.”

Sunday, December 21, 2008

Credit counseling business "Booming"

From a recent Iconocast* news feed comes the report that one business that's taken off like a rocket with Baby Boomers in this recession is credit counseling. The National Foundation of Credit Counseling says that calls to credit counselors are up 30% this year, and the month of October saw a 70% spike over last year (Blogs.WSJ.com/wallet 11.21.08).

The NFCC, representing the nation's non-profit counseling agencies, says demand is being met by hiring more certified counselors. There are now 2,600 credit counselors (a 10% increase) and 1,600 housing counselors (a 25% increase). Credit counselors can help troubled consumers make a plan to manage debt, pay bills, save money and get their finances in order. The service usually costs around $20, and it's often waived for clients who are too strapped for cash.

Consumers are hurting and frightened, and they're reaching out for assistance and education. Because they're often reluctant to seek help until things become dire, the uptick in counseling is a sure sign that things are ugly indeed. Desperate consumers are mobilizing and seeking help.

As a Realtor® I am having to advise clients moirĂ© often these days to seek credit counseling. I generally advise them to go to one of the non-profit counseling services, like Green Path, which has many offices here in Michigan or Money Management International, which is more of an Internet source of help. I’m not a credit counselor, so I can’t help with situations that don’t involve selling your house. If a short sale of your house is part of what makes sense to do, then I can help.

Hopefully you’ve had some money management help and advice for some time, in the form of a financial advisor. I’ve had a financial advisor for over 20 years and her advice and help have certainly helped me survive through many hard times. Sure my investments are down right now, just like everyone else’s, but I feel confident that she has me well positioned to ride out this recession and go on towards retirement. However, even she is not what I might need if I were in a really bad situation. She is more of an investment advisor and not a credit/debt counselor. That is a very specialized field, made up of people who are used to figuring out ways to manage really bad situations and skilled at helping negotiate payment programs with debtors.

So the advice here is to seek out the professionals at the companies listed above or at other local credit counseling companies, for help if you are in over your head. Just be cautious if you are going to deal with a for profit credit counseling company, especially any company that asks you for a front end payment to help you work out your problems. This industry, like so many others in the financial world, is full of slick operators, who are out to shake you down for whatever little bit you may have left. Do you homework and check out the company before you pay them to do anything,

* - Iconocast is a cultural tracking news service that focuses upon trends within the various cultural groups that they have identified, from the youngest “Millennial” generation thru the generation of “Baby Boomers.”

Saturday, December 20, 2008

How will you respond?

“Life is ten percent what happens to you and ninety percent how you respond to it.” (Lou Holtz) – From a recent Jack’s Winning Words Blog. I get a lot of inspiration for life and for this Blog from Jack Freed’s Winning Words daily Blog. Jack is a retired Lutheran pastor, although I think using the word retired with any pastor is probably an oxymoron. He continues to have a positive impact on hundreds of lives on a daily basis.

Lou Holtz was a great college football coach. Currently he is a sports commentator and motivational speaker. I suspect that Lou’s teams were always well motivated for every game and certainly came out of the half-time break fired up by Lou’s half-time speeches.

Lou’s line in this post certainly applies to life in general and kind of takes off on my post of yesterday. We can choose to respond to the news around us in a negative and down way or we can choose to try to see some positive in things and keep an upbeat attitude about life. If you or your life has been a part of the news – a layoff or a plant closing, a divorce or death, or some other natural or man-made disruptive event – then it is how you choose to react to that will determine whether that event defines you or whether you decide to react and deal with it in a way that you define.

In real estate, I’m seeing people who aren’t able to keep up with their house payments take a couple very distinctly different routes in life when that reality sets in for them. One group just gives up and says “here take it” to the bank. They go on to foreclosure, maybe abandoning the house, many moving out of state. The second group generally calls someone like me and asks what they can do to avoid foreclosure or at least minimize the damage. We discuss the options of various workout programs or a short re-fi, offering the deed in lieu, or trying a short sale. I have to tell them that none of those may work and that they may still end up in foreclosure; but at least they will have tried and will have stayed in control of the process until the end.

To get back to the football analogy (and maybe a sore point in this area), can you imagine what it is like to be on the Detroit Lions team and a player or coach? Week after week they have taken the field believing that they could win and trying their best to win, yet they are 0-14 and have a shot at making history (perhaps better stated as a shot at infamy) as the only NFL team ever to go 0-16 in a season. These are professional athletes and as bad as it is to be in their position, even the most critical sportscasters have given them credit for not quitting.

I get to see lots of sad cases in the real estate market right now, but nothing is sadder than seeing a person or couple who have just given up - dejected and beaten-down. What’s that old saying “It’s better to have tried and failed than never to have tried at all”? So, I applaud the Lions’ players and coaches for trying and I applaud the distressed homeowner who refuses to go down without a fight. Nobody but you (and maybe me) may ever know how hard you tried and against what odds, but when you have to look at the guy in the mirror every morning you can hold your head up and say, “Dammit, we gave it a good try.” And who knows, you might even pull off that short sale and rescue most of your good credit rating. That certainly won’t be the case if you don’t try.

Friday, December 19, 2008

Be happy in 2009...

According to a recent INMAN News article by Bernice Ross - national speaker and CEO of Realestatecoach.com, is the author of "Waging War on Real Estate's Discounters" and "Who's the Best Person to Sell My House?" - there is hope for 2009 -- plenty of opportunities for qualified buyers; a declining REO/foreclosure inventory; an increase in the availability of credit making it easier for people to purchase; and families getting loan workouts that not only let them stay in their homes but preserve their neighborhoods as well.

No matter what the market does, she goes on to say; there are always opportunities. People still relocate, get married, have children, etc. It saddens me to see so many people becoming "victims" of the market. She states that her clients do not want to work with someone who is angry or depressed. Instead, they want someone who has the professional skills and a "take-charge-and-get-it-done" attitude.

Whether you’re a seller or an agent, being an angry or pessimistic "victim" of today's market can carry a cost, she says. If you focus on negative events, that negativity can spiral into more negative events. Psychologists call this a self-fulfilling prophecy -- what we expect to happen can steer actions toward making that prediction a reality. Several studies have explored connections between optimism and overall health and longevity, and whether positive thinking may be a contributor to wellness.

What can you do to increase your level of optimism? First, many events are beyond our control, such as terrorist attacks, the financial meltdown, natural disasters, loss of loved ones, etc. What we can control is our response to those events. When we experience a loss, we can wallow in our anger, fear or sadness, or we can look back at both the good and the bad in the situation, identify what we have learned, and then formulate at least one action step to take now to move beyond the situation. The key is to stay committed to moving forward and not sliding back into pessimism.

The other key factor in coping with tough times is to control our environment. According to philosopher Buckminster Fuller, "Environment is stronger than will." In other words, attempting to control your thoughts or actions is not enough. You must also control your environment. If your environment at work or at home is hostile or down, maybe getting away from that for a while will help you or, even better, doing something to change the environment by being happy, upbeat and positive and complimentary around your co-workers and family.

The burning issue is what will you choose for yourself in 2009 -- anger, fear, pessimism? Or will you choose an attitude that searches for opportunity in the challenges you face and is optimistic about better times ahead?

This article reignited the perpetual battle that I have between Mr. Grumpy and Mr. Happy – the two sides of my slightly bi-polar personality. Fortunately I have Pollyanna at home and Little Mary Sunshine at the office to keep Mr. Grumpy at bay. When someone asks me about how the real estate business is going, I say great, we’re selling more houses than ever. It’s true. Many are foreclosed properties; but, hey, they’re selling and the inventory is coming down, which is a precursor to a recovery. Yea, Mr. Happy!

Bernice can be reached at bernice@realestatecoach.com or visit her blog at LuxuryClues.com.

Thursday, December 18, 2008

Energy/Money Saving Tips for Winter's Cold Days

The average U.S. household will pay $2,300 this year on residential energy costs, with heating accounting for almost 45 percent of that total, according to a recent news release from the Alliance to Save Energy, a nonprofit public policy group based in Washington, D.C.

Gas and electric costs are up from last year, the group says. Data from the U.S. Department of Energy's Energy Information Administration shows that homes heated with natural gas will pay about $30 more compared to last winter, while those heating with electricity will pay about $80 more.

In Michigan, the Michigan Public Service Commission (MPSC) had this projection for the 2008/2009 winter. This winter, heating bills will be much higher in Michigan and across the country. Since the National Weather Service is expecting this coming winter to be warmer than normal, and if one assumes this will mean temperatures comparable to last winter, then consumption would also be similar to last year.

For the 2008-2009 winter heating season based on the average price of natural gas, residential customers in Michigan can expect their winter bills over the November to March period to be around $922, based on October 2008 prices. This represents a 21 percent increase in residential prices. The average residential price in Michigan for home heating oil on September 22, 2008 was $3.60 per gallon, up 13 percent from last year's average price. Propane has also increased slightly. The average residential propane price on September 22, 2008 was $2.45 per gallon, up 3 percent from last year's average


To help consumers cut costs, the Alliance to Save Energy is sharing these tips:

- Turn down the thermostat. In America, lowering it by just 1 degree can reduce heating energy costs by up to 5 percent–between $35 and $70, depending on the fuel used to heat the home.

- Plug leaks. Gaps between windows and doors may be small, but they can collectively add up to big energy losses. Plugging these leaks with caulk or other materials is the first action home owners should take to combat high heating fuel costs. By sealing those leaks and installing proper insulation, especially in the attic and crawl spaces, American households can reduce home heating costs by up to $180-$340 per year, depending on the fuel used.

- Heat people and pets, not empty space. About 80 percent of space is usually not being used at any given time. Closing vents in unoccupied rooms and using small space heaters to heat occupied areas can save a significant amount of energy and money.

- Use a programmable thermostat. It costs about $100, but if used properly, it can save American households up to 10 percent on their home heating bills–up to $90-$170 a year.

- Set the hot water heater at 130 degrees. Use cold water when washing clothes to save more energy and reduce bills for water heating.

- Replace the four most used bulbs with compact fluorescent bulbs. American households can save about $135 over the lifetime of the bulbs.

- Look for the label. When choosing a new heating and cooling system, windows, or appliances, consumers should purchase models with the ENERGY STAR label.

- Save gas on the road. Vehicle fuel economy can be improved with a few simple measures: tuning the engine (4 percent), using the recommended grade of motor oil (1-2 percent), keeping tires properly inflated (up to 3 percent), curbing aggressive driving such as speeding and rapid acceleration and braking (10 percent on average, but possibly as much as 33 percent), and removing unnecessary weight from the trunk (2 percent per 100 pounds). Even better, carpool, take public transportation, ride a bike or walk to really rack up the savings.

While many of these suggestions are “Well, Duh” kind of obvious, they probably merit revisiting from time to time. One could add other obvious things, like replacing your old drafty windows with modern thermal windows or replacing an old, low efficiency furnace with a new, high-efficiency model and adding insulation to your attic or walls; but that’s a job for Obvious Man, who in the summer months spends his time making sure that lawnmowers have a warning on them that one should not put one's hand under the mower while it is running.

Wednesday, December 17, 2008

It's not really exciting...

From the Jack’s Winning Words Blog comes this - “The idea of waiting for something makes it more exciting.” (Seen on an Andy Warhol poster). Normally I agree with Jack, who went on to site examples in which that little saying made sense, like waiting for Christmas or for a new baby to arrive. However, in real estate there is one waiting game that does not make things more exciting; it’s just plain annoying.

Waiting for banks to get back on offers that are made in short sale situations has become pure torture. The banks are overwhelmed by the case loads that they have and the bureaucracies that they have in place to deal with the issues of short sales. Stories abound of banks taking weeks, even months, to get back on offers on short sale and foreclosed houses. I’ve personally had 3-4 deals this year that didn’t go through because the buyers just got tired of waiting for a bank reply.

Short sales are particularly notorious for the length of time that one may have to wait. In those cases, the bank doesn’t yet own the property. The owners are often in arrears and may have already received default notices; however, the Sheriff’s Sale hasn’t taken place yet. The bank is being asked to take less than it is owed, even before the foreclosure process even starts. A variation on this same scenario is called a “short refi”, where the bank is asked to accept less than it is owed on a refinancing loan. In either case, the bank is gong to be out some portion of what it is owed, so you can see why it doesn’t just jump on these deals.

The logic from the homeowner’s perspective is that that bank should be willing to take less than it is owed to avoid the hassle and cost of going through the foreclosure process and the cost of managing the foreclosed asset. That makes sense; however, logic seldom hold sway within large bureaucratic organizations. Most of these institutions have policies for dealing with defaults that were put in place years ago and have never since been reviewed or changed. Rules and procedures that were meant to deal with an occasional default are now failing under the load of 1 in 10 homeowners being in trouble.

A few institutions that have already failed and which are now under new ownership and management (IndyMac Bank and Countrywide come to mind) have changed their policies and adapted new policies and procedures for trying to deal with the tsunami of defaulted loans that they face. My sense is that other banks are trying to come up with new strategies, but I’m reminded of that oft-used and ridiculous example of trying to change a tire on a car that is going 100 miles per hour – it’s tough.

So, we will end up waiting and waiting for replies on most short sales and some foreclosure sales; and we will be neither excited nor amused, just frustrated.

Tuesday, December 16, 2008

Think twice Send once...

From the Jack's Winning Words Blog comes this little gem - “If thou thinkest twice before thou speakest once, thou wilt speakest twice the better for it.” (William Penn). If Penn were around today he might instead say - "If you think twice before you hit Send in your email, you might be the better for it." How many times have you regretted something that you sent out in your email that you should have thought more about? I know I have many times regretted hitting the Send button.

Email is a communications method that almost encourages bad behavior, since it affords a slight degree of anonymity for users. Sure the receiver of your email can see your email address and send something back or track you down, if they really want to, but you're not standing there in front of them when you write your missive and so they can't see you then or reach out and touch (slap) you for having said what you just wrote.

Email is also dangerous because the reader of the email has the opportunity (maybe even the obligation) to interpret what it is you're trying to say. They put the emphasis on the words as they see them and that can change the intended meaning, making a mild rebuke sound like a flaming rant or even turning what was meant to be a compliment into an insult. Most of us don't spend much time carefully choosing our words for emails, especially those that are meant as mild rebukes or expressions of disapproval. So your message, telling a friend that you think they should reconsider an action or decision, becomes a flaming arrow that burns a bridge or at least inflames an already touchy subject.

The other email faux pas that can quickly be regretted is the tendency to hit "Reply to All" when one has received an email that begs (or provokes) an answer. That just compounds the error and let's everyone on the original mailing list see what a doofus you are. That's especially true if you share some piece of information that you intended to be shared only with the original sender, such as informing someone who invited you to a party that you're sorry that you can't attend because you have a colonoscopy scheduled for that day. Oops! Of course, some emailers want the world to know what their thoughts are about the original message, i.e. "You're an idiot for saying what you did in your email." Again, think before hitting the Send button.

The last email no-no that I'll discuss here is THE PEOPLE WHO APPARENTLY HAVEN'T DISCOVERED THAT THEIR COMPUTERS WILL TYPE IN LOWER CASE LETTERS, TOO. In polite terms this is called shouting. Maybe they meant to shout; or, perhaps these people have such bad eyesight that they can't see anything but capital letters; however, it is annoying to almost everyone who receives such messages (except of course those readers who also have bad eyesight).

My most consistent mistake with email (other than hitting the Send button to quickly on occasion) is not taking the time to spell check what I've typed. I'm not a good typist and often I'm dyslexic on short words like "me" and "the". In one email that I sent out to a client I was trying to tell her to "let me know" if she want to see some houses; it came out "let em know" and she emailed me back asking how she was to let them know. So, now I try to pause and go back over what I've typed to check for obvious transposition errors. If you have examples of bad email habits let em know. Now, should I hit the Publish Post button on this?

Monday, December 15, 2008

By the numbers – NAR on Pending Home Sales and other indicators

From a recent National Association of Realtors® (NAR) press release come these numbers and economic indicators. Pending home sales eased against a deteriorating economic backdrop but remain in a stable range, according to NAR.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, slipped 0.7 percent to 88.9 from an upwardly revised reading of 89.5 in September. It is 1 percent below October 2007 when it was 89.8.

“Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” says Lawrence Yun, NAR chief economist. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”

Conditions remain uneven around the country, but some areas that are showing healthy gains in pending home sales from a year ago include many Florida and California markets; Providence, R.I.; Lansing, Mich.; Oklahoma City; and Las Vegas.

By the Region

Here's what the PHSI showed across the country:

South: jumped 7.8 percent to 95.9 in October but remains 2.9 percent below a year ago.
Northeast: rose 0.6 percent to 68.1 but is 14.1 percent below October 2007.
Midwest: declined 4.3 percent to 79.7 in October and is 6.8 percent below a year ago.
West: fell 8.7 percent to 103.7 but is 17.4 percent higher than October 2007.

The Economic Forecast

New-home sales: for 2008 should total 486,000 this year, decline to 393,000 in 2009 and then grow to 446,000 in 2010. Housing starts, including multifamily units, are projected at 934,000 units in 2008 and 731,000 next year before rising to 772,000 in 2010.

Existing-home sales: looking at middle-ground assumptions, existing-home sales are forecast to total 4.96 million this year, and then increase to 5.19 million in 2009 and 5.55 million in 2010.

Home prices: “Price projections are challenging in an environment with so many variables and divergent local conditions,” Yun says. “The home price correction to date has brought prices in line with fundamentals, but buyer pessimism could cause prices to overshoot downward, resulting in further economic deterioration.” NAR’s housing affordability index is likely to remain quite favorable, averaging 138 in 2009.

Unemployment rate: is estimated at 7.2 percent in the first quarter, rising to 8.3 percent by the end of 2009.

Inflation: as measured by the Consumer Price Index, is seen at 0.7 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.5 percent in 2009.

GDP: Yun expects growth in the U.S. gross domestic product (GDP) to contract through the first half of 2009, then stabilize and expand in latter part of the year – lifted by a home sales recovery.

“Given the critical role of housing in an economic recovery, we’re confident sufficient stimulus will be offered to bring more buyers to the market,” he says.

Could a Drop in Interest Rates Help?

The 30-year fixed-rate mortgage will probably decline to 5.6 percent in the first quarter, rise slowly to 6 percent by the end of 2009, and average 6.2 percent in 2010. NAR President Charles McMillan says he’s hopeful about considerations by the U.S. Treasury to help the housing market.

“Efforts to bring down mortgage interest rates demonstrate a clear understanding of the role housing plays in stabilizing the economy,” McMillan says. “We’re very encouraged by all of the proposals getting serious consideration in Washington to help home buyers. More sales will stabilize home prices by bringing down inventory, and would lessen foreclosure pressure.”

Whenever I read or hear things by economists, it gives me a headache; and, I’m tempted to turn to that great philosopher and interpreter of life’s mysteries, Yogi Berra for guidance. As Yogi might say in this case: “You’ve got to be very careful if you don’t know where you’re going, because you might not get there.” Or maybe the Yog would have just looked at this whole housing mess and said (To paraphrase another famous Yogism): “They made too many wrong mistakes.” But in the end, even Yogi would have to admit: “A nickel ain't worth a dime anymore.” There, I feel better already. I just wish that economists, when ask about the direction economy, would follow Yogi’s lead and reply – “I wish I had an answer to that because I'm tired of answering that question.”

Sunday, December 14, 2008

Mortgage rates fall - applications up

From a recent real estate news feed comes this good news…If new mortgage applications are a reliable gauge of forthcoming home purchases, looks like things are looking up. Last week the Mortgage Bankers Association's national survey registered a record 37 percent jump in applications for new conventional loans to buy houses, and a 39 percent increase for home purchases using FHA mortgages.

What’s the reason for the sudden surge? A half point drop in 30 year fixed mortgage interest rates to 5.47 percent -- which was down from 6 percent the previous week -- and to just 5.13 percent for fifteen year loans. The rate drop happened almost overnight, after the Federal Reserve announced plans to pump up the housing sector by buying $100 billion worth of bonds issued by Fannie Mae and Freddie Mac. The Fed also said it plans to buy about half a trillion dollars of mortgage-backed securities issued by Fannie, Freddie and Ginnie Mae beginning this month. Ginnie backs the FHA side of the market, just as Fannie and Freddie do on the conventional side.

Although lenders report their phones were jammed with applications from people who want to refinance, the big surprise was the huge jump in applications from consumers who plan to buy houses. With prices down in the majority of markets, more and more people are finding that the equation now works: Fixed rates in the mid-fives combined with pricing at 2003 and 2004 levels make a compelling case that this is an excellent time to buy - provided you've got a down payment and reasonable credit.

One additional bright spot to report: Unsold inventory -- the backlog of houses that weighs down local markets -- dropped by a full point and is now down 4 and a half percent nationally for the year. Locally, in the little market that I track on a weekly basis (Milford, Highland, Commerce, White Lake and West Bloomfield), the inventory has dropped even more, down 19% since June of this year and 21% from the year’s high in March. Median list and sale prices have dropped too. Hopefully these lower rates will reverse the trend of homes staying on the market longer. See all of my local statistics at http://www.themilfordteam.com/.

To see how these new rates might impact your ability to buy a new home here in Michigan or to refinance your current home, call Agnes Miesch of John Adams Mortgage at (248)684-1065 (ask for Agnes and tell her that Norm sent you). She can tell you how much you’ll need for a down payment (which changes for and FHA loan as of January 1, 2009) under various programs and what you can afford. Then, call me and I’ll help you find the perfect new home.

Thursday, December 11, 2008

Ben says go while many taxpayers say no…

Federal Reserve Chairman Ben Bernanke said last Thursday that the government must do more to address foreclosures. Bernanke, speaking at a Fed conference in Washington, D.C., said that beyond just keeping homeowners in their homes, the Fed must continue to focus on foreclosure prevention to help stabilize the housing market and economy as a whole.

"The housing market remains central to the economic and financial challenges that we face," Bernanke said. "Reducing the number of preventable foreclosures would not only help families stay in their homes, it would confer much wider benefits."

According to Bernanke, about 15% to 20% of borrowers are "underwater" on their mortgages, meaning their homes are worth less than they owe. In addition, he said, 20% of subprime mortgages are seriously delinquent. Bernanke estimated that 2.3 million foreclosures will be initiated in 2008, compared to an average of 1 million before the mortgage meltdown.

Bernanke said the Fed, Treasury Department and Federal Deposit Insurance Corp. have already planned or put in place several measures aimed at stemming foreclosures. The government has, among other things, cut interest rates and announced a plan to buy $500 billion of mortgage-backed securities and $100 billion of debt issued by government-sponsored mortgage financers Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).

But Bernanke said more can still be done and outlined several "promising programs." One was FDIC Chairwoman Sheila Bair's plan, which would reduce mortgage rates, extend loan terms and offer government insurance against bank losses if borrowers who receive help end up in default anyway. Another proposal includes strengthening the Federal Housing Administration's Hope for Homeowners program by reducing the premiums paid by the lender. Bernanke suggested that Congress could give FHA the ability to set premiums on a case-by-case basis rather than an across-the-board approach.

Lastly, Bernanke said the government could buy up delinquent mortgages in bulk and refinance them under Hope for Homeowners or a similar plan. He said such a plan could help more homeowners stay in their homes than if the government refinanced individual mortgages in a more selective process. The Fed chief said all of the proposals could be used in tandem and would likely require additional public funding.

It’s that last point that has taxpayers up in arms about paying for all of these bailouts. In the same issue of CNN Money was an article that chronicled the angry reactions of homeowners and those who are waiting to own a home when they can afford one. Their take on all of this was summed up by Jay Black, a CNNMoney.com reader who rents in Queens, N.Y.- "All these idiots who bought homes they couldn't really afford are going to be rewarded with loan modifications, but what about those of us who didn't make stupid decisions?"
The case for bailing out homeowners is that foreclosures have far-reaching effects. As delinquencies have skyrocketed, most of the country has suffered steep home-price declines which has helped cripple the economy. Helping some homeowners but not others may not be fair, but it's necessary to keep the economy from deteriorating even further.

"There's always the issue - 'I'm paying my mortgage even though I'm upside down and my neighbor is not,'" said Mark Goldman, a real estate professor at San Diego State University.

Letting delinquent mortgage borrowers slide into foreclosure will only do more damage to the entire financial system, according to Goldman. That's the most fundamental reason to support government funded rescue efforts.

"The appropriate public rationale [for the bailouts] is to support housing prices," he said. "The reason they're doing this is to stop plummeting prices and everyone benefits from that."

So, what is the “right” answer to this crisis? Certainly doing nothing and letting millions of home owner default and property values continue to drop does not seem to make sense. Sure it’ll seem “unfair” to some, those who have not let themselves (or caused themselves to) get caught up in this mess; however, the greater good for the vast majority of Americans seems to be best served by taking actions to stem the tide of foreclosures and restore some sanity and value stability to the housing market. I have a lot less issue with helping home owners try to stay in their houses than I do bailing out a bunch of Wall Street fat cats, not one of whom has yet volunteered to give back the billions that they made while they were creating this mess.

Wednesday, December 10, 2008

Unwinding Dreams...

Last week's Business Week magazine had a story titled "Enter the Liquidators: We Unwind Dreams". The story was basically about the people who specialize in liquidating the assets of failed companies, specifically this story focused upon a company that liquidates the IT start-up companies of Silicon Valley. The main character highlighted in the story was Martin Pichinson, know to friends as Dr Death and among clients as Marty the Liquidator. His company, Sherwood Partners, is currently doing 12 liquidations a month, as the economy turns sour.

The story got me thinking about our industry’s liquidators – the agents and companies that specialize in short sales and foreclosures. These are our industry’s “vultures”. They feed on the dead dreams of distressed home owners or feast on the carcasses of abandoned and foreclosed homes. And yet, as disgusting as the circumstances may be surrounding what they see as opportunities; they, like nature’s vultures, provide a valuable service. They help get rid of the rotting hulks that are left behind with the shattered dreams of ex-home owners.

In the Business Week story there were customer testimonials about Larry the Liquidator and how clam he is in the midst of an otherwise tumultuous time for the companies being liquidated. Hopefully I can bring some of that same understanding and calm advice and counsel in my efforts to help people through the short sale process. That was certainly one of my goals in starting up the web site MIShortSales.net. The site is oriented to provide as much information about the process as possible and to set a re-assuring tone about the process. But the site is also honest, because it states right up front that going to a short sale still means that you are losing the house.

It’s not a lot of fun working with people who are in the personal situation where a short sale is the only answer left. But, at that point, it’s not about fun; it’s about trying to help that person do what’s right now, so that they can get back on their feet and get back into a home as soon as they are able. I don’t ever want to be known as Norm the Liquidator or the Dr Death of Real Estate. I’d rather that someone be able to look back at a bad time in their lives and say honestly that they are glad I was there to help them get through it. As I said in yesterday’s post; sometimes that’s all we can do – survive and persevere I may have to unwind a few dreams today; but, I hope that I do it in such a way that I can help make new dreams come true for those same people, down the road.

Tuesday, December 9, 2008

What would Steinbeck write about today?

When I was in college I did a paper on “Grapes of Wrath” by John Steinbeck. Steinbeck wrote the award winning novel in 1939 as a chronicle of the great struggles suffered during the dust bowl days of the Great Depression. The conventional wisdom was that Steinbeck meant the novel primarily as a social commentary about the conditions of the times. That was what the college professor that I had at the time expected to get back in the papers that she assigned,

What I wrote about was the use of the times as a vehicle for Steinbeck to write about the ability of people to survive and persevere in times of great hardship. I got an “A” on that paper for seeing the novel in a whole different light, perhaps one that even Steinbeck didn’t realize as he penned it (although I really believe that he did).

I wonder what Steinbeck would right about today. I’ll bet he would find another award winning novel in the hardships being suffered today by the displaced homeless. He wouldn’t have a bunch of hard scramble sharecroppers to use; but, I’ll bet he could find plenty of material within the families of the laid off auto worker, or the struggling middle class family whose mom just lost her job and the family can’t afford the house payments any more. These are our generation’s “Joads”.

And just like the Joad family in Steinbeck’s novel, our modern families will find a way to survive. They may have lost the family home, but they will find a place to land and eventually they will find new work and a way back. The fact is that we, as a people, have great resiliency. We also have great compassion and a willingness to help each other out. So, even though we are currently in what some are calling the worst recession since the Great Depression, we will find a way to survive.

As Little Orphan Annie always says, “The Sun’ll come out tomorrow.” And, we’ll still be there. And, that’s the important thing. We will persevere. I still think some writer should do a story about the trials of those displaced by foreclosure in this recession. There is a powerful story there somewhere; or to paraphrase the tag line from an old TV show, "There're a million stories in a foreclosed city."

P.S. I just couldn't help myself when I found this graphic. There's just too much cynic left in me. Where's Little Mary Sunshine when I need her?

Monday, December 8, 2008

Getting pumped up...

“Enthusiasm, like measles, mumps and the common cold, is highly contagious.” (Emory Ward) – from a recent Jack’s Winning Words Blog post. Enthusiasm and energy are what our office manager Vicki brings with her to our weekly meetings. Sometimes that’s a tough assignment, especially if one isn’t feel well themselves; but, somehow, she pulls it off consistently.

I have to work at it to stay enthused about the day-today grind. Sometimes my wife let’s me know when I’m acting down by calling me Eeyore, the donkey from Winnie the Pooh. I suppose I can be a bit of an ass every now and then, but I’m trying to get better at staying positive and up. Vicki calls me Mr. Grumpy when she sees that I’m down. It’s probably a good thing that they keep an eye on me, so that I don’t get down and wallow around in self-pity or doubt.

It’s especially hard sometimes to summon up enthusiasm when answering oft asked question, “How real estate these days?” Obviously, it’s not where any of us would like it to be, especially those trying to sell a home. But, I always answer the same – “It’s OK. We’re selling more homes this year than we’ve ever sold before and it’s a great time to be a buyer.” That’s all true. What goes unsaid and can remain unsaid as far as I’m concerned is that about half of the homes that we’re selling are foreclosed homes that are selling for about ¼ to ½ of what they would have gone for 2-3 years ago. That’s sad, but it does help sales.

What I do find it easy to get enthused about is working with the many first-time buyers that are out looking right now. Some of these buyers are about the ages of my kids and many are much younger. It’s fun to see how excited they get about finding the perfect house or at lease one that they can work on together to make perfect. I’ve had that pleasure several times this year and have 4-5 more couples that I’m working with right now, trying to find just the right house.

So, excuse me for now, I’ve got to run off and show houses to a young couple. All this fun and I get paid for it, too. How great is that!

Saturday, December 6, 2008

Life's challenges big and small...

From the Jack’s Winning Words blog comes this tidbit, “Having a dream is what keeps you alive. Overcoming the challenges makes life worth living.” (Mary Tyler Moore). I’d have to comment that we must all be living life to its fullest these days.

Lately the “dream” of having a comfortable retirement is one that many have had to work hard to keep alive. Not a day passes without some story about some company declaring bankruptcy and dumping its pension plan or about another company suspending health care coverage for retirees. It’s scary that you can work your entire life for a company that promised you a retirement pension, only to find out at the 11th hour that they can’t fulfill that promise.

Of course we all have also been told all along to save for our own retirements, but where could you have had that money (other than stuffed under a mattress) where is would not have been impacted by the recent stock market meltdown? There are some challenges that are more daunting than others and starting over to try to save some money for retirement, when you are already retirement age is about as daunting as I can imagine. Now many of use can better understand how the older workers at companies like Enron felt when their company and their retirement investments went belly up.

For many, a big part of the American dream has always been home ownership. Pursuing that dream recklessly got too many people in over their heads and contributed greatly to the mess that we find ourselves in these days. However, for many, who have had the discipline to wait and save and to reach for a home that is affordable, these are great times. The mortgage rates are still at historic low levels, even if you need better credit and a bigger down payment now. The selection is great and the values (what you can get for what you pay) are unbelievable. Many first time home buyers are actually able to buy what would have been their first “move-up” home today, rather than waiting years to get to that level.

So, if you’re just starting out, these are great times, with huge opportunities. If you’re on the other end of life’s cycle these are likely troubling and scary times with many challenges to overcome. It’s important to keep your dreams alive, no matter which applies to you. I guess that we at least won’t get bored as we all scramble to make the best of the situations that we find ourselves in today. Let’s all go out and overcome some of life’s challenges.

Wednesday, December 3, 2008

Rent-to-not-own...

From my weekly IconoCulture news feed comes this story about a new trend in which Gen-Xers are leading the way.

TREND: iLetYou: Loan instead of own

WHAT'S HAPPENING: Consumers who prefer to borrow products instead of buy them now have an online marketplace with iLetYou, a website that hooks them up with rental retailers.

More than 65,000 U.S. business are participating to help consumers benefit from short-term use of their products. Think everything from traditional loaners like wedding party supplies to novel newcomers like clothing and kids' furnishings.

iLetYou's website (http://www.iletyou.com/) puts the shopper directly in touch with the retailer by including their digits and a link to their site.

The down economy may be creating more commerce commitment-phobes looking for short-term consumption. Consumers are increasingly conscious of their accumulation of stuff. Some are trying to cut down on clutter by renting or sharing items that are infrequently used. It’s sort of a Gen-X take on the Boomer’s Rent-to-Own idea, only this is more Rent-to-Not-Own.

Actually this makes a lot of sense, since so many things in out lives get very little actual use that it doesn’t really make sense to own them. Seasonal toys like personal watercraft and snow mobiles come to mind, but it certainly could include lots of things around the house that we seldom use, but would like to have on occasion.

The key, it would seem is to make access to the items that we might want to rent easy and affordable, which is, I guess, where sites like iLetYou come into play. The iLetyou.com site basically aggregates and fronts a whole bunch of merchants who have agreed to offer rental programs on things. Some are very familiar, like the chain of Rent-A-Center stores for furniture, but some are just regular stores that have rental programs.

You can rent just about anything. Popular categories are furniture, party supplies, kids items, wedding supplies, games, sporting equipment and costumes. They have a category labeled kids, but it turns out you can’t rent kids there, just stuff for kids. Bummer! Renting a kid or two for a day would be a great way to test your parenting instincts.

So, basically; you could rent an empty house and rent a bed to go into it. Then if you have anyone over, rent the furniture needed to entertain for the evening (offering a delicious carry-out meal, of course), including a TV or games or whatever else you need and then send it all back tomorrow. Maybe they even have a deal with a local dating serve to rent a spouse for the evening too, in case the boss is coming over with his wife.

Of course, at the end of the evening, when things could get interesting, your “wife” will have to punch out and go back to the Rent-A-Center. It turns out iLetYou doesn’t cover that.

Tuesday, December 2, 2008

Best places to retire...

From a recent news story in U.S. News and World report comes this story on low tax places to retire. When one is retired and living on a fixed income, spending the least amount possible on taxes is smart money-saving strategy.

To find the most tax-friendly places to retire, U.S. News & World Report sifted through more than 2,000 U.S. locales to find spots with low taxes and the amenities that are important to retirees like an economical cost of living, good recreational opportunities and attractive cultural amenities.

Here are the magazine’s top 10 communities:

1 - Billings, Montana
2 - Cheyenne, Wyoming
3 - Doral, Florida
4 - Henderson, Nevada
5 - Juneau, Alaska
6 - Manchester, New Hampshire
7 - Nashville, Tennessee
8 - Sioux Falls, South Dakota
9 - Spokane, Washington
10 - Stafford, Texas

There are a couple on the list that were real surprises to me and some that are just in places that I wouldn’t want to live in retirement. Of course that wasn’t the point of the article or the research. Having low taxes is important; but, the quality of life that one can lead with the money that remains is important also. The little short piece that I saw about this story didn’t detail the cultural amenities that are available in each community, but a few of them hopefully have more than the local weekend rodeo to offer.

Certainly retirees are looking for more than just warm weather these days, although that is still high on the list of preferred attributes for many. Things like theaters and sports teams and art museums and other cultural attractions are important, too. That’s why college towns in many states tend to be attractive to retirees. They are just so much more vibrant and intellectually challenging that places that offer nothing more than “go to the beach” as activities.

Today’s Baby Boomer retirees don’t fit the walkers and shuffleboard image from years back. They are much more likely to out on the links or even out surfing than they are to be at the local bocce ball court. Still, saving on taxes is important to them, too; so maybe they’ll end up in some of these places, although I venture to guess that most won’t be heading to Alaska or North Dakota or Wyoming to save a few shekels on taxes.

Monday, December 1, 2008

How's real estate these days?

I get that question a lot, everywhere I go. People are just naturally interested in how the real estate market is doing. Many are interested because they are about ready to retire and would like to sell and move on with life, maybe in a smaller home. Some are interested because they are ready to buy their first home and want to feel sure that they are getting the best deal or find out if they should wait. Some are just checking to see when their biggest investment might start appreciating again and hopefully regain any lost value.

My answer is the same for all of them - the market is slow, but still moving. People are buying and selling homes. There are fewer people buying right now and it takes a bit longer to sell right now, but it is still happening every day. The lower end of the price spectrum is moving fairly well, with many foreclosed houses falling into that category now. First-time buyers are getting great deals on houses that they otherwise would not have been able to buy for years. Those move-up buyers who aren't tightly associated with the automotive industry are also getting great deals on move-up homes that have dropped in price over the last 12-18 months.

Most sellers have finally come to grips with what has happened to home values and are starting to realize that they will make up most of the loss on the home that they are selling on any new purchase, especially if they are staying in Michigan. The good news is that the rate of decline in value has leveled off and we may be at or close to the bottom of the devaluation adjustment.

After a brief period of confusion and adjustment, the mortgage industry is back making loans and still at great rates. The qualifications are higher now than before and that's likely a good thing, since it was the lack of qualifying buyers that got us into the mortgage mess to begin with.

If you want/need to buy a home, and you meet a set of very reasonable mortgage criteria; go for it. It's a good time to buy and prices may not get a whole lot better if you wait. If you want/need to sell your home, price it right and it will sell. Then you can become a buyer and get a great deal yourself.

So, how's real estate these days? It's OK. It's not good or bad, just different. We've all had to adapt to the new market and the new reality about home values. Those who have been able to come to grips with things as they are now are moving on with life. Those who can't yet let go of the past are stuck figuratively and literally. They are not buying or selling, just watching things happen and wishing for a return to the "good old days" of 2-3 years ago. Ain't gonna happen, folks. Get over it and get on with life. The reset button has been pushed and we all have to learn to live in the new game that has started.