I have an unsubstantiated rumor that a particulr zip code in Indianapolis is tagged as being in a declining market. I did a little research and in fact if you look at the entire zip code, it is in declining market. I then narrowed it down to particular legal descriptions and guess what, not every legal description was in a declining market in fact some had actually increased. I guess FANNIE MAE is getting it's information from the morning news and not reality. There is no doubt the real estate market is more of a challenge than normal (maybe some of the weaker agents can leave now), however this attitude of blanket statements needs to stop. If FANNIE MAE wants to see market turn around, which it seems they would then perhaps those in charge should get off the couch and smell the coffee and make sure the information being relied upon is accurate, or take a neighborhood that is doing well and help it make a downturn.
I recently read a book titled "Masters of Sales." The book contained brief articles from various people such as Zig Ziglar, Tom Hopkins, Ivan Misner and more. The article that had the strongest impact on my psyche was Ocean of Sales by Linda McCarthy. Linda used and analogy about sales people that she picked up from Chellie Campell in the book The Wealthy Spirit. Chellie says there are 3 types of people Dolphins, Tuna and Sharks. We have all met these people somewhere. Now you may wonder how does this apply to sales people so I would like to pose the question, do you know somebody that has not been in sales at some time in their life, think hard now, if you answered no then you have never been on a first date and you can stop reading now. According to Chellie Campbell: Dophins are intelligent, friendly, happy and playful. They communicate well, they swim in schools. They've been known to protect other fish and protect other fish.
Tuna are food They don't know the blood in the water is their own. Everything that happens to them is somebody else's fault. They take no responsibility for the choices they make.
Sharks are eating machines. They are born that way, it's not their fault. When you find yourself in the water with a shark, get out.
So how do the above behaviors relate to salespeople. Let's start with sharks. Shark salespeople: it is all about the kill, there is no concern for the client. You've met them at business events, it's about getting as many business cards out as possible, they tend to be a little,well a lot overbearing and seem to have nothing other on their minds but the sale.
Tuna, ask tuna how business is and you will hear all about the bad market, others in their office that are holding them back, everything except them being responsible for anything going on in their lives.
Dolphins are interested in you, like to build deep relationships, talk more about your desires than themselves.
At one point in my life I worked at a car dealership, don't let that scare you. The dealership had all three types of salespeople there. My favorite, possibly the only car salesperson I ever met was Don. Don is retired now, we go out to lunch now and again, I don't take the sharks out. I remember once listening to Don talk someone out of buying a particular model car. The customer came in convinced he wanted a sport package, leather etc. Don asked him some questions about what how he used his car and discovered the man was a geologist and did a lot of field work and would be using his car for work and he always took his rather large dog with him. Don proceeded to sell him a less expensive car that the customer could lay the back seat down, for the equipment he carried, put up a barrier for the dog and had enough clearance to drive down dirt roads. By doing this Don mad less money and made a customer for life. I don't know what kind of salesperson you would like to be, but I am going for the Dolphin so if you want a shark or a tuna you may want to call someone else, or I could find one for you they usually leave a trail of blood that is easy to find.
I was listening to the radio (NPR) today while on the way to walk through a house for a final inspection prior to closing, note I was going to a house that some one was just getting ready to complete the sale.
Someone on the radio mentioned that there are currently 9,000,000 homeowners in the USA that are upside down with there home, i.e. they owe more than they could sell the house for if they should need to sell. This is roughly 10% of the homes owned in the USA. The federal reserve has been tracking this number since after just after world war II. The commentator then asked would this have a negative impact on the number of homes going into foreclosure,well of course as people discovery they have negative equity they will walk away from their homes. (Excuse me, I am not really an avid Ronald Reagan fan but I am going to have a Reagan moment.) My take this comment "Well here you go again."
To make such a blanket statement that when people are upside down on their mortgage they tend to walk away from the house raises several questions for me.
The commentator also made it clear that this was not a good time to buy a home.
1) Where do they go?
2) Do they also sell the stock they have because it is worth less than they paid for it.
3) Why would I leave my home just because I owe more than I could sell it for? After all I have to live somewhere and granted I do like backpacking and have a nice tent, but I also like a hot shower now and again.
4) Why is this a bad time to buy a home?
It is time for the media to be specific. Speaking in blanket terms is not responsible reporting. Granted there are parts of the country that are in trouble, there are parts of Indianapolis that are not doing so well. Granted some people will simply walk away from their homes, usually those that have adjustable rate mortages or purchased more home that they should have to begin with and granted if you put no money down you may, may feel less compelled to try and stay in your home, however after 16 years in real estate sales no one has called me to say I am just walking away, most want to work things out. If someone is being transferred for a job, it may be a problem depending upon where they live, but quit getting on the airwaves telling me that my neighhood is in terrible shape, cause it isn't. I have told homebuyers and owners for years that if people checked their home value on a daily basis, no one would buy a house, but you gotta live somewhere so why make your landlord rich.
I don't know the solution(s) to the real estate markets current problems but let's start with a little truth on the part of the media and the experts. Yes things are challenging however the market is not blanketly bad and it is still a good time for investors and first time buyers.For goodness sake people think this through, I met someone today that refinanced at 4.5% 15year fixed mortgage, and the media will tell us the bad news monday that the interest rate jumped to 4.51% and make it sound like the rates are higher than they have ever been.
P.S. what do you bet the same newscasters that preach the sky is falling own several homes, probably bought a bargain in FL.
Several weeks ago I posted a blog about Indianapolis being ranked as the most affordable housing market in the country by Forbes Magazine. Well now the city is ranked as one of the top places for a market rebound, wow what a great time to buy.
Comeback Cities: Top Places Ready for a Rebound
The oldest rule of investing: Buy low, sell high. With some housing markets bottoming out, now could be a good time to get ready to make money on the slowdown, says Business 2.0 magazine, which has worked with Moody's Economy.com to identify 10 major metropolitan areas that are coming back to life after a slowdown.
The following is a list of the 10 metro areas identified by the magazine, including their projected median sales prices for single-family homes and the percentage of growth expected in the next two years. While the numbers are moderate, they are a huge improvement over what's been happening in these cities and others, the magazine notes.
Indianapolis is riding a few trends that are bringing about an early recovery in its real estate market. While Indiana's capital city did join in the housing boom this decade, prices didn't reach the stratosphere. Indianapolis still suffered through the downturn, though: Building permits for new homes dropped 30 percent from their peak in 2005. But the housing market hit bottom earlier here than in most parts of the country - during the last quarter of 2006. Now, with the local economy poised to grow faster than the national average over the next two years, house prices are projected to post a respectable gain.
Indianapolis's low unemployment rate has made it a destination for people fleeing cities like Fort Wayne, Gary, and Terre Haute. It's also relatively cushioned from slowdowns in the national economy because more than a third of its workforce is employed in stable sectors like professional and business services, health care, education, and government. Those white-collar corps also help boost Indianapolis's median household income to $50,500 a year. Given that you can buy a four-bedroom, 2,000-square-foot home for less than $200,000, that makes the place the nation's most affordable major metro.
Granted the rules have changed, you can still buy a home for little or no money down but now you must have a record of paying your bills on time.
If you have questions about buying a home in Indianapolis or a surrounding county feel free to can me or go to my website and sign up for a free report on how to buy for no money down.
I was on the question and answer sectio of AR this morning and read a question by someone from San Bernardino County California had a question I have seen posted before, also a scam I have heard of before.
You can Click Here to see the question. The story is one I have seen on the six o'clock news here in Indianapolis which in itself is nothing special, however what made me smile was the good advice the person was getting from agents across the country not just agents from Indianapolis or Indian or California but many states. The beauty of that for me is it confirms to the individual that posed the question that what she was about to do was extremely risky financially.
I don't know why it never dawned on me that the same scams run in Indianapolis work elsewhere, but it sure dawned on me this morning.
So how do I love active rain? Heres a few ways:
1) Fast communication and sharing of experience from around the country
2) A wealth of solid advice from agents and lenders with years of experience.
3) No question is to foolish.
4) Maybe, just maybe if the person that wrote the question paid attention we as a group may have save her a lot of money and with market the way it is we all need to watch each others back.
5) You can't beat the price.
I would really like to know how many ways you love Active Rain
I was reading a article in a local business journal yesterday about the sub prime mess. The premise was we can blame the problem on the education system for not teaching fincancial management. After reading this I must admit part of me agrees, however I see three things that may have helped prevent this mess and by blaming on the education system are we not blaming the victim. I see three things to could make a world of difference; Ethical lenders, real estate agents and builders.
Were Lenders Acting Responsibly?
In my humble opinion many were not. The lenders that I typically work with would work harder to get someone to wait six months, help them straighten out credit issues and get them in to a loan that is sensible for them. If any lender I refered did offer a sub prime the buyer was well educated about what they were getting, payment increases, pre payment penalties etc. Then of course there were the lenders that would switch people loan program at the last minute knowing the moving truck was loaded and not much the buyer could do.
Real Esate Agents Part In The Crime
On more than one occasion I have had a buyer come in very excited and pre approved for a loan. When a buyer comes in pre-approved the agent has a choice, they can just accept it at face value or read the pre approval talk with the lender and if there is something funny about the loan explain that to the buyer and ask is this what you really, really, really want. My experience has been most people will wait.
Builders Part
Many, not all but many tract builders salespeople pushed to get buyers in a home with total disregard to the financial well being of buyers, let alone the big picture for the neighborhood they were building. It is somewhat understandable because they are probably being pushed to Sell not consult or ask any questions about what the buyer wants. One solution to this might be to make salespeople have their real estate license and explain who they represent. On one occasion I had a young woman come to be after being told she could buy a $150000 house in a new subdivision (sub prime loan of course) and her income was $26000 a year. I have no idea how they were going to do this but thank goodness she decided to wait and get some debt paid off and lower her sites a bit.
Solutions Short and Long Term
For the present President Bush has made what I hope to be a good decision. I see this however a short term solution.
PresidentGeorge W. Bush announced that HUD's Federal Housing Administration (FHA) will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecureplan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing...
LENDERS PLEASE NOTE: FHA WILL PUBLISH A NEW MORTGAGEE LETTER WITH GUIDANCE ON THE NEW FHASecure PROGRAM ON OR ABOUT TUESDAY SEPTEMBER 4th, 2007 at: http://www.hud.gov/offices/hsg/mltrmenu.cfm
Long Term
1)Possibly coming up with an in depth training program for first time buyers explain finances and mortgages. 2) Police our own better. If you hear, see or smell predatory lender don't just turn your head, by doing so you have become part of the problem 3) Close the coffin on Sub Prime and lock it tight. 4) Lenders, real estate agents and builders sales reps, be truthful, make sure people are getting what they need and not what you need; a paycheck. We could all stand to take a step back and ask ourselves three questions 1)Is what I am about to do in the best long term interesst of the client and the company. 2)From the clients point of view are they be treated with respect 3) From the clients point of view am I exceeding their expectations?
In Conclusion
I may be wrong but there is no one group involved in the real estat industry that is to blame, we all share a part of it, but let's not blame the victim. Let us all become pros at what we do with high standards and realize the trust the people put in us and take that trust very, very serious.
Danny Baize
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