Archive for July, 2008

Advantages of using a real estate agent

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One of the easiest ways to sell or buy a house quickly for the right price is to choose a good, efficient and experienced real estate investing who will work for you, and work with you to sell or buy a property.

Jeff Adams Real estate investors focus on one area of the real estate market. They may have additional training and authorization in that area. Most real estate agents specialize in different areas such as office or industrial property, retail property, and real estate investments. Some agents deal with only sellers or only buyers. Some may deal with only renting or leasing of property. The different types of real estate investing agents are commercial real estate, residential real estate, and real estate investments.

Though the only drawback of using jeff adams real estate agent is the need to pay their fees and the need to choose the right person, there is lot of benefits in using them for selling or buying your home.

A real estate agent provides various advantages. This is of course the experience of many buyers and sellers who use them. A real estate agent who has enough experience in selling houses and who has up-to-date knowledge of the current market can help you to decide the exact value and correct price of your home. Serious real estate continuously upgrade their skills, and hence they can easily say whether a house is priced too low or too high than market. You can also approach a real estate investor agent with strong local or internet marketing skills as they can help you a lot in marketing your home sale offer. The real estate agent knows the magic of marketing the house to the public.

Good real estate agent will bring you potential buyers if you are selling your home, and will bring potential sellers if you are in need of a home. He may even suggest you to make good necessary changes at your house in order to invite prospective buyers. He will guide you throughout the whole process of real estate transaction, and is capable of handling the complications of the transaction. You will also save time if you hire a good real estate investing agents, as he will take care of the needed things.

A number of real estate agents are members of real estate clubs and therefore have access to essential resources. By hiring one of them, you can gain their influence. When you hire a real estate agent, your comfort and confident level will rise. The real estate agent will give you invaluable advice with no fee. Thus with the support and guidance of an experienced and efficient real estate agent, buying, renting, leasing, or selling a home can be a smooth, enjoyable, quick, stress-free and highly profitable process. In fact, their efforts will be well worth than their commission fee.

Choosing the right real estate agent is very important. If you choose a real estate agent with less knowledge and experience regarding the real estate business, then you have the possibility of landing up with some problem during any time between the transactions. So, it is important to select someone with enthusiasm and drive, someone who will give you the attention you need, someone who is capable of handling the complications of a real estate transaction, and someone who will guide you throughout the whole process with politeness and professionalism.

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Subprime ARMs are not to Blame for Foreclosures

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It’s no coincidence that states with the largest shares of adjustable-rate mortgages -Nevada, California, Arizona, Florida, and Colorado- are also among the states with the highest levels of foreclosures. The link between adjustable rate mortgage (ARM) concentrations and foreclosures has become increasingly apparent in the year or so since the subprime loans that originated at the top of the market started resetting.

This has made the temptation to blame ARMs as the reason for the high number of foreclosures incredibly hard to resist and very few media types has been able to do so. But this does not mean that we have to follow suit without being analytical and even critical in our approach.

Let’s look at the facts. If Adjustable Rate Mortgages were the main culprit in the increase of defaulting mortgage payers and foreclosures then states like Texas which only has a 12% share of the total in adjustable mortgage rates would not show as much of a spike in foreclosures as other states which are more exposed in terms of ARMs.

Yet Texas was 14th in the national statistics in terms of the number of foreclosures being experienced there. This indicates that an entirely different culprit is at play when it comes to foreclosures and that an adjustable rate mortgage only serves to make matters worse.

Looking at Texas as an example we see that the real estate industry there overheated in terms of development with developers and mortgage companies jumping on the bandwagon in order to capitalise on a trend they regarded as unstoppable and capable of constant growth.

This attitude (which it has to be said is totally unrealistic) led to development of housing and properties in more and more remote zones (because of low building costs) where homes were put up quickly, sold and bought with the mortgage companies doing almost anything possible to sell mortgages.

This lack of restraint and somewhat unethical behaviour contributed to an influx of unsuitable buyers in the housing market, which, under any other conditions, would never have been approved for loans in the first place.

So what seems to have gone ‘wrong’, if such a label can easily be applied, in this case, is the fact that the market was allowed to grow unchecked and without even any self-imposed balances and that, beyond any other particular reason, seems to be the most central reason for the sharp rise in foreclosures.

To be sure adjustable rate mortgages have exacerbated a bad deal and made the situation worse but the existence of an ARM, on its own is not enough, It takes greed from the point of the developers who built houses in areas that are less than ideal and greed from the part of the mortgage companies which failed to ensure that even minimum lending criteria were being applied. And it is this approach to real estate that has to change if we want to return to the golden age of the real estate industry in America.

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Home Sales Slowdown Signals Foreclosure Increase!

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In real estate, every single action is followed by an opposite and sometimes equal reaction. The news that Bay Area sales of new homes have slowed to their lowest point in 15 years signaled a rise in tension as lenders began to nervously examine their lists of borrowers who have fallen behind on payments.

Let’s take a moment to examine why one area should be affecting the other. Lenders make their money by doing what they do best: lending money to borrowers who pay it back with interest thereby leading to a large profit. There is a certain remorseless logic of specialization in this area which occurs by default.

What I mean by this is that lender’s are happiest when they lend money and collect payments because that’s what their business is really geared up to do and borrowers need to borrow money at a rate they can afford to repay it.

Now the moment you have house sales dropping and borrowers defaulting, lenders begin to get nervous. They get nervous because they sense that the economy is taking a dip which means that those borrowers who are teetering on the edge and are just managing to make the payments and have now fallen behind, and are finding it tougher to make ends meet. You would think, at this point, that the fact that lenders have lent money with a house as a collateral would be enough to take the edge off their nervousness. After all, logic tells you, the moment a house owner cannot make payments and the loan goes into default (and remember these two things do not happen simultaneously, there is a lengthy process involved) the lender will take possession of the house, call foreclosure upon it, and get their money back.

Ok, logic here is wrong. Here’s why: Lenders have specialized. Taking possession of a home and selling it is the worst case scenario for them because they know the have no specialized staff to do this. It is a costly exercise for them in terms of administrative costs, because they are not geared up for selling houses and they will get back in most cases is going to be well below the house’s market value. That means that the moment a lender decides to play hardball with a house owner (who can no longer make payments and take possession of the house), they are losing money and are only trying to decide what is an acceptable loss.

This leads me into the Bay Area news which is bad for those home owners who have fallen behind on their payments and those lenders who have loaned money to them. A slow down on house sales means a slow down on the economy which means a dip in house prices and a buyer’s market. For a lender who has taken possession of a house because the owner defaulted on the payments means that house prices are dropping and their loss is increasing. This makes it more likely for them to foreclose on properties which have not yet reached the normal default stage, because the lender does not want to risk waiting and having to sell the property six months later at a greater loss.

This is bad news for borrowers struggling to make ends meet because the lenders are getting trigger happy and are less likely to listen to a home owner who has fallen behind on their payments. Suddenly, the news coming out of Bay Area is a clear signal that suddenly there is a very cold wind blowing in the home buying business and lenders are getting uneasy.

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Foreclosures Lead to Altered Behaviour by Lenders

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Countrywide Financial Corporation, America’s biggest mortgage lender and now part of the Bank of America Corporation, made headlines when it announced that it had restructured 81,000 mortgages in order to permit borrowers to avoid foreclosure and stay in their homes.

You would expect a foreclosure expert, like me, who has often stated that foreclosures are part of the balancing mechanism of our free market economy and a means for the real estate and mortgage lending system to self-correct, to say that this is disastrous news.

In reality nothing could be further from the truth. The fact that Countrywide has bowed to both government and public pressure is absolutely great because it highlights exactly what I have been saying all along. Foreclosures, sad as they may be in their reality, also represent a correction mechanism and an opportunity to release money which would otherwise be locked up tight in the debt part of our economy, but this only works when they are a true, representative and therefore ‘normal’ part of our economic model.

In the case of Countrywide the implication has been that many mortgages were oversold using aggressive selling practices and this is leading to an eschewed picture of the real estate market with more foreclosures coming to light than there normally should be.

A system out of control is no good to anybody. It does not help lenders, it does not help real estate investors who need to find the right kind of foreclosure and it does not help home buyers and mortgage investment institutions all of which need to have a certain faith in the system before committing themselves in any way.

The Countrywide announcement is the best indication yet that the current crisis we face in our country with foreclosures increasing exponentially as a result of predatory selling practices is leading to a reform, sometimes a voluntary one, of the mortgage selling code. This means that the real estate market will soon be in the robust state of health it was before the crisis hit. House prices will start to rise again. Real estate will be a good investment area to be in and the mortgage lending market will stop getting the bad publicity it has been receiving.

Because there truly never is a cloud without a silver lining the lessons learnt from this crisis will serve to make sure that the U.S. real estate scene goes, once more from strength to strength, and continues to deliver solid value to our economy.

Additional legislature by the government at federal level will probably mean that these hard-earned lessons will not easily be forgotten and the U.S. real estate industry will learn that unchecked, predatory selling is a short-sighted goal that delivers quick profits in the short term but only results in greater damage in the long run.
 

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FOLLOWING UP ON LEADS IN A TIMELY MANNER

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Marketing plays an important part in selling any product. The marketing department includes advertising and sales. A through survey has to be done before selling anything. Then the leads have to be followed to clinch the deal.

Any product that has to be sold needs to be given enough advertisement. Then the people interested will respond. These are the leads. These people should be contacted. The first thing would be to get a questionnaire to be filled in. This will be the lead sheet. This might give you an idea of the interest of the person who has filled it in. Their address and contact numbers will also be there. A lead code should be devised. This will help in rating how ‘hot’ the lead really is. Many people may be interested in the product. All the people even slightly interested in the product should be followed immediately. This is what following the leads is about. To get the lead, electronic lead-collecting system can be rented. This will swipe the person’s card and give you all the details. All the information should be recorded and used properly for following the leads.

Now that all the information has been gathered, it is necessary to sift the information and get to know who is really interested in the product. These people should be followed up. The information that they want should be immediately mailed to them. It should be done quickly, not a month after they ask for the information. The lead response letter that is sent to them should be short, precise and should give them all the details politely and in a manner that they should want to buy your product.

Lead managers can be employed to do a thorough of following the leads for your company. The other members of the team should follow his/her leadership. The manager will be able to give directions to follow leads. The marketing department and sales department should work together to follow leads.

A flow chart or a timetable can be made so that the leads can be followed. This will involve getting the lead and following it. If the lead is really interested, immediately get the person to consider the product with all the relevant information. This should all be done as soon as the person shows interest. Then take the product and even when there is likeness of a sale, get the initial sales report. When the sale is completely over, get the final sales report. This whole process involves a long period which has to be done very quickly. It essentially depends on how quickly leads are followed. Hence, leads are very important in any sales deal.

Following leads is essential in any business or sales venture. This is true with trade exhibitions, clothes, medicines, books, marketing clothes etc. The main problem in marketing that about seventy nine percent of the leads are not followed up at all. If they are followed up, it is not done at the right time. By the time the lead is followed up the person might have lost interest in the product.

A thorough study has to be done, a lead manager employed, flow charts or timetables made, to follow up leads. If leads are followed in a timely manner, and at the right time when the customer wants the product, any sales venture is sure to succeed.

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Mortgage Relief Plan does not go Far Enough

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I know it’s unusual for a foreclosure expert to stress that what we need in order to make the real estate market work properly now is a mortgage relief plan that really delivers the goods, but I will explain why I say this.

Foreclosures, as I have noted in countless articles and speeches across the country, are a balancing mechanism that is an integral part of the mechanics of our real estate system and our economy. As a percentage of home owners, foreclosures, are always going to be there because the mechanism does a number of things automatically:

1. It stops the real estate market from overheating by increasing the number of foreclosures, organically, as more houses are bought and sold and some, inevitably, will fall foul of the requirements and be unable to keep their home.

2. It releases new money into the system and the economy stopping loaned money from becoming gridlocked in a property that the owner cannot afford to keep and which is going nowhere.

3. It allows houses which have been gridlocked and are ‘dying’ to come back into the real estate market and be sold at affordable prices which to new owners pursuing the great American Dream of owning your own home.

As I mentioned before the moment this mechanism gets flooded with more foreclosures than the system is supposed to produce it stops working properly and begins to cause imbalances in the real estate market that do more harm than good to the industry as a whole.

Proposed relief plans which will supposedly freeze Adjustable Rate Mortgages (ARMs) so that those who might not be able to afford them will actually be able to do to so and will not lose their home do not go far enough.

Let’s take Corona in California, where the mortgage-relief plan being pushed by the government is supposed to help debt-laden homeowners across America. But it’s creating dashed hopes and fresh tensions in this city that mushroomed during the subprime-lending boom.

The problem is that the lending occurred in a very indiscriminate and predatory way which effectively removed many of the criteria for lending while the rescue plan that’s being proposed comes with a stringent set of criteria many of the most needy home owners will simply not be able to meet.

Nationwide, California is among the leaders in foreclosure filings this year. It notched state-record highs for default notices and homes lost to lenders in the June-to-September quarter, according to DataQuick Information Systems, a La Jolla, Calif., real-estate research firm.
The time has come to put together a mortgage relief plan that actually provides mortgage relief. Then and only then will the foreclosures we see work as the organic, balancing mechanism we know and start to provide real value in our real estate economy.

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Foreclosures will continue if there is a Solvency Issue at Big Banks

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Foreclosures reached epic proportions for much of 2007 because the real estate market suffered an unprecedented global credit crunch during which many traditional lenders stopped lending money and started chasing late payers and non-payers and foreclosing on their properties.

This turned foreclosures, essentially a balancing mechanism within the real estate market, into a ticking time-bomb which threatened the global economy and which was fast becoming an issue because of liquidity.

Liquidity means that as investor and saver confidence started waning banks were facing the possibility that should there be a run they would be unable to sell all the mortgages they owned fast enough to cover the amount of money borrowers would want to withdraw.

Liquidity causes issues because to forces banks to be really careful with the money they lend as they may have to pay it back to those who have put it in the bank in the first place. Liquidity, however, is a transient problem. Yes, it does undermine investor confidence and shake the real estate market but it is a problem of time.

Simply put, given sufficient time, most banks facing a liquidity problem have enough capital in their books to meet their commitments to savers. The global finance rescue package that was announced by the Fed and the Bank of England as well as the national banks of Canada and Switzerland will together see the banks inject at least $600 billion.

This will go a long way towards addressing liquidity fears but it will not be enough if solvency starts to become an issue. Solvency is a far more difficult problem to deal with. Simply put solvency happens when the price of real estate and property begins to drop to a level where the mortgages that are owned by a bank are not enough to cover its commitments. At that point the bank itself begins to exist on a wing and a prayer.

For solvency to become an issue foreclosures need to continue at the rate we see now and house prices will have to start to drop at a rate that will be called ‘alarming’ by the press. This will create negative equity and a sense that real estate no longer is a fit vehicle for investment which means we will have a real freeze of the market which will not be able to be jump-started even by real estate investors working foreclosures.

Thankfully we are not there yet but there are some worrying signs which should it prove they are real will make the real estate market and the global economy even tougher than it is at the moment. 

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Jeff Adams In The News…

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Real Estate Investors are the Catalyst in the Real Estate Market

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The moment you have a slow down in the real estate market you begin to realize the vital role played by real estate investors. As the name suggests real estate investors are there to invest in the market which means they go to great lengths to do their research and they take greater risks than ordinary buyers and sellers precisely because they are creative in the way they buy and sell property and are able to find both buyers and sellers in the most unlikely areas.

When the market is gridlocked due to either overheating (which causes many problems in its own right) or a real estate slump (when prices begin to fall and house buyers are cautious) real estate investors provide a much needed catalyst. They are willing to do the work necessary to find properties which are locked into the market through foreclosures and release them creating an upward and onwards movement within it which benefits everyone involved in real estate.

The assumption is that usually only realtors and lenders can benefit from real estate. In fact there is an entire peripheral industry depending on it and the services within it range from DIY stores to home furnishings and furniture stores.

In truth, real estate, drives a huge chunk of our economy and the recent global crunch in credit and the rockiness we witnessed in the markets was a direct result of  lack of faith in the value of existing mortgages which led to a withdrawal of available credit between banks which in turn reduced the amount of money that was available to be loaned to borrowers and that, caused a tremendous upheaval in the market and a wave of foreclosures which, quite frankly, should never have seen the light of day.

Throughout all this real estate investors managed to find houses, find buyers, find finance and close deals. Admittedly the work was harder and the margins slimmer than ever but they did it and it kept the real estate market afloat long enough for banks to rally and come up with a global finance rescue plan for the lending institutions which were facing difficulties and that led to a revitalizing of the real estate market.

The temptation here is strong to think that we are now out of the woods. With more money than before available for them to borrow banks should be able to loan money but now that the question of liquidity is solved the question of solvency is beginning to raise its head.

Solvency is a much more serious issue than liquidity and if it proves to be a problem it will put the real estate market back to the doldrums it was in for much of 2007.

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Foreclosures Will Start to Ease Off as Credit Crunch Dissipates

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It’s true what they say. Money really does make the world go round and the lack of it can threaten to bring the world to a standstill. In recent months the global credit crunch has made banks unwilling to lend to each other which means that they have been even less willing to lend to consumers and this has led to a tightening up of the money available to do anything.

This kind of situation is exactly what can potentially bring about a recession, a shrinkage of global markets and a reversal of the progress we have made through globalization. Because the potential risk has been so great it goes without saying that the world’s greatest banks would do something about it.

Sure enough The Fed, the Bank of England, the European Central Bank and the national banks of Canada and Switzerland have banded together to put in more than $100 billion into the world monetary system.

The result of such action is a speeding up of the sluggish world economy which means that in terms of real estate the green light is back on. Real estate is a funny business because in order to work right it requires two things: new home buyers and foreclosures. New home buyers are required because they are the lifeblood of the system. Foreclosures are needed because they help keep things in control.

Foreclosures are a balancing mechanism that unlocks ‘dead money’ and puts it back in circulation, revitalizes the market and helps to create fresh supply and demand where before you had a deadlocked situation between a borrower and a lender with the only potential outcome the lender taking control of a property and spending a lot of money trying to sell it at a loss.

The credit crunch that we were experiencing was affecting man lenders and lending institutions and, in its international outlook, was stopping overseas investors from pouring in money that could jumpstart the sluggish U.S. housing market.

All this is now set to change. While it may be a brief while before we experience a really positive outlook in real estate again, 2008 looks set to be a seminal year in terms of the real estate market and foreclosures in particular.

The tightening of credit we experienced has led to a pruning of bad practices and bad lending accounts and the fall out has actually benefited the market as a whole. This means that we are now ready to turn a new leaf having learnt from the mistakes of the past and foreclosures can once again become to golden wedge helping to open up new areas of real estate and attract new home buyers into the market.

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