The term ‘bailout’ has become a staple in the American economy over the past few months. Everyone has heard about the $700 billion bailout of financial institutions and just as many heard about the bailing out of Fannie Mae and Freddie Mac from back in October. Some people have been for or against it, and with just reasons. On one hand, we’re using more government spending that could be used better elsewhere to save something that was by all means failing. On the other hand, banking and housing are driving factors of the economy and you can argue that the money couldn’t be better used elsewhere. Regardless of what your opinion is, $700 billion is a lot of money for our government to be spending. It’s a lot more money than a school levy ever needs, and some areas struggle to pass those, so it’s really hard to imagine what $700 billion is needed for.

A lot of people look at financial institutions and immediately think loans, more notably mortgages. Its no secret that when it comes to mortgages, there are institutions that end up giving more money out than they should be to some customers, and we find ourselves in the situation we’re in today with borrowing standards being more restrictive on all fronts. Because of these restrictions, people aren’t making the big investment in home owning or putting their stake in a new home, despite a great buyer’s market.

I bet you’re asking yourself “Dave, where are you really going with all of this?”

The Housing Stimulus Plan from the National Association of Realtors was recently approved to be submitted to Congress. The plan is centered on getting apprehensive buyers to get into the market, helping lead to an end of free falling home prices. As I mentioned in a previous blog, Real Living has held two City Wide House Hops and while I don’t know the success rates of the open houses translating to transactions, I do know from my open houses that the incentives Real Living incorporated with Real Living Mortgage didn’t translate into business for me. Few people really didn’t react to the incentives, which told me that it was not enough to meet their needs. Something on a national level needed to be done.

The plan has four focal points:

1. Take the $7,500 first time homebuyer tax credit and make it available to everyone and eliminate repayment provisions.

2. Keep the Fannie Mae and Freddie Mac loan limits at their 2008 levels.

3. Use money from the $700 billion bailout to lower mortgage interest rates to a max of 4.5% on a thirty-year mortgage on homes under $1 million for homebuyers.

4. Prevent banks from taking part in real estate brokerage and management.

There it is in a nutshell. This is what real estate is trying to do with the money from the bailout. There was an uneasy feeling from people when the $700 billion was granted by the government, and mainly because people didn’t exactly know what it was for other than a failing system. This however proves there is a plan in place to help revive a very important sector of our economy.

I like the plan to be perfectly honest. People are more adverse to spending money right now, so the $7,500 tax credit should be open to everyone. Everyone is going through the same economy and if real estate is going to nationally rebound, you can’t expect a tax credit and first time homebuyers to do all the heavy lifting. The biggest impact I see coming from this plan however is the interest rate buy-down plan. I have friends and clients tell me 6% interest rates are just too high, so you can see where this is my favorite part of the plan. Lets look at how big an impact this is going to be if it’s passed by Congress.

Take a $150,000 home with $10,000 down on a 30 year mortgage with 4.5% interest and $2000 in property taxes. The payment on that will be a little under $1000. Looking at today’s current rate of 5.75%, which is still low, your payment would be a little under $1100. You would be spending $1200 more a year over 30 years. I don’t think I need to multiply $1200 by 30 years for anyone to see what they would save over the entire length of the mortgage. Let’s just say instead of exact numbers you would easily save what could amount to two cars for your future kids to drive to school or up to two years of college education, depending on the school of their choice. Now imagine how much money you could save if the experts are right and supporters want the rates around 3%.

Hopefully this plan or one very similar to it gets passed through Congress. People need to not fear home owning or this economy if they have a steady job. With stricter lending standards, this plan looks like the kick in the butt fence sitters need. The only real flaw would be its lack of help for those who are in danger and already own a home, so that may be what holds the bill back from being passed.

I highly suggest reading the article about it over at RealtyTimes.com. http://realtytimes.com/rtpages/20081203_buydown.htm

It’s the basis for most of my information, but it’s definitely got me intrigued to look more into it. It’s quite exciting to think of the chain reaction of events that get more people in the market of buying.

This is a blog I probably should have written before Thanksgiving, but once the holiday hit, I decided to take it easy and enjoy the time spent with family. The news tells us every day that there aren’t many things to be thankful for. Whether it’s the hot topic of the flailing economy or the usual local crime, there isn’t much to generally be happy about. Thanksgiving however gives us focus and perspective on what there is to be happy about, and call it a cliché, but I’m going to use this blog to say what I’m thankful for as a realtor.

I’m thankful for low interest rates in this economy.

The economy and real estate almost go completely hand in hand, but with today’s economy, housing hasn’t been as affected as people are being led to believe. Real estate over the past few years has been undergoing price correction and over this past year we’ve only begun to see it reflect in home sales. You may be led to believe that interest rates around 6% are bad, but it was only back in the 1980’s where rates were as high as 13%. Rates in the long term are looking to decrease to below 6%. The economy may be making people wary about buying homes, but the real estate market is doing its job to keep you in the game.

I’m thankful for becoming a realtor at the start of a less than viable housing market.

Realtors in times like this decide to either retire or get out of the game for other economically viable career paths. I graduated college and jumped right into real estate in spite of hearing all of this. People tell me this is a bad market to start up in and I tell them it’s a great market to start up in. If you’re new, you already have to build from the bottom up. This kind of market only drives you to do the things you need to do to succeed. Someone who’s been in the business when times are good may adhere to “You can’t teach an old dog new tricks,” and continue to do things the same as they always have and that may be where you as a new agent would snap up buyers. Personally, this market has taught me to always search for a better way to do business, even when times are good, cause when times are good, they still have the potential to be great.

I’m thankful for being a realtor in this technological time.

I can’t imagine what it was like being a realtor before the days of the internet and cell phones. The information super highway has made our profession so much easier when you really sit and think about it. The internet based MLS we use to find homes used to be a huge book we’d have to look up codes in and the only way we’d be able to be reached by clients would be by a phone hooked into a phone line. We wouldn’t be able to fax or e-mail anything to our office or to our clients. There was a time where Mapquest and GPS were only ideas on a piece of paper. Advertising was left to print and television. The internet is so important that it’s where people do most of their home searching now. I’m very thankful for the time I grew up in, where computers were being integrated into school curriculum and information was making a rapid transition from paper to digital.

And lastly, I’m thankful for the news…sort of.

The news is a catch-22 for realtors. Think about the ten second news commercials for the 6 o’clock and 10 o’clock news. You rarely see and hear the news anchors leadoff with a heartwarming story or good news for people. It’s generally about local violence or tragedy. Most recently the headlines were about Black Friday, which were either about the local worker in NY being trampled and subsequently killed or “Best Deals on Black Friday!” News items need to be captivating to sell papers and gain viewers, and lower mortgage rates or housing sales up over the last month aren’t going to make people tune in. Its good news that people feel they don’t need details about. If foreclosure rates increase without end in sight, people will tune in or read about that to get all the details. I know I generally read into news items like that so I know just how bad it is, but being a realtor, news items like that are very misleading. This market is great to buy into, but unless you talked to a realtor, you never would know that. That’s why I’m thankful for the news, because it inspires people to ask us, the experts, about what the market is really like. I just have to hope that it inspires more people to ask me questions than sit back and decide against buying or selling.

Well, now that I think about it, I have one more thing to be thankful for. I’m thankful for anyone who read this blog. It goes to show I spent my time well and at least it entertained and informed you for 3-5 minutes.

Hope everyone had a great Thanksgiving. Christmas is right around the corner!

I’ve heard some good things about blogging when you’re a real estate agent. It helps your exposure, it showcases your knowledge, and it can allow prospective clients to get a feel for who you are as both a realtor and as a person. I’ve heard of the advantages of blogging for months, but never jumped on the bandwagon. As a realtor in his first year in the business, who was I to be blogging about the market or changes in real estate compared to other realtors who had been around for a much longer time period?

The answer to that came upon reading the introduction to “Shift: How Top Real Estate Agents Tackle Tough Times,” by Gary Keller. Gary mentions how buyers are more reluctant, fearful, and with higher anxiety. He also mentions how people are getting out of the market.

I thought he was talking about the current market, seeing as the book is already copyrighted for 2009, but he was talking about the market in 1979. He followed that up with the following information; 22 years of age, new to the industry, new to his market. Now I’ve lived in Columbus for 8 years and had family here since shortly after my birth, but just by looking at me you know I don’t have the 30 years of experience other realtors have. You look at me and you see someone fresh out of college, and that’s exactly who I am. I’m in my early twenties, just like Gary, in the same kind of market. There was one question I asked myself after reading this introduction.

If Gary can write a book, why can’t I at least attempt a blog?

I’m not at all comparing myself to Gary Keller, who’s the chairman of the board at Keller Williams Realty International. I’m far from comparing myself with him and will likely never reach that level of success in real estate, but if you ever want to give yourself the chance to reach that point, you have to take chances.

Real Estate is all about taking chances. We take a chance when we financially commit ourselves to becoming realtors, whether it’s the money and time we spend on our education to acquire our license or the money and time we spend to keep it. Those are all common chances we take, but there are many others we take uniquely. Some of those may relate to marketing, prospecting, or personal branding.

For me, I took a chance wearing experience on my face and now I take a chance by imparting what I have in knowledge and experiences in blogs. In this market, buyers are more wary than ever and if we as realtors are going to be good at our job, we need to make their primary real estate news source be us. We know how good this market is for them. Rates are still favorable and there is still money out there in the mortgage industry. The news would simply report interest rates are higher (faintly mentioning compared to earlier this year) and lump mortgages in with other money lending programs having difficulty. We need to be an alternative news source!

I guess we’ll see whether or not blogging is for me, but a risk not taken is a reward you can’t claim. In other news, Real Living is hosting another Citywide House Hop this Sunday, November 9th. It’s a great opportunity for anyone who’s interested in buying sometime in the near future to get to see a ton of open houses and pick the minds of agents they may need to consider to serve them later. As someone that has two open houses on Sunday, I know I’ll be hoping for lots of traffic, so if you know anyone that may be interested in home owning or changing locations, tell them about the House Hop or click on the link below.

http://her.realliving.com/HouseHop.aspx

It really is a tremendous event that’s had a lot of hard work put into it, so take advantage of all the information that’s being given, not to mention the possible $10,000 in savings you can have if you close within the next ten days.

Hope to see you Sunday!