Mike Calhoun's Blog

The Last Days of August

Mike Calhoun (iMarketLuxury) — Fri, 03 Sep 2010 15:46:29 -0700

Here's the most important reading of the week, hands down: "The Fight Over Foreclosure Fees" What's being discussed, in accurate detail, is the very future of our industry.

"No aspect of the U.S. mortgage business will go untouched by this," said one attorney I spoke with, on condition of anonymity. "It won’t be long until we have a federally-regulated foreclosure industry, where Congress sets allowable fees. We might even operate under a single set of federal statutes when all of this is said and done."

Obviously, this is a big deal and worth paying close attention to, so...here's the link again: print this out and pass it along.

Meanwhile...

Shaun Donovan is probably wishing he never said this...

ED HENRY: Is that housing credit now dead? Or does the administration think you should try to revive it to try to prop this industry up?

DONOVAN: Look, Ed, I think it's too early to say after one month of numbers whether the tax credit will be revived or not. All I can tell you is that we are watching very carefully. I talked earlier about new tools that we will be launching in the coming weeks and we are going to be focused like a laser on where the housing market is moving going forward. And we’re going to do everything we can to make sure that this market stabilizes and recovers.

That's from an interview with CNN last week and his slip-up has been headline news ever since. Everyone has been talking about whether or not this was a signal that the Housing Tax Credit might be coming back. Calculated Risk was skeptical about the possibility, and The Wall Street Journal was even more blunt (declaring "Ignore It") and when those two sources agree on something...it's a safe bet. Economist Tom Lawler wrote an angry rant claiming Donovan "may have just made near-term housing sales worse."

It's not easy being a politician -- actually saying nothing is a very difficult trick. I believe that Donovan was attempting to do exactly that: come up with a paragraph of filler on the spot. It's very unlikely that the Housing Tax Credit will be brought back in 2010. (After November, though, that might become a likely forecast for 2011.)

Does the Real Estate market even want the Tax Credit brought back? CNBC did a poll today, and if these results are any indication, perhaps the NAR would be smart to let this one die...

The Yale economist Robert Shiller recently talked to WSJ about the need for "inspirational ideas" for housing policy. From their summary:

He lamented the fact that the policy responses of the Bush and Obama administrations have so far amounted to reactive “patches and bailouts.”

What’s lacking, he said, have been “forward thinking” measures that would be “more inspirational to the market by creating innovation and progress.”

Where are those ideas? Well, journalist/blogger Felix Salmon has been offering a lot of worthy ideas over the past few years, and this week he wrote a short, excellent article about The Rental Alternative. As we reported last week, PIMCO's Bill Gross was calling for even more aggressive nationalization of the Housing Industry...but of course, Bill Gross also stands to make a lot of money from that outcome, too.

Shiller himself had two suggestions: first, indexing mortgage rates to inflation, in order to protect US homeowners from a "Great Depression" scenario...and second, a "preplanned workout" in all future mortgages to make modifications and defaults into a streamlined, automatic process instead of the hostile negotiation it is now.

So far, though, the song remains the same...everyone knows there's a problem, but nobody is taking accountability. Even the Federal Reserve has been trapped in the same argument for months now. Of course, while the experts argue, RealtyInfusion readers are out making money and doing deals every day. The rest of 2010 will be a real-world test of the Free Market's ability to make things right.

Finally, here's a strange find from the always-interesting Seeking Alpha about Google's recent decision to invest $86 million into...low-income housing? Apparently so!! Looks like it's for tax breaks, but Google has been branching out into every other utility...could this be a sign of Things to Come?

An Update on Where Luxury Foreclosures are Headed...Up!!

Mike Calhoun (iMarketLuxury) — Fri, 03 Sep 2010 15:38:35 -0700

Mindy Sylvester is one of our "Superstar" clients!! She's having an amazing year and I wanted to share this latest blog from her, focusing on the LUXURY Short Sale market, something I know many RealtyInfusion readers are involved with...

Via Mindy Sylvester Naples Fl Real Estate (Downing-Frye Realty):

"We've been waiting for a year and a half for the deluge of bank-owned properties, and it hasn't happened yet." -- Mark Goldman
For the first time in a couple months, the Luxury Real Estate market got a detailed write-up in a national paper. Thanks to Los Angeles Times reporter Lauren Beale, I'm feeling a bit more confident about my view of the market than I was yesterday! It's always nice to get some confirmation from the national news.

Then again, given the mainstream media's track record...maybe I should be worried??

Anyways. Here's my breakdown of the most important points from the rather lengthy article "Foreclosures of million-dollar-plus homes on the rise"...

1. Luxury Real Estate is DIFFERENT. The trends and statistics for Luxury market exist very separately from the larger Housing market here in the US. While foreclosure levels have been slowing down since the record peaks of 2008 and 2009, the numbers have actually been increasing for homes worth over a million. So along with conventional Short Sales, distressed sales of Luxury Homes is a newly-minted growth market.

2. The Forecast Calls for Huge Discounts for Years to Come. The higher upscale you go, the bigger the discounts are. Top-end Luxury homes are going at fire-sale prices in 2010!! Beale concludes that the effects of "Shadow Inventory" have been mostly contained, explaining "there's more interest from banks to modify loans or go for a short sale, in which the house sells for less than the lenders are owed."

3. There Really is Financing Out There. Even in a tight credit economy, it turns out there's not only lenders available for Luxury home purchases, there's even competition at the top end of the market! The article quotes Karen Caskey from the Beverly Hills-based RS Capital, who loves working with banks: "If all their requirements are met, I've had an answer the same day," she says...adding "There's good savings in the $2-million- to $4-million range."

Finally, there was one "Doom and Gloom" voice in the article claiming that the discounts are going to get even bigger -- Bryan Ochse from the super-busy Media West Realty was very blunt: "We believe the high end is ready to fall apart." Food for thought! There could be even better deals and bigger discounts to come in 2011...

The "Future of Housing and Finance" Roundup...

Mike Calhoun (iMarketLuxury) — Mon, 23 Aug 2010 18:32:37 -0700

It's like something out of a movie. There's been a crisis that affects the whole country .. maybe the whole world .. and the President convenes a group of the smartest experts and the most powerful investors he can assemble to advise him. But of course, in the movies, after a long dramatic argument, somebody proves their case...and a course of action is decided upon.

Last week, at the Future of Housing and Finance conference in Washington, DC, there was an incredible cast of characters assembled, but unfortunately, there was no Hollywood ending in sight. The headline from Newsweek says it all, I'm afraid: "No Consensus on the Future of Housing Finance."

The Cast of Characters

The most-quoted voice at the conference was Bill Gross, the manager of the massive investment conglomerate PIMCO. "To suggest that there's a large place for private financing in the future of housing finance is un-realistic," he said. "We need a government balance sheet." He also advocated an ambitious mortgage refinance plan that was making headlines all last week. That's not surprising, though .. "Full Nationalization" makes for one heck of a headline!!

In sharp contrast, Timothy Geithner never broke his role as a moderator. In fact, he was so vague most of the time, it felt like a Saturday Night Live skit: "Some suggest that, as a government, we have provided too much support for housing, while others suggest we provided too little...It's safe to say there is not yet any clear consensus." Thanks, Tim.

HUD Secretary Shaun Donovan wanted to see less government involvement in the future .. much, much less: "To be clear, the government's footprint in the housing market needs to be smaller than it is today - where FHA and the GSEs collectively guarantee over 90 percent of all mortgage loans." His remarks made it clear that everyone in the control tower at Fannie and Freddie is not comfortable under-writing the entire housing market at once.

Here's an important detail: the executives of Fannie and Freddie didn't even make an appearance at this conference. Because of this, a lot of experts have been brushing off the whole event as more political theater. Mortgage analyst Laurie Goodman told Newsweek: "Nothing will happen on reform for years. The conference is a big blah, blah, blah."

What's Your Call?

Do you think this conference was worth all the coverage, or was it just a bunch of noise. In a room full of geniuses...does anything get done?

Peak Foreclosure 2010

Mike Calhoun (iMarketLuxury) — Mon, 23 Aug 2010 12:32:47 -0700

Here's a fact that woke me up more than the coffee did: "25.5 percent of consumers now have a credit score of 599 or below." Wow...Good morning!!

We're working harder every day because this Short Sale market just keeps building momentum. Thanks to ActiveRain, we've got a lot of new readers in the past few weeks, so today I wanted to recap some "Big Picture" concepts.

So let's review...

Here's the single-sentence summary from yesterday's post: "From the week ended June 5 to the week ended July 10, more than 2.1 million Americans lost their benefits, and another million will join them by July 31." As we've discussed before, the number one indicator for future foreclosures is unemployment, and unfortunately, that's one trend that shows no signs of reversing, or even improving all that much.

This morning, Realty Trac released their report for the first half of 2010, and they're expecting over a million homes will be repossessed this year. As their VP Rick Sharga said, "The underlying conditions haven't improved."

Not only that, but it's looking like conditions might get even more drastic in the second half of the year. HousingWire editor Paul Jackson was the source of my morning wake-up call:

New data released today by FICO Inc. show that a whopping 25.5 percent of consumers now have a credit score of 599 or below. That’s a market of more than 43 million people, and growing every day, too—thanks to unemployment levels that appear set to remain painfully high for the next five years.

This is the definition of growth market, too: historically, only 15 percent of consumers have found themselves with a credit score below 600. Now, a quarter of consumers fit the profile.

To round out today's Big Picture, the Wall Street Journal is reporting on a sharp rise in housing inventory in markets around the country. The best recent estimates from S&P called for three full years before Shadow Inventory is remotely cleared out...expect to see those estimates increase in light of the new numbers!!

Nobody knows just how bad it's going to get. What we can say, with total confidence, is that we're all going to very busy for the rest of the year...and probably several more years to come. If you're not already using our Short Sale Engine, right now would be a great time to check it out. If you're dealing with a lot of Short Sales, we have THE best technology for processing your paperwork, automating your business and empowering your associates. Take a look at what we can do for you...

Realty Infusion Short Sale Processing Engine from Realty Infusion.

Always Winning, Together!!

RealtyInfusion Featured on BankRate.com!!

Mike Calhoun (iMarketLuxury) — Thu, 19 Aug 2010 11:46:17 -0700

Our very own Garrett Heaney got interviewed for a recent BankRate.com piece about Short Sales, where columnist Steve McLinden takes on the question Why Do Short Sales Sputter and Fall Apart?

"With every short sale, there are dozens of required documents requiring as many signatures, dates, witnesses, initials and sometimes notaries," says Garrett Heaney, a spokesman for Realty Infusion in Seminole, Fla., a real estate technology firm that sells short-sale processing software.

"Now, try to visualize getting all of these documents collected, organized and submitted through the required channels within any time frame and you'll have a good idea why less than 20 percent of traditional short sales are successful," Heaney says. Thanks to Steve McLinden for reaching out! I guess it's a testament to how well our RealtyInfusion blog has been doing that we're being taken seriously by journalists these last few months. I think it's also an added sense of responsibility, though .. realizing how much our audience has grown, and how much our readers are relying on us to filter out the BS and noise!!
It's been a long, busy and amazing summer .. here's a quick look back at some of our most important articles you might have missed!!

Chinese Money and US Real Estate 101 -- a review of a new trend that's quietly shaping the recovery: billions of US dollars coming into the market from...China?? Worth reading!!

There's No Way to Make the June Numbers Look Good -- I'm not a pessimist, I swear!! I am a realist, though, and I had to take issue with articles and blog posts that tried to "spin" June's disappointing numbers into a good thing...

Would YOU Live in a Shopping Mall? -- looking at one of the more radical uses for neglected commercial Real Estate in 2010 .. converting it into living space, apartments and condos!!

Finally, check out our book recommendations: here's 5 Mind-Blowing Business Books, and 4 More Visionary Business Reads.

Do I Need a Hardship to do a Short Sale?

Mike Calhoun (iMarketLuxury) — Mon, 16 Aug 2010 14:46:04 -0700

Bryant Tutas always does awesome work .. and this post was ESPECIALLY relevant for our readers!!

Via Bryant Tutas-Tutas Towne Realty, Inc:

Well that's a good question. What do you think? Most folks would probably answer this question with a resounding YES! But...what if I told you the answer is "No....you don't necessarily need a hardship to qualify for a Short Sale. You may be able to do a Strategic Short Sale". Heck, big business and lenders do them all the time.

One reason lenders/investors may approve the Strategic Short Sale is that the hardship in no way changes the financial outcome of the Short Sale for the lender. The numbers are still the same. In fact, the numbers may even be better for the lender on a Strategic Short Sale because the Seller is in a financial position to contribute. So why wouldn't they approve it?

Now while you may not have to have a hardship to do a Short Sale you may very well be required to be delinquent on your payments. This is mostly due to government intrusion into the process. For example HAFA (Home Affordable Foreclosure Alternative) requires the mortgage to be: "delinquent or default is reasonably forseeable."

Also, if you have an FHA loan: "At the time the PFS (pre-foreclosure sale) closes the loan must be in default (i.e. delinquent more than 30 days)." FHA DOES require a hardship.

If you are way upside down on your mortgage and see no light at the end of the tunnel then you have to ask yourself some hard questions. The reality is that most of us will have to move for some reason over the next 5-7 years. So ask yourself:

If I'm upside down on my mortgage today will I still be upside down in 5 years if I have to move then?

Would my family be better off if I took the financial hit today instead of waiting?

If I did a Strategic Short Sale today would I be able to rent a property for my family and save a substantial amount of money each month?

How will going through a Strategic Short Sale affect my credit and will my interest rates on my credit cards go up drastically?

How will a Strategic Short Sale affect my job (security clearance)?

Ask yourself hard questions. Seek legal advice from an experienced Attorney. Talk to your CPA. Have a family meeting.

Then if you decide that a Strategic Short Sale is the option for you, remember, there are no guarantees it will work. You may be asked to contribute to the "Short". What I tell potential Sellers when they ask the question is... "If you have no hardship and you have assets or sufficient income the bank may very well want some of it. You may have to bring a cash contribution to closing and they may also want you to sign a promissory note. But you may very well have your Strategic Short Sale approved."

These are difficult times and that require making difficult decisions. Let me know if I can help.

Are you facing foreclosure in Florida?

Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

Want to find out more? www.CentralFloridaShortSales.com

***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

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Can You Stop Calling us "Vultures," Please??

Mike Calhoun (iMarketLuxury) — Mon, 16 Aug 2010 14:05:18 -0700

""People are not in it to flip like back in the old economy. The new economy dictates that you have to have a long time horizon."

--Matt Martinez

I read a really strange article on CNN Money last week. The entire point of the article was about how Real Estate investors are helping neighborhoods and cities around the country recover, getting more involved with their properties long-term, and stepping in where nobody else will to fix what has to be fixed...and yet the title of this article is "The New Vulture Investing." What gives?

It's no surprise to RealtyInfusion readers that a lot of "Flippers" are making the transition to long-term holdings and rental income -- after all, a lot of you are already doing exactly that! What is surprising is that anti-investor bias is still being paraded by the media in 2010 .. even in an article that's about how much good investors are doing!!

America doesn't need a bad guy to point fingers at...America needs solutions. Call me crazy, but I don't think that making investors out to be the villain is a very productive use of time and resources for CNN Money. That's enough sermonizing from me, though. Let's dig into the article itself...

Some Interesting Details

This confirms what a lot of our clients have been telling us in recent months:

Although conditions are very favorable, investors have to be adaptable because the market is evolving rapidly. In Phoenix it's changed in just the past six months. Foreclosure auctions are no longer a fertile hunting ground...

"Amateurs have come in and run up the prices," said Tanya Marchiol of Team Investments. "In 2009 I bought 76 properties at foreclosure auctions, at an average of about 60 cents on the market dollar. This year, I've bought four."

The article also spotlights Glenn Plantone, a Las Vegas investor and a regular contributor to the Bigger Pockets forums. Glenn makes a lot of important points...and he really doesn't sound like much a "vulture," either...

"I tell investors to plan on holding for five years. With cash flow, there's no need to worry about price drops."

Glenn also discusses a surprising (and welcome) trend in 2010 -- major banks are increasingly favoring Short Sales over the usual REO channels. "The banks make better profits with short sales, so they're not foreclosing. They've switched staff to processing short sales and they've gotten faster at processing them."

What's Your Call?

Do you think we'll see the media bias against Real Estate investors finally come to an end in 2010? Or will we still be "vultures" for years to come? (And...does it matter to you?)

If You've Ever Wondered About the Short Sale Engine...

Mike Calhoun (iMarketLuxury) — Fri, 13 Aug 2010 14:58:16 -0700

There's never been a better time to check out our Short Sale Engine.

That's because we're running a (VERY) limited time offer that's so ridiculous, we've had a lot of people on our email list ask us if this was a prank. It's not. We really are offering the full Pro version of our Short Sale Engine for $1. We're running this special to help celebrate our upcoming end-of-summer Short Sale Party .. more details on that soon!!

Come check out the dollar deal here --> Short Sale Engine Pro Edition for $1!

I've also put up a video explaining what the Short Sale Engine can do your for business...

Are You Tuned Into "Seeking Alpha" ??

Mike Calhoun (iMarketLuxury) — Thu, 12 Aug 2010 15:02:30 -0700

All too often, media reporting on the housing industry is too shallow and superficial to be really useful for those of us who are in the business. If you're like me, you want to see original analysis by experts who can connect the dots and explain their logic every step of the way. Seeking Alpha has become a website that I turn to, every day, for information that goes deeper than the headlines.

The best part about the Seeking Alpha approach is that, unlike the Wall Street Journal, New York Times or Forbes Magazine, there's no political bias to their coverage. Seeking Alpha gets contributions from a wide range of voices, and the comments sections are often the most educational part of the articles. Remember, when smart people argue .. the audience wins!!

I wanted to share three very important articles that I've read on Seeking Alpha in the last few days...

1. Evidence of Systemic Credit Breakdown. This might be slow reading if you're not familiar with the market, but for those of you who keep a close eye on the "Big Picture," this will be powerful reading. This is quite possibly the most important story you'll read this year, given how scary the long-term implications are...

2. Fed Dissenter Fears New Bubbles. There's been a lot of rumors and competing explanations for the Federal Reserve's statements on Tuesday!! This article is by Tim Iacono, who is always a standout contributor: level-headed, focused on the numbers instead of the politics, and speaking from decades of experience. His explanation is the single best article I read on this topic all week...

3. One More Futile Attempt to "Stabilize" Housing. This is a (very) opinionated piece about the newest round of homeowner aid from the Obama administration. Like most of the articles I recommend, though, this is so packed with facts and ideas that you'll still learn a lot from it even if you don't agree with the main argument at all! That's good writing...

What Do YOU Read Every Day?

I'm always looking for new sources and new ideas .. return the favor and let me know what sources you trust and rely on in 2010!!

News Roundup for the Week of 8-9-10

Mike Calhoun (iMarketLuxury) — Wed, 11 Aug 2010 16:07:16 -0700

Just last month, I remember talking about "Slow News Days" .. that really hasn't come up at all in August, though!! In fact, there's been almost too much to keep up with. So for this week's roundup, I want to focus on a handful of truly excellent articles that help sort out the big stories...

The Refinance Rumors

The biggest story we've been getting the most questions about is definitely the rumors of government-mandated refinancing and even principal forgiveness. It seems like the story gets more complex every couple hours, doesn't it? There's been a lot written about this .. but not a lot that you can trust.

Fortunately, HousingWire came through with the goods. Linda Lowell gave a great treatment of the whole controversy, titled "The Natural History of a Rumor."

The former Hedge Fund manager turned journalist Bruce Krasting also offered some valuable insights -- if you're still hungry for more perspective, turn to "Rumors of News, and News of Rumors..." (And for a very funny rant about all this drama, check out Paul Jackson's editorial, "Never Underestimate the Stupidity of Politics.")

"If we've learned anything from watching government response to this nation's housing and economic crisis, it's this: the more irrevocably stupid an idea is, the more likely it becomes that our politicians will tend to consider it. It's already been proven true more than once, across two different administrations."

That Whole Unemployment Thing

One of the most challenging and interesting articles I've read in months was "Strip-Mining the US Economy," which argues that US Corporations are destroying our economy by creating profits at the expense of jobs. The author is an active trader on Wall Street, and the case that he makes is full of details and facts. Although I don't quite agree with his argument, it's something I've been thinking about ever since I read it .. and that's exactly the kind of material that leads to new ideas!!

Boy, I wish there was good news to report on the unemployment front. I don't have any to report, but I do have an important article by Andy Grove about "How to Create American Jobs Before It's Too Late." Grove was one of the founders of a company you might have heard of named Intel, and his advice here is full of sobering data...

"Some 250,000 Foxconn employees in southern China produce Apple’s products. Apple, meanwhile, has about 25,000 employees in the U.S. -- that means for every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods and iPhones. The same roughly 10-to-1 relationship holds for Dell, disk-drive maker Seagate Technology, and other U.S. tech companies."

Finally, Newsweek published a solid "Big Picture" version of the unemployment story that's focused on the President: "Has Obama Run Out of Economic Options?"

Just Plain Interesting

We read forecasts from economic experts week after week, but is anyone keeping score? It turns out that economists really don't do very well at forecasting when you measure their performance...

"How do economists fare when it comes to real forecasting, to predicting GDP growth and inflation one year out? About as good as a coin toss, according to esearch. Less than half the economists did better than the “naive” forecast, which is based on no understanding of the economy and merely assumes next year’s outcome will be the same as this year’s. It’s what you’d expect if the results were purely random."

That's just a small part of the eye-opening revelations in the article "For Good Economic Forecasts...Try Flipping a Coin." Highly recommended reading!! Worth printing out and enjoying at a quieter time...

What's Your Call?

Speaking of "making bad calls," in the aftermath of the subprime crisis, there's been a lot of talk about how to deal with the ratings agencies who either got corrupted or just totally failed to do their jobs right: S&P, Moody's and Fitch. Well, former regulator and economic watchdog Bill Black has a simple plan: "Just Get Rid of Them."

Do you think that's too drastic? Or just drastic enough, but not a realistic option? Or .. do you think the ratings agencies still have a valuable role to play in the post-crisis economy? Let us know!!

4 More Visionary Business Books

Mike Calhoun (iMarketLuxury) — Tue, 10 Aug 2010 10:15:05 -0700

I have always enjoyed flying. After all, being tens of thousands of feet above the ground .. that's pretty cool!! In the past two years, though, I've come to love something else about flying: all the free time for reading. I've always had a hungry mind, so I fit in reading whenever I can, but in 2010 it seems like a long flight is the only chance I get to read a book cover to cover.

I've been a lot more selective this year, and it's really been paying off. We got a great response the last time I recommended some great business books, so today I'd like to tell you about the four best books I've read in the last few months...

Drive: The Surprising Truth About What Motivates Us, by Daniel Pink. Truth in advertising! This was definitely a surprising book, and I think anyone who runs a business, or manages a team, will find a lot to think about here. Pink basically says that in the past two decades, what we've learned from brain science has totally contradicted what psychology always told us about success and motivation. The good news: Pink focuses on how to actually apply the science here, and keeps every chapter grounded in real-world examples. So not only is the book "deep thinking," it's easy and interesting reading, too.

Made to Stick, by Chip & Dan Heath. This is a book about storytelling for business -- about how to craft your message so that people will pass on, simply because they want to talk about it. The authors do an amazing job of identifying simple keys to making your stories "sticky", meaning "interesting enough to pass on." Out of all the books I've read this year, I took more notes on Made to Stick than anything else .. pages and pages of actionable ideas and insights into how to run RealtyInfusion better. Let me know if this book jump-started your brain, too!!

The Big Switch, by Nicholas Carr. This was perfect airplane reading. I learned something new and interesting on almost every single page. I'm not sure if I agree with his vision for the future, but I got so much out of this book I still had to recommend it. He covers the full sweep of the past 200 years, and Carr bases all his arguments about the future of the internet on the history of electric technology. Carr has a reputation as the "grumpy old guy" of technology authors, but this book reads like he has a lot of fun talking about how innovation changes our culture, around the world.

The Genius of the Beast, by Howard Bloom. This is a book that takes on an even bigger story .. the entire history of Capitalism!! That might sound boring, but actually, this is the most fun I've had learning something all year. Bloom takes you from humanity's first cities right up to Intel, Apple and Michael Jackson, and he manages to make it all into a page-turner. At the end, you may suddenly realize you basically took a whole college course without even realizing it!

Return the Favor!!

Let us know what your picks are .. have you read something so great you want to share with other investors and Realtors??

Visions for the Future of Real Estate

Mike Calhoun (iMarketLuxury) — Thu, 05 Aug 2010 14:30:37 -0700

There's been a strange mix of headlines about Deutsche Bank this week. One Tuesday, the Wall Street Journal was reporting about their role in financing the housing bubble, and the ugly fact that despite being "among the first to flag weaknesses in the market as early as 2005," Deutsche Bank continued to make billions on bad bets until 2008. This kind of behavior would seem crazy from a person .. but for a corporation, this is business as usual!!

The other headlines are more interesting: Deutsche Bank has been making some of THE darkest predictions for the housing market I've seen yet!! It never ceases to amaze me how much investment banks manage to play every side of the market...

That's nothing new, though...and Deutsche has built a reputation for being Bearish on housing already. Just last year they were forecasting that almost half of all US mortgages would be underwater by 2011. This year? They're putting a more specific number on their prophecy: over 20 million borrowers will be underwater by 2012.

Remember, though, that's not too much of a stretch, because currently over 14 million US mortgages are already underwater.

Other industry experts are painting a grim picture, too. S&P and Barclays both see the current crisis conditions continuing past 2012 at least. (Morgan Stanley is betting it looks more like 2014.)

Lawrence Yun: More Wrong Every Year?

Making fun of Lawrence Yun is nothing new. He is, after all, the guy who went on record in the summer of 2008 saying "I think we are very near to the end of the housing downturn." Unlike most of the housing optimists, though, Yun is still making the same claims to this day. Just last March, Yun was hugely optimistic about the short term future...

"We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June."

Of course, we all know what actually happened: the numbers are just plain ugly. I got a comment from someone named Steve Smith, who asked "So what's the point? Do we bend over and kiss our sweet a**es goodbye?" -- let me answer that here: Steve, you absolutely don't have to give up. These market conditions are an unprecendented opportunity.

Here at RealtyInfusion, I work with clients every day who are navigating this changing landscape successfully, week after week. They are growing their businesses in 2010. Their methods are not a secret.

If you want to see a detailed demonstration of how, join us tonight for a call at 8 PM Eastern. We will walk you through a complete tour of our Push Button System to show you exactly how powerful Short Sales can be.

There's No Way to Make the June Numbers Look Good...

Mike Calhoun (iMarketLuxury) — Tue, 03 Aug 2010 16:27:27 -0700

In the past week, I've seen a lot of bloggers, on AR and elsewhere, try to play the same old "Glass Half Full" routine with the latest round of economic statistics. Most months, I'd call it a matter of opinion and move on...but June is very different. I think the indicators are so consistently negative that it's become impossible to reach any other conclusion.

Let's break down WHY...

It starts with the Census numbers on New Home Sales. As the housing economics blog Calculated Risk put it: "bottom line: this was the worst June for new home sales on record." The final number was just over 30,000 homes...a record low, and miles away from the 2005 record high of 115,000. (Was that really only 5 years ago? Feels like decades, doesn't it??)

The NAR's figures for Pending Home Sales showed a modest drop .. just 2.6%, which is not much. However, the real story is what happened the month before: the 30% drop in May . So that's two major indicators that are, without question, showing MAJOR negative trends in June 2010.

How about Existing Home Sales? Pretty neutral results here, too...the index was down 5% from the previous month, but it's also almost 10% higher than it was in June 2009. To understand this index, having a graph really helps...

Looking at the "Big Picture" outside the Real Estate market, indicators are equally grim. The Bureau of Economic Analysis (BEA) released the June figures for Personal Income and Personal Spending, and both of them remained flat for the month. We've also seen drops in the ISM Manufacturing Index and private construction spending, and as far as employment goes...well, take a look at this recent debate hosted by The Economist about "Structural Unemployment" -- something we'll be hearing a lot more about in 2010.

What's Your Call?

To me this all looks like an open-shut case. I'd like to know if you disagree .. and I'd especially like to know why. Not because I want to argue, but because I've learned to really value contrary opinions. After all, the human brain does it's best work when it's being challenged...

Always Winning, Together!!

Chinese Money and US Real Estate 101

Mike Calhoun (iMarketLuxury) — Mon, 02 Aug 2010 14:08:32 -0700

I've been keeping a close eye on this for a couple years now, and I believe this is one of the most important and least covered stories in the Real Estate industry. Since the housing crisis began, there has been a steadily increasing flood of money coming from China in the US Real Estate market. In 2010, private investors and the Chinese government itself are buying billions in property here in the United States.

Back in early 2008, the first reports surfaced of "Investment Tours" being organized for wealthy (and even middle-class) Chinese to visit the US and look at hundreds of properties around the country firsthand. The trend caught on quickly, and a March 2009 article quoted SouFun Holdings chairman Vincent Mo on the growing popularity of these tours:

"We'll probably take more than 10 groups this year. There are more than 500 people applying to go with the SouFun team to look at property in the U.S."

As the article notes, though, "Not all of those on the tours are serious property investors. Some want a quick look around the US. Others want a son or daughter to obtain a US education and think that buying property will get a foot in the door." When it comes to "serious property investors," though, here's a good name to know: China Investment Corporation. It's a governent-owned "sovereign wealth fund" that has over $300 billion in assets -- most of which are held in actual US currency. (They also own a 9.9% stake in a little company you might have heard of named Morgan Stanley.)

...What About Commercial Real Estate?

Here's an important background fact that gets left out a lot in articles about China's increasing involvement in the Commercial Real Estate market: In 2008, the number of total commercial property deals that were executed in the US dropped by a stunning 62%. In 2009, that number fell even further, going down another 55%. With an opening that huge, it's inevitable that somebody would step into the market to take advantage of depressed prices.

Against that backdrop, this January headline from Financial Times is less of a shock: "Bank of China leads lenders for US real estate."

"With most US banks paralysed and the market for commercial mortgage-backed securities frozen, foreign banks are now providing more than 60 per cent of all debt financing for commercial real estate."

Back in the 1980s, when German and Japanese investors were on infamous property-buying sprees, Congress responded with the Foreign Investment in Real Property Tax Act (FIRPTA), which mandated a capital gains tax on all properties purchased by non-citizen buyers. (If you're amazed that law wasn't already in place, well, so was I.) Representative Joseph Crowley proposed seriously reducing those taxes in order to encourage foreign investment. However, his bill -- the Real Estate Revitalization Act of 2010 -- is still in committee and will probably never even come to vote.

Interestingly, Rep. Crowley is very much alone in thinking his bill is important. To most foreign investors, this is a non-issue, because they already structure their deals through US corporations and avoid most taxes entirely. Which brings us back to the biggest fish in the pond, the Chinese Investment Corp. Why hasn't the Chinese buying spree been front page news? Because it's being done primarily through US corporations and thus disguised from public view.

Earlier this year, the LA Times gave a peek behind the curtain in what remains the only major media story about this so far in 2010...here's the details that really matter:

"...after getting burned by the financial crisis that emerged in 2008, the sovereign wealth fund has been shifting to real estate. Its investments in the last year have included hundreds of millions of dollars in real estate-related funds managed by Oaktree Capital of Los Angeles, Goldman Sachs Group Inc. and BlackRock Inc."

"Chinese companies have learned that allying with partners tends to draw less attention, said Wenran Jiang, a China expert at the University of Alberta who has studied Chinese investments around the globe. When multiple parties are involved in a deal, he said, the Chinese buyer's stake gets diluted. "So you can't report that the Chinese are taking over."

What's Your Call?

Is this something that US Real Estate professionals need to be concerned about? Is China's involvement strictly business, or do you think there's a strategic purpose behind this flood of capital? Or...is our economy so "Globalized" now that distinctions like this no longer matter?

Let us know what you think!!

Short Sale Guru Mindy Sylvester Spills Her System...

Mike Calhoun (iMarketLuxury) — Fri, 30 Jul 2010 13:57:38 -0700

THIS JUST IN: we've made today's call even better, thanks to the Short Sale entrepreneur Mindy Sylvester.

We've featured her before, in the article "What's YOUR Short Sale Success Rate?," as an example of how smart, savvy Realtors can boost their Short Sales success from the industry-average of 20-25% .. up towards 85-90%. These aren't super-human numbers. There's a lot of business owners around the US making it happen on that level .. heck, quite a few of them post blogs right here on Active Rain.

Since that article, we get asked about Mindy just about every day...so we've asked her to join us for today's call at 3, debuting the newest version of the Short Sale Engine. She will be explaining how our technology has helped to grow (and automate) her business.

This is our most radical over-haul of the Short Sale Engine yet, and the NEW FEATURES alone are INCREDIBLE -- but I'm still proud that this call is going to be WAY more than a sales pitch. Mindy has been making waves around the country this year, and this webinar will be a real-life, take-notes teaching call now, too.

Set aside some time this afternoon to join us .. the presentation begins at 3 pm Eastern.

We're debuting the NEW Short Sale Engine...Today!!

Mike Calhoun (iMarketLuxury) — Fri, 30 Jul 2010 13:00:56 -0700

Today, we're debuting the newest version of the Short Sale Engine .. and it's the most radical update we've done so far. We've never integrated more features and more user requests, and based on the beta testing last week, we're extremely proud to introduce our most powerful software yet.

We've got a short, powerful presentation for you this Friday at 3 pm Eastern. I'm confident that you'll find this worth your time. We'll also be offering an exclusive low price for the people on this call.

Preparing for the launch this month has been INTENSE for me .. especially after my Weekend in Vegas! I seldom take the time to think about my journey, because I'm more of a "nose to the grindstone" kind of guy. It amazes me to look up and think about how long I've been working on mastering the Short Sale .. how much our team has grown and thrived .. it makes me proud, but it HUMBLES ME even more. 2010 has been awesome.

I want to thank everyone who's contributed to this project, from the Realty Resolve days right up to the beta testing crew who helped us out last week!! Even our critics and competitors have been valuable sources of feedback, so we're truly grateful for EVERYONE who's been in touch with us.

And Oh Yeah...

I wrote another blog today for ActiveRain .. it's about The Political Demand for Short Sales, and the reasons that many Realtors give for not investing time and work into Short Sales in 2010.

For some people, those obstacles are like a brick wall, it's true. For others, though, those obstacles are more like speed bumps...the difference is having the right system and the right tools. Join us this Today at 3 to find out how our clients are saving time and making money with Short Sales...

The "Political Demand for Short Sales"

Mike Calhoun (iMarketLuxury) — Thu, 29 Jul 2010 13:12:36 -0700

Social Media is great for networking .. but what I really like is the detailed conversations. I learn more. Yesterday, I had a valuable exchange with a Realtor who warned me that "Short Sales are not going to work in the long run."

Well .. I agreed with her. I also think it's important to define "The Long Run," though. Will we still being doing Short Sales at this kind of volume in 2020? Definitely not. However, Short Sales do have a guaranteed 2-3 year run at continuous record-high levels. I don't think I'm making a very radical statement there .. but that's because I follow this industry very closely.

Here's why I'm bringing this up: this Realtor proceeded to give me a laundry list of Short Sale problems, and it's important enough to quote here on the blog...

"Second lien holders are not rolling over...they are foreclosing cuz they can ... there is no "set" standard of doing them (Fannie and Freddie for example) there are too many moving parts ... AND some agents are being sued by SS sellers claiming that the agents gave them wrong information ... banks aren't paying lawyers to negotiate them anymore so if you hire a lawyer it comes out of your commission ... think what you like but the handwriting is on the wall."

Every one of those points is valid. Well .. with the one exception of agents being sued. That's just a matter of due diligence and proper paperwork, and frankly, I think most of you reading this on ActiveRain know full well you've got nothing to worry about on that front.

Sad but true: Short Sales are not Quick and E-Z. However, they can get a lot faster and lot easier with the right system and the right tools. I know a lot of Realtors have become frustrated enough with Short Sale delays to quit taking them altogether!! So why am I still in this part of the business? Because I've got so many clients who have having tremendous success in 2010 doing Short Sales. My opinion is not just shaped by the articles and reports I read every day .. it's also shaped by the awesome network I'm fortunate to be working with.

So in light of this whole conversation .. a recent headline in Housing wire really jumped out at me .. "Record Number of Foreclosure Sale Cancellations in California" Here's the opening line... "Lenders are canceling more foreclosure sales in California than ever before, and new financial and political demand for short sales could be the culprit." Now, that's something I want to believe in .. but do the facts support it?

Digging a little deeper, it turns out the answer is No...

"According to ForeclosureRadar, a certain number of the cancellations can be attributed to pending modifications and short sales, but homeowners and real estate agents have complained to the company of sales that were canceled without either."

"Researchers at the company received varying answers as to why the cancellations are up. The best answer came from one unnamed REO professional. According to the source, the Home Affordable Foreclosure Alternatives (HAFA) program had the most to do with the cancellations.

"“Now that servicers have systems in place to administer the program they are removing delinquent loans from the foreclosure pipeline to allow a reasonable short sale time period,” the source told ForeclosureRadar."
In courtrooms and scientific studies, this is called the difference between causation and correlation. We can correlate these foreclosure cancellations with Short Sales .. but it would be dishonest to claim that these cancellations are actually causing more Short Sales. That's a big reason I read HousingWire regularly -- it might make for more boring headlines, but they consistently present all the facts.

What's Your Call?

Do you think we'll really be seeing "Political demand for Short Sales" before the November elections? Does this have the potential to become an actual issue in the coming elections? And oh yeah .. how long do YOU think the Short Sale market is going to last??

My Weekend in Las Vegas...

Mike Calhoun (iMarketLuxury) — Tue, 27 Jul 2010 19:11:39 -0700

I knew this weekend would be a powerful experience .. but it wound up exceeding my expectations!! I always like it when that happens, don't you? It feels like I've been running around town ever since I landed here, so I wanted to give you guys a quick report on what I've been up to.

One of the main events I was here for was the 7 Figure Speaking Empire with Dave Van Hoose, Dustin Matthews and AJ Pueden. (We've featured Dustin Matthews once before in a "Follow Friday" post, so you might already be familiar with this highly motivated and fearless entrepreneur.) I still feel super-charged from this event .. I was so immersed in the event and networking with the attendees. The quality of the people in the room was amazing.

Not only that, Jeff Adams was hosting his "Millionaire Maker Summit," a 2 day event that was packed full of successful and legendary speakers like Al Lowry and Jason Medley -- both of whom we spotlighted in last week's "Vegas Edition" of Follow Friday. Jeff brought together an incredible audience of ambitious men and women, and I cannot thank him enough for the "Booster Shot" of energy and empowerment!!

I saw a lot of speakers, but I wanted to give a special "Thank You" to those who truly impressed me: Jeff Adams, Larry Benet, Ted Thomas, Gerald Rogers, Cory Boatright, Mindy Sylvester, John Hyland, Ted Miller, Zack Childress, Chris Bowser, Dean Edelson, Jeff Lindahl, Brian Ellis, Jason Henderson, Bruce Mack, Peter Sorensen .. and everybody was buzzing about the talk that Kenny Rushing gave!!

As if all that wasn't enough energy, there was also a "Rich Dad, Poor Dad" event going...in the same building. It seemed like everywhere I turned these last few days, there were remarkable people to meet. Being able to "talk shop" with investors from around the country has given me pages (and pages and pages) of new ideas and valuable clarity about where RealtyInfusion should be headed as we march into the second half of 2010...

Sights to See

Probably the most amazing thing I saw was Cirque du Soleil, but that's probably not a surprise to anyone reading this, right? The Cirque is internationally famous for being, well, a stunning spectacle. You might not be as familiar with a restaurant called Little Buddha, but in a word .. WOW!! I'm not sure if I was more blown away by the food or the interior. It really did feel like stepping into another world, and in a city as strange as Las Vegas, that's really saying something!! If you get the chance, definitely check out the Little Buddha.

I was fortunate to be staying at the Rio, in the center of all the Real Estate Investment action this weekend. It's also the home of the second most amazing thing I saw .. namely, the view from the Voodoo Lounge, the beautiful bar they built onto the roof!!

We've got a lot of big news to roll out this week .. but first, I've gotta catch a plane back home!! There's only one right way to end a blog post like this, and that is to thank everyone reading this. Sitting on that roof, I felt keenly aware of how fortunate I am .. and how much work has gone into building RealtyInfusion. I am grateful for my team and grateful for our incredible clients.

I'm honored to be doing business with you!! As always, if I can be of service .. get in touch!! I'll be catching up all week, I'm sure...

In Gratitude,

--Mike Calhoun

5 Mind-Blowing Business Books

Mike Calhoun (iMarketLuxury) — Fri, 23 Jul 2010 14:01:25 -0700

Predictably Irrational -by Dan Ariely

The past decade has been a flood of great marketing books, all aiming to provide the "big picture" of how the mind of a customer works. Few of them have been as interesting as Predictably Irrational, which is funny, concise and thoroughly researched. I enjoyed this because it made me re-examine all my assumptions about human behavior, from shopping to politics.

Learn More: Dan Ariely speaking @ TED (video)

Pragmatic Thinking and Learning - by Andy Hunt

By far, the best detailed guide to self-mastery I've read. Overflowing with concepts, exercises, case studies and been-there advice, the author manages to make high performance workflow into a step by step manual. Best of all, he talks to you like an adult the entire time. Highly recommended.

Learn More: free PDF preview chapter

Black Swan - by Nassim Nicholas Taleb

Although the author has a tendency to ramble, that's a typical side effect of being a genius. Of the 5 listed here, this is the most truly mind-blowing, a long, globalized rant from the smartest professor you've had, informing you that Everything You Know is Wrong. His core obsessions are risk, randomness, and rare events. This book is even remarkable for it's timing, having arrived just a few months before the global economy began to crack.

Learn More: The Author discusses Geithner and Obama (video)

The Endless City -by Ricky Burdett and Deyan Sudjic

Here's the pitch: right now, more than half of the human race lives in a city. By 2050, that number will be over 75%. This book is a well-presented, numbers oriented and business minded investigation of those statements. The patterns and trends of urbanization are the future of the real estate market, and this book is a guided tour of the next 40 years.

Learn More: Business Week Review

WorldChanging

Listing this as a "business book" might be unorthodox, but this large, colorful book has been a valuable tool for inspiration and innovation. You see, it's about our environmental problems, and includes some of the best summary writing about the State of the World you'll find...but it's definitely not a list of problems. It's a huge catalog of solutions from around the world, from the low-tech to the sci-fi, and I've always found WorldChanging to be a testament to human ingenuity.

Learn More: WorldChanging Blog

What's YOUR Short Sale Success Rate?

Mike Calhoun (iMarketLuxury) — Fri, 23 Jul 2010 13:25:11 -0700

We've gotten quite a few questions lately about the Short Sale industry that's been growing throughout 2010, and by far the most common question is this:

"What's the average success rate for a Short Sale?"

The hard truth of it is, nobody knows. Back in February 2009, a research firm called Campbell Communications did a study and concluded that "only 23% of short-sale offers from potential buyers actually close." Since then, their figure has become the Best Guestimate that everyone goes by -- most folks in the Real Estate business would tell you that Short Sales average between 20% and 25% for an actual, successful closing.

I'd like to ask a more important question, though. How much does the national average really mean...to YOU? If Campbell Communications did a study on our clients here at RealtyInfusion, the success rate would have been through the roof.

Take Mindy Sylvester, for instance. Her Short Sale success rate is hovering at over 85% these days. How does she do it? Good news: she's happy to share her system...

"...it's not really a secret, but here are some of the things that have really worked for me.

1. You have to be ON TOP of the banks. Call them EVERY week, whether they tell you to or not.

2. Always make sure your short sale packages are complete - if you are missing even one item, you will delay the process.

Since I started using the Short Sale Engine, my success rate has been unbelievable. It creates perfect short sale packages that get the bank's attention. A lot of times, the bank rep calls ME!! I got one SS approved in about 10 days! It's really helped me - I can't imagine doing it the "hard way" now!

What's Your Call?

Short Sales aren't easy, but they can definitely be a whole lot easier with the right tools. The opportunity is huge, and the market just keeps on growing. When we said that 2010 would be the Year of the Short Sale, we had no idea just how right we'd be...

We've got some HUGE announcements around the corner...get in touch if you want a sneak preview!!

Visualizing a Trillion Dollars

Mike Calhoun (iMarketLuxury) — Thu, 22 Jul 2010 14:42:12 -0700

I had to share this. I've seen similar infographics before, but this is the best I've come across because it puts the astronomical numbers into a very human perspective .. this is what a trillion dollars looks like...

WHY DID I POST THIS TODAY? Not just because it's interesting and cool .. but because of a headline I saw today: "Housing aid boosts total US financial system support to $3.7 trillion." We are so far past the point where the numbers can even make sense to people with this Bailout Culture in Washington, DC.

So, where did that $3.7 trillion figure come from? One of the most interesting people you may have never heard of...

I'm glad I don't have the job Neil Barofsky does .. he's the "Inspector General" of the TARP program and his job is to keep track of every single one of those 3.7 trillion dollars. He's been outspoken and honest, and he's made a LOT of enemies in government and the "public sector" as a result of his integrity. Here's what he had to say back in February...

"The role of Federal government in financing housing has grown so dramatically since the outset of the housing crisis that the government now no longer simply supports the mortgage market. It has taken on so much of the risk involved in financing housing that it has become the market, with the taxpayer shouldering the risk that had once been borne by the private investor."

Well, today Barofsky was back in form, unloading some blunt truths about mortage modification schemes like HAMP...

Unfortunately, HAMP continues to struggle to achieve its original stated objective, to help millions of homeowners avoid foreclosure by 'reducing monthly payments to sustainable levels.' Despite a seemingly ever-increasing array of HAMP-related initiatives designed to encourage participation in the program, the number of homeowners being helped through permanent modifications remains anemic, with fewer than 400,000 ongoing permanent modifications.

One continuing source of frustration is that Treasury has rejected calls to announce publicly any goals or performance benchmarks for HAMP or its related initiatives concerning how many homeowners it actually expects to help stay in their homes.

Meanwhile, the housing economics blog Calculated Risk is doing their best to force transparency where there is none. I highly recommend checking out their breakdown of the 15,000 trial modifications started in June under HAMP.

We've all heard the promises and we've all seen the results...is this kind of "recovery" really worth football fields full of $100 bills??

Decoding the Wall Street Journal

Mike Calhoun (iMarketLuxury) — Thu, 22 Jul 2010 02:19:09 -0700

"Economists aren't singling out one reason for the stalling housing market."

The Wall Street Journal ran an important article today about the housing market "Stalling" in recent months. Their argument can be boiled down to a single, troubling sentence: "the housing market faces two big problems: too many homes and falling demand."

True indeed. Right now there's over 7 million people who are 30 days or more behind on their mortgages. What interested me the most, though, was one of the unexpected reasons for the stall...

"Another reason inventory is rising: "Unrealistic sellers have flooded the market" after reports of bidding wars and home-price increases earlier in the year, says Steven Thomas, president of Altera Real Estate, a brokerage in Orange County. The amount of time that homes there have sat on the market there has swelled to 3.78 months, up from 2.35 months in April.

"The sellers think the market's coming back. They've tacked on an extra 5 to 10 to 15%. The buyers aren't going for it," says Jim Klinge, a real-estate agent in Carlsbad, Calif. Over the next six months, "it's going to feel like a double-dip because sellers are going to have to lower their prices."

The always-excellent housing economics blog Calculated Risk agreed with this assessment, saying "in most markets the problem is too much supply at the current price. So falling prices will help clear the market."

It's an amazing thought: what if media cheerleading about the "Housing Recovery" actually did damage to the recovery itself? Did months of CNBC optimism create this flood of "unrealistic sellers"?? I'm sure it's more complex than that .. it always is .. but it's something to chew on.

5 Business Lessons from the Life of Art Bartlett

Mike Calhoun (iMarketLuxury) — Thu, 22 Jul 2010 01:08:30 -0700

Last New Years Eve, Real Estate lost a genuine giant: Arthur "Art" Bartlett, the founder of Century 21 and a pioneer in real estate computer technology. I've really enjoying reading up on his life, because there's business lessons jumping out of pretty much every paragraph.

I get inspired by studying genuine visionaries, and Art Bartlett's success grew from his ability to literally see the future. That's a rare gift, but that's not all Bartlett has to teach us. Here I'd like to share the story of Art Bartlett before he was an internationally respected entrepreneur. How he got there has 5 core lessons to teach that can be applied to anyone, and I hope you find them useful here today.

1. Always Think Bigger. One of the things I like best about Bartlett: the man had the common sense to recognize a pay cut as an unacceptable insult. He'd worked his way up the ladder at Forest Olson, which was California's largest real estate agency at the time. Then he "fell up" into the classic corporate management trap of a salary that wound up being less money for more work.

2. Learn by Doing. His next move was simple: he founded his own agency, Four Star Realty, and grew it into a thriving business. More importantly, he did that while steadily branching out into other ventures. Wherever he saw untapped opportunities, he started funneling profits into a new business.

3. Leverage Technology. During this time, Art Bartlett basically founded the field of Real Estate Technology when he founded Comps Inc. -- jumpstarting the fields of comparative housing reports, online real estate listings, and computer analysis of real estate market data. Everything from RealtyTrac reports to the Case-Shiller Index emerged from the problems he was solving during the 60s and 70s.

4. Build the Best Team. If there is one thing Art Bartlett was constantly accused of, it's Choosing the Right People. "He had the innate ability to select and motivate to excellence," said his old friend Arthur Turner. Bud Cashen, the first regional director Century 21 ever had, remembered, "He created order out of chaos. Your success was his success." Throughout Bartlett's career, he stayed focused on repeatable business models, which allowed him to train talented people and then give them the space to be successful.

Now we've arrived in 1971, when Art Bartlett finally founds Century 21 with Marsh Fisher. The reason he's a business legend today is because he took a new model and built it into a record success. Just 5 years after starting the company, Century 21 had 2,600 offices open nationwide, all of them fully functional and highly competitive businesses. The model he used?

5. Conversion Franchising. When someone buys a McDonalds franchise, they're starting from scratch, building a business from the permits on up. Bartlett took a "lateral thinking" approach, instead reaching out to existing small businesses and convincing them to convert to a Century 21 agency. This meant hugely reduced start-up time and cost, and immediate social capital gains because all of the employees are trusted local realtors already.

Bartlett's vision, and olympic-level work ethic, made this model work so well that Century 21 was consistently opening 300 new franchises per month by the end of their first decade. Of course, that kind of growth also hits the population ceiling pretty fast, too. Arthur Bartlett cashed out when the Century 21 brand was becoming more or less totally omnipotent, and went on to...well, starting new businesses, of course.

He passed away at 76. Rest in Peace, Art.

Would YOU Live in a Shopping Mall?

Mike Calhoun (iMarketLuxury) — Mon, 19 Jul 2010 17:23:16 -0700

Would you live in a shopping mall? That's what I've been asking people all day .. to my surprise, most people think about for a few seconds, then say Yes!! It might sound strange at first, but I've seen it work around the country, as well as the famous "Underground City" complex in Montreal.

As the commercial real estate crisis gets worse, there's going to be a LOT of opportunity for innovative thinking .. a lot of demand for new approaches and flexible business models. Today, we're looking at some alternative uses for abandoned shopping malls .. including the most relevant use of all, residential development.

Forward-thinking REI's and management companies are increasing business for their tenants AND getting a new income stream from the rental units. You can see why this is worth paying attention to!!

On September 26th, 2007, Michael Townsend finally got busted. He was standing in the parking garage at the massive Providence Place mall complex in Rhode Island, and mall security had just caught him leaving an abandoned storage space. When they went in to investigate, they were shocked to discover an urban myth was completely real: Townsend had built the storage space into a fully furnished apartment and art scene hangout.

More amazing: he did it in 2003...and got away with it for over four years. Despite the incredible details, though, the apartment itself was pretty low-rent. Here's a picture of the living room, for instance...

For something completely different, let's take a look at a development in Houstin, TX called The Gables. A few years after launching, when their occupancy numbers didn't improve, they made a decisive move. They converted retail frontage into luxury apartments, and immediately starting re-building their bottom line with high-end rent income. (There's also obvious benefits for the businesses there, with a built-in customer base.)

As you can see, with some professionals and money behind it, mall living looks...really good:

The research firm Green Street keeps a list of over a thousand "Dead Malls" around the US, and that's widely considered to be an incomplete list. Their research is focused on publicly trade companies and doesn't account for thousands more abandoned malls that were in private hands. So as the real estate crisis gets worse, developers are taking a new look at shopping malls.

The huge square footage of these properties opens them up to other kinds of community and business development, too. One major consideration is installing solar panels to feed the local energy grid. Many cities have been having great success with rooftop gardening and "urban agriculture." Many malls are already built for sunlight throughout the day, and some entrepreneurs with especially dirty hands have taken up highly profitable organic gardening operations...

The Galleria Mall in Cleveland, Ohio is leading the way by growing organic food for mall patrons and local restaurants. The mall has transformed the lost retail space within its glass-top confines into a gigantic, organic-food greenhouse.

The box transforms into a restaurant; a greenhouse pops out of its roof. Where the desolate parking lot once stood, a pocket farm springs up. Light poles turn into solar trees studded with photovoltaic cells. Fulton imagines “pushing a shopping cart through this suburban farm and picking your produce right from the vine, with the option to bring your harvest to the restaurant chef for preparation and eating your harvest on the spot.”

Source link: SPECTRE research group

Here's another awesome (and very successful) operation that's built onto a barge in New York City...

The Blue Brothers Approach

On a lighter note, have you ever heard of the Dixie Square Mall? It's one of the oldest "dead malls" in the country, having been abandoned for over 30 years now. Odds are you've never been there...yet you've probably seen it.

For the classic car chase sequence in Blues Brothers, director John Landis rented out the Dixie and set it up to look like a functioning shopping mall. In fact, it was used as a temporary school for the previous two years and was already starting to fall apart. After Dan Ackroyd and John Belushi demolished the place in style, the Dixie never recovered and continues to rot into the ground to this day.

What's Your Call?

Can you see a future for dead malls as the centers of new communities? Would you consider moving into a mall yourself?

The New Normal

Mike Calhoun (iMarketLuxury) — Mon, 19 Jul 2010 12:23:53 -0700

Here's the most important fact from today's article: in 2010, Short Sales hit record levels, making up over 17% of all residential real estate purchases for the last four months.

Combine that with the fact that the market opportunity is spreading from the 6 problem states...to 34 states facing negative equity rates of over 10%...and that is the NEW NORMAL. We're looking at three more years of these conditions!!

It's getting to the point where we don't even have to promote our product anymore -- the media is doing it for us!!

We knew we'd be right when we claimed 2010 was the year of the short sale...but we didn't realized HOW RIGHT we would be by now. Find out why super-empowered agents around the country have been able to turbo-charge their business through this crisis -- check out the Short Sale Engine ASAP!!

It's looking like this summer will be a waiting game, full of contradictory reports and expert economists saying stuff that boils down to..."let's wait and see."

Here's one trend that's absolutely crystal clear, though: short sales are still on the rise in 2010. From November 2009 to February 2010, short sales grew from 12.4% of all real estate purchases to 17.1%. In April, that number has peaked even higher: 17.9%.

Those numbers are from Campbell Surveys, and as their research director Thomas Popik put it:

"Short sales now account for the No. 1 category of distressed property. Losses on short sales are typically lower than for REO, and both lenders and the government are pushing programs to facilitate short sales. But as more and more people default or simply want to walk away from their properties, mortgage servicers are having trouble expeditiously processing these complicated transactions."

Now, let's combine this with what we've already covered recently in the article "Re-Thinking Everything" -- the national numbers from Core Logic showing that the problem of underwater homeowners and shadow inventory is considerably more widespread than just the 6 problem states the media has been focusing on...just look at all the states pushing above the 10% mark in the first quarter of 2010:

CLICK TO ENLARGE

The pundits have all been talking about "The New Normal," and folks...this is it. These are strong trends with serious staying power, and they're going to disrupt the entire industry. We've seen this coming for awhile, and we've developed a power tool for weathering the storm in style: the Short Sale Engine. Get in touch with us if you've got questions...we're all about building a bigger and better winning team!!