If you are frustrated by the the human race today, consider the evolution in teaching since you were starting school.  Is it any surprise that looking at this one example, why our society has issues?

1. Teaching Math In 1950's
A logger sells a truckload of lumber for $100. His cost of production is 4/5 of the price.
What is his profit ?

2. Teaching Math In 1960's
A logger sells a truckload of lumber for $100 His cost of production is 4/5 of the price, or $80.
What is his profit?

3. Teaching Math In 1970's
A logger sells a truckload of lumber for $100. His cost of production is $80.
Did he make a profit?

4. Teaching Math In 1980's
A logger sells a truckload of lumber for $100. His cost of production is $80 and his profit is $20.
Your assignment: Underline the number 20.

5. Teaching Math In 1990's
A logger cuts down a beautiful forest because he is selfish and inconsiderate and cares nothing for the habitat of animals or the preservation of our woodlands. He does this so he can make a profit of $20. What do you think of this way of making a living? Topic for class participation after answering the question:
How did the birds and squirrels feel as the logger cut down their homes?
(There are no wrong answers, and if you feel like crying, it's ok. )

6. Teaching Math In 2009
Un hachero vende una carretada de madera para $100. El costo de la producciones es $80.
Cuanto dinero ha hecho el hachero?

Who knows what they will teach them next year!

President Obama is expected to sign House Bill 3548 as amended today!  (he did sign it)

I finally found a copy of the bill http://thomas.loc.gov/cgi-bin/query/D?c111:5:./temp/~c111AKbnXR:: 

Here are some of the key points that should be of interest to Realtors and Mortgage professionals:

This Act may be cited as the `Worker, Homeownership, and Business Assistance Act of 2009'

•  
  • (6) EXCEPTION FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE- In the case of an individual (and, if married, such individual's spouse) who has owned and used the same residence as such individual's principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.'.
  • (D) SPECIAL RULE FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE- In the case of a taxpayer to whom a credit under subsection (a) is allowed by reason of subsection (c)(6), subparagraphs (A), (B), and (C) shall be applied by substituting `$6,500' for `$8,000' and `$3,250' for `$4,000'.'.

• INCOME LIMITATION- Subsection (b)(2)(A)(i)(II) of section 36 of such Code is amended by striking `$75,000 ($150,000) and inserting `$125,000 ($225,000)'.
• LIMITATION BASED ON PURCHASE PRICE- No credit shall be allowed under subsection (a) for the purchase of any residence if the purchase price of such residence exceeds $800,000.
• If you are working with our armed forces personnel, make sure to read up on the "SPECIAL RULE FOR MEMBERS OF THE ARMED FORCES"

Except as otherwise provided in this subsection, the amendments made by this section shall apply to purchases after the date of the enactment of this Act. (which as of the time of this blog, have not yet been signed by President Obama).  I will amend this blog if another amendment occurs prior to his signature and/or upon his signature!

One thing is becoming increasingly clear to me - the American consumer is finally getting worried about the amount of this countries debt.  They are thinking about our ability to pay it back and realizing that the repayment will eventually come from us, the taxpayer!

My proposal is to extend the First Time Homebuyer Tax Credit and expand it for upper end buyers too since that market appears to need a lot more help than the first time homebuyers!  Wait, didn't I just say that we were adding too much debt and now I am proposing adding even more?  Yahbut!

Yeah, but, I propose making this credit a silent second on your mortgage so that the person directly benefiting from the tax credit has to eventually pay it back themselves!  I would prefer that the interest acrue at a below market rate but not be due and payable until the home is resold, but would agree to a no interest loan since the additional impact on our economy would offset the interest and still provide an economic stimulous.  I believe NAR's economists stated that the economic impact of the $8,000 tax credit was $65,000!

I recognize that there will be some default on the seconds; however isn't a 1% payoff even better than the 0% today?

I am not sure why so many people believe our government has to give stuff away for free (i.e. swine flu vacines).  If they are turning people away since supply does not exceed demand, generally private enterprise raises the price, they don't keep giving stuff away!  Why not give away the vouchers for the shot to the people that could justify spending 8 hours in line and allow them to sell it to the highest bidder on Ebay as a way of creating additional income for the homeless and underemployed willing to stand in line?

At some point we have to recognize that we have to stop feeding the pig.  We need to realize that when the piggy bank breaks, maybe we will need to consider making bacon, ham and hot dogs to feed our population instead of just printing more money and giving it out as quick as Bernie Madoff can take it!

Here is an excerpt from the email I just got from NAR.  If you haven't seen this, maybe you need to join their free "Broker Involvement Program"!  http://www.realtoractioncenter.com/realtors/brokers/

I had to adjust it a bit to get it to fit on my Faceboook page.

First Time Homebuyer Tax Credit update! Tentative tax credit agreement of yesterday has changed. A new agreement on extending and expanding the tax credit has now been introduced as a separate, stand alone bill. It could be voted upon separately from the Unemployment bill. Or not. The timing of the votes is still up in the air, but the good news is that they are still working on it!

 This has been a major effort by NAR so you dues are working for you!

I have attended well over a dozen NAR conferences in my 18 years of real estate.  They are fantastic and I always learn new things there each year.  This year’s conference is in San Diego from November 11^th to the 16^th.  (actual dates vary depending on courses you want to take and volunteer work prior to conference).  It is a relatively cheap place to fly to and there is lots of competition for hotels so if you are on a budget, shop around.  Your travel agent may even have some “vacation package” deal.  

Tips:

1.      Make up special business cards with a new conference email account and bring about 500 of them to pass out.  This way, you can track the leads you get back to this conference and you won't feel bad about dropping your card in all the vendor booths for their prizes knowing they will probably have already called your office or emailed you before you get back home.

2.      Allow two full days to visit the Expo! They have over 400 exhibitors this year.  Several years I have gone and only bought the expo pass for $25 instead of paying $330 for the entire conference.  http://www.realtor.org/convention.nsf/pages/exp

3.      Lodging is most convenient at the host hotels however you pay a premium for convenience.  Sometimes I have gotten rooms nearby for 1/2 the price and still can use all the same shuttles to different events.  I think Manchester owns both the Hilton and the Marriott so you probably have to go further to get much price variance this year.

4.      Review the agenda and when you have conflicts of which event to go to, choose to visit the vendors at their booth instead of taking a class and attend the class that may not have a booth.  Wouldn't you rather talk one on one with the instructor anyway? Use their event planner online.

5.      Make sure to look for specialty functions associated with any designations you may have:  (i.e CRS Day, ABR receptions, WCR functions, etc.)

6.      Learn immediately where you can get access to WIFI and determine if you need to bring your tablet (laptop) everywhere or not.  I have a special laptop case with wheels so I have no problem lugging it everywhere and it makes a great place to stuff all the give away items at the convention.

7.      Make a list of companies you want to follow up with.  Instead of dragging a suit case home with pamphlets you hope to read later, just write down the business category, their website and the person you talked to.  Maybe just write these notes on the back of their card.  The pamplet they hand you typically is not as comprehensive as their website.

8.      Wear something that people can associate with your area.  For example, I will probably go to the Idaho Potato Commission and see if they can spare a few hundred "Idaho Potato Pins" for me to hand out.  Sure beats being from Wisconsin and having to wear a cheese hat since that stands out way too much for me (grin).

9.      Network, network, network!  What a great way to meet top agents from all around the country personally to build your referral network.

10.  Post to your blog that you will be attending and invite your readers to meet you there.

11.  Don't physically plan to do any work the day you get back home.  There will be enough "surprises" and messages to return without having to fill them in between your prescheduled appointments.

12.  Change your email and voice mail to let people know you are investing in your customer service level by attending a national Realtor conference to help better serve your them and the best way for them to reach you while you are out of town.

13.  Many of the vendors will have special “show pricing” and “free delivery” or “no set up fees” so it is a good place to buy supplies for 2010

14.  Have a great time writing off the business expenses and mix in a mini-vacation while you are there!

I just learned of a great program from the good people at Walt Disney called Give a Day - Get a Disney Day.  I just emailed them for more details since I think this could be a great way for our local Board of Realtors to work on a civic project and then reward the people for serving by enjoying a day at Disney!  Every volunteer that pre-registers and completes their volunteer commitment gets a free pass, so get the family together and plan for 2010!

For details, go to:  

http://disneyparks.disney.go.com/disneyparks/en_US/WhatWillYouCelebrate/index?name=Give-A-Day-Get-A-Disney-Day

Many Realtors around the country are facing the same problem - how to get buyers off the fence and commit to buying a home!

I have had more luck recently conceding that prices may in fact keep dropping a little, but am able to show my clients why it can still make sense to buy now!  For example, stock brokers quit aspiring to help you buy low and sell high since they were always getting beat up for not buying at the lowest and selling at the highest!  They started telling their clients to just "buy now and sell higher later" so they wouldn't get blinded with hindsight later.

For example, here are two scenarios:

1. $250,000 mortgage today @ 5% = 

   Monthly Payment:

   $1,342.05 (Principal & Interest ONLY)

   
   
2. If your buyer thinks the property values will decline 5% more in the next year, just agree with them! Then the mortgage would be $237,500 instead of $250K.  Because you agreed with them that things are still eroding, they might agree that interest rates will go up due to additional economic concerns so figure the same house at the reduced mortgage but increasing interest rates to 6%.  $237,500 mortgage at 6% = 

   Monthly Payment:

   $1,423.93 (Principal & Interest ONLY)

   
   

It was a pleasure listening to Dr. Yun's perspective again today as he tailored his speech to the Idaho market.  I have had the privilege of hearing him speak at several NAR meetings in Chicago and in Washington, DC previously.

Some of the key take away points for me today included:

• Of the $800 million in stimulus money handed out , $10 million of it is doing what it was intended and that is the $8K First Time Homebuyer Tax Credit;
• The market is still not quite self sustaining since many buyers are still on the sidelines concerned about even lower pricing;
• Even though pricing is lower than year ago numbers, the trend is reversing and month over month numbers have been improving for 3-4 months;
• Nationally, we are at 5 months of increases in pending sales activity (seasonally adjusted);
• The removal of the excess bubble has already occurred and we are overshooting the correction now;
• Annual increases in appreciation is about 3-4 percent since 1970 so we are now below that curve;
• New construction inventory now stands at below that of the pre-boom days;
• Population growth and housing formation models indicate we should need about 1.3 - 1.7 million new homes a year and we are building way below that now;
• Even in 2001-2002 sub prime loans averaged 12 percent that were 90+ days delinguent;
• Current price increases annualized in parts of California may equate to 15% increases in property values;
• Major issues have shifted from Short Sales to HVCC and appraisal issues;
• Nevada and Arizona are also coming back well;
• Employment lags production numbers in the economy since companies can absorb additional production prior to having to hire.  Employers typically wait to make sure the demand is sustainable first.
• The number of renters that can afford to buy modestly priced homes has increased nearly 50% in recent years from 11 million to 16 million.

I will be hosting another EPRO Workshop Monday, October 26, 2009

With the potential end of the $8 First Time Home Buyer Tax Credit coming on November 30th, I have been thinking of potential ways to legally stretch the available time that is left to my clients advantage.

I started wondering when the "life" of a home begins according to this program.  Is it based on a permit, completion date, certificate of occupancy, or when  it is converted from a house to a home via the transfer of the deed?

If a buyer was to obtain a "construction perm" or a "one time closing" loan for a brand new home prior to November 30th, since the property is already deeded into the buyer's name and the interest is being paid by the new "owner"; would they still qualify for the deduction?