I submitted a new short sale offer for one of my listings to Bank of America. Bank of America rejected the last offer without it ever getting past the SPO review. It's fancy terminology when you fax your short sale package and workers in India scan the documents, a BPO is done and several weeks go by, a computer simply takes the offer price and the BPO price and either moves it to the next level of waiting or rejects it. At this point, no human has ever looked at a single page of the entire 50 page short sale package I so carefully prepared.

In this case, the BPO price came in so high that if we could get that price, the property wouldn't be a short sale. In fact, it was the initial list price because the owner really didn't want to have to do a short sale but we couldn't get any offers at that price.

So after the rejection, four Bank of America short sale employees told me to just put it back on the market and get a higher offer than the one that was rejected, even $1,000 higher. So, I did that. It took another 3 weeks to get an offer but we got one that is $1,000 higher. However, today I was told by an employee that they will not order a new BPO until 3 months have passed.

It got me thinking...I thought I read that ALL Fannie Mae loans would be at least considered for short sale. I though it was a requirement for the servicers to at least attempt to avoid foreclosure.  So, I called Fannie Mae and got into an automated phone system that said, "If you would like to see if you qualify for the $75 billion federally funding Making Home Affordable Program, please press 1." I pressed 1 and this is what I heard next..."No one can take your call right now. Please call back later."

I am so thrilled to have a portion of my income go towards Bank of America and Fannie Mae, I think I could scream!

So who am I to think I'm smarter than two best-selling, award-winning economists? Not long ago I read, Freakonomics, written by Steven Levitt and Stephen Dubner and I was shaking my head from page one through the end of the book. Granted, it was written quite a few years back and they have a new best-seller that I haven't read but I'll bet the premise is the same...the premise that numbers don't lie.

I'm ready to debate and debunk their theory...I think numbers lie a lot!

The more I am absorbed in the housing market, the more complicated I see the economy. I certainly don't have the answers to our economic woes but I absolutely know that the numbers reported by the media, banks and the government do not reflect anything at all. I believe it is impossible to know the real state of the economy because the numbers are so false.

Just in my small sphere of experience here are some flaws in the numbers...

#1. Number of Homes for Sale is not an accurate picture of the number of Homes that don't have an owner.

EX.--In our condo complex there is a bank-owned property on the market that got offers quickly, but there is also a bank-owned property that the bank is holding off the market. And there are 3 other units that are in pre-foreclosure trying to do short sales that may come on the market. I would say that if all of these properties came on at the same time, prices would drop dramatically, yet is it fair to say that banks are propping up the market but strategically timing properties to come on the market?

#2. Sales price does not reflect the actual value.

EX.--One of my clients recently purchased a condo that was originally listed as a short sale with an offer of $215,000. The bank would not approve it and they foreclosed on it. Then the REO department of the bank listed it for $170,000 and it got tons of offers over the asking price. It actually was in escrow twice for $190,000 cash but the buyers backed out. There were offers higher than $200,000 but they all had low downpayments. I called at the right time and convinced the agent submit our offer with a big down payment for $175,000. So what is the real value of the unit even though the sale price was $175,000? 

#3--A minor change in the number of foreclosures does not correlate with economic recovery, decline or stability.

EX.--Many foreclosures are the result of true hardships from unemployment, a spouse's death or some other life-altering tragedy. Yet, it's no secret people go through foreclosure for financially strategic reasons. Additionally, millions of homeowners are in limbo, not paying the mortgage and trying to get a modification or a short sale; or just not paying yet the banks have not started foreclosure proceedings. What does a change in foreclosures represent if the change is not dramatic?

#4. The number of cell phone users and the number of subscribers who upgrade phones are more valid indicators of the economy than housing figures.

If this sounds silly think about it for a minute...You don't need a cell phone to live and they are not addictive cruches difficult to give up like smoking. Of course most plans are only $100 per month, but I've got to think that if we were close to another Great Depression, people would have the sense to drop their cell phone plan and use pay phones again. People are manic about getting newest phones, texting, Tweeting, etc. These people are not worried about their next meal. If there is ever a dramatic drop in cell phone subscribers or the newest iPhone flops, then start worrying big time!

The more I read various economic theories, the more I realized how complicated our economy is today. Is there a chaos theory? I think there is. I'll have to read about it.

The Wall Street Journal today highlighted a new book by Harry S. Dent entitled, "The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History." I thought to myself it sounds like an excellent self-help book for the coming year. Then I did a quick look on Amazon and I discovered Dent's last book, published in 2004 is entitled, "The Next Great Bubble Boom: How to Profit from the Greatest Boom in History, 2005-2009." In the editor's description of that book, Dent predicts...

** The Dow hitting 40,000 by the end of the decade (2010)

** The Nasdaq advancing at least ten times from its October 2001 lows to around 13,500, and potentially as high as 20,000 by 2009

** The Great Boom resurging into its final and strongest stage in 2007, and even more fully in 2008, lasting until late 2009 to early 2010

In the editorial description of his new release, Dent predicts:

**The economy appears to recover from the subprime crisis and minor recession by mid-2009 -- "the calm before the real storm."

**Stock prices start to crash again between mid- and late 2009 into late 2010, and likely finally bottom around mid-2012 -- between Dow 3,800 and 7,200.

**The economy enters a deeper depression between mid-2010 and early 2011, likely extending off and on into late 2012 or mid-2013.

So, now we are all supposed to shell out $18 bucks to see how he got it WRONG by a few critical years but we should believe that now he's right!

Who is Harry S. Dent??? His website says he's an "economics expert" trusted by "financial professionals." In addition to book and audiotape sales on his website, you can also attend his seminars and hire him to speak for your group. It goes to show you that anyone can make money peddling any type of advice as long as it's what people want to hear.

The moral of this story for me is that I should continue to learn and absorb information, reflect upon it but be careful about applying "expert"  advice.

It seems like bank failures are yesterday's news and today traditional companies we've known for generations are on the verge of collapse. On top of that, very sophisticated investors are losing fortunes investing with "trusted" experts.

The more I read The Wall Street Journal the more I believe in real estate. How can I say this while values continue to drop? I feel real estate is something I have more control over than a mutual fund run by some manager who invests in companies I don't even know that have cooked the books. I am not a sophisticated stock investor who understands hedge funds, swaps or shorts, but I understand a 2-bedroom home in a good neighborhood can rent for about $2000, which is enough to cover my expenses.

Here's How to Buy Real Estate with an IRA Account:

As long as you have approximately $100,000 to invest, you can have a nice return here in Long Beach. California. (All-cash investments are the easiest because very few lenders will make a loan on an IRA.)

You will need to transfer your IRA into a "self-directed" account. Most traditional brokerage companies like Charles Schwab, Fidelity, etc. do not offer this type of fund but a number of others do. Fees vary greatly so you will have to compare prices and services carefully. You can use multiple IRA accounts to buy one piece of property but the rent and expenses will be distributed between them.

Here's an example of a potential opportunity:

A nice one-bedroom/one-bathroom condo in Bixby Knolls recently came on the market for $92,000. Property taxes are $95 per month and HOA dues are $145 per month, so by charging $850 a month rent you will have $610 added to your IRA account each month...that's more than 7% profit! Additionally, over time the property value should increase when you want to sell down the road.

I purchased a townhome in Tennessee a few years ago and recently sold it to "roll" it over into a property in Long Beach. You can invest anywhere you feel you will get a good return.

Please let me know if you are interested in diversifying your IRA to include real estate.

If you feel that the value of your property has decreased significantly from when you purchased it, you can apply to get reassessed at a lower value. Some homeowners have gotten small automatic assessments but you can get potentially much greater savings by applying on your own.

I can't guarantee success but I am happy to send you comparable sales to help you support your claim to the tax assessor. Just call me at (562) 673-7348 or email me at shariposey@hotmail.com.

The LA County deadline is November 31!

Make sure to tell your friends & family to apply, too!

Which investment is better...real estate or stocks? If you ask a Realtor, you know which answer you will get and the same goes for a stock broker. Of course, common sense says you should have a little of both but if I had to choose only one, I would pick real estate.

In early April, it was time to fund my IRA account. I hate to admit this but I really only look at my brokerage account once a year compared to my daily contact with the real estate market. However, I subscribe to Money and Forbes, so I try to know what's going on in non-real estate markets as well.

This year I took the microscope to my brokerage accounts. I calculated my rate of return over the past 10 years for each mutual fund and for my stocks. Even after all the turmoil in the stock market, I gained an average of 3.7%. At least I didn't lose any money and stayed at least in line with the inflation rate. I feel even better because I read in this month's issue of Money magazine that since the end of 1998, the Standard & Poor's 500 index of blue-chip stocks only returned 3.5%. Without knowing hardly anything about the stock market, I beat the Standard & Poors...by a little at least.

However, when I look at my real estate investments over the same period of time, I'm way ahead! Overall, I'm up approximately 33% taking into account today's values. Obviously, the properties that I've held the longest are up the most.

One huge advantage of stocks and mutual funds over real estate is liquidity. And that is something real estate investors have learned the hard way in the past two years. If you have to sell a stock at a loss you can do it with the click of your mouse. If you have to sell real estate at a loss, it's a long, painful process.

Neither stocks or real estate are a sure thing. In both cases, experts advise looking at your investment in the long term. This year I contributed the maximum to my IRA to reduce my taxes but I will also look to buy a piece of property that makes sense as a long-term cash flow vehicle.

It seems common sense that the reason real estate prices drop is because there is too much supply and limited demand. BUT WAIT!! There are other factors at work behind the scenes.

The housing market is not like your average retail store that puts products on the shelf and offers advertised specials.

One way prices drop is when property is sold privately off the market. Believe it or not, some sellers would rather have either a private party buy it under market. This private party could be a family member or a friend, or maybe they have a friend in real estate who has a buyer "in their pocket" who wants a great deal. When a home sells off the market it is a comparable sale for the entire neighborhood.

Desperate sellers also bring prices down. These days many desperate sellers are banks that want to cut their loses by selling properties below other listings. Not all banks are doing this type of fire sale of property, Ironically, as long as the property is listed on the market often times buyers bid up the price. I showed a few bank-owned new listings this past weekend that had multiple offers by Monday.

Short sales prices are even lower than foreclosures in many cases. Some banks don't want to gamble with prices or the condition of the property in the future if they take the home back through foreclosure. Some banks cut their loses before the owner has even moved out of the property. Short sales are not for every buyer. Generally there are months of waiting while the banks go through their approval process.

The housing market is very volatile right now. For sellers, the best chance of getting the highest price is to price your property below other competing listings but make sure it is marketed heavily so buyers and other agents have the opportunity to see it.

Several months ago I read an article in our local newspaper, The Grunion Gazette, about two homeowners in Long Beach who were planning to tear down their 1920s bungalow and replace it with a very environmentally sound home. They were looking for volunteers to help them build it because the costs of building green is so much higher than traditional materials.

When I read the article I was trilled that someone in Long Beach was bucking the trend. A friend of mine also saw the article and he thought about volunteering to help build because he's a believer in green building, too. My ultimate dream is to build a strawbale house here in Long Beach. People tease me about it but straw is an incredible green building material plus it costs less than manufactured green products. ("Manufactured" green products seems like an oxymoron to me.)

Yesterday I was driving around the area where this green house was being built and I decided to check out the progress. To my horror this 1920s bungalow was added to a landfill in order to be replaced by a monstrous 2-story square box that takes up almost the entire lot! I'm not an expert on green products but I can't see how this new gigantic structure that will be filled with environmentally sound finishes like bamboo floors and dozens of fluorescent lights could have less of an impact than a little bungalow.

"Green" seems to be a trendy excuse for replacing something that is perfectly functional or for charging more for a product that has minimal benefit.

I love this quote from Will Rogers...

"You don't wait and buy real estate. You buy real estate and wait."

Every day I get calls from investors ready to get back into the market to flip and grow rich. Ironically most of the homes that are currently bank owned are flips that flopped. My philosophy in general is to buy real estate to hold unless the market has increased to make at least 10% profit after rehab, holding and real estate fees.

Our current market is a perfect market to get into a home that needs some cosmetic repair and live in the property while you do the work (sweat equity!). Down the line, you can turn that property into a rental and start with a new project.

One of my buyer clients found several properties he liked equally and made offers on multiple properties at the same time. All the sellers knew they were in a multiple offer situation. Yes, the offers were low but not what I would consider offending.

Out of 5 offers, 3 sellers came back with full-price or nearly full-price counter offers. One of those full-price counter offers was also loaded with so many special terms they would strangle a buyer. Two sellers came back with fairly generous price reductions and the buyer chose to continue to negotiate with one of those offers.

A week later, two of the sellers who my buyer did not choose wanted to come back to the table and negotiate more but it was too late.

The moral of the story is not all sellers are motivated to sell just because their house is on the market. However, if you are a seller who is motivated, you need to realize there are many properties competing for a limited number of buyers. No seller wants to "give" their house away but the negotiating process will determine the value of your property in today's market so be prepared to cooperate if you want to sell. And for buyers, the more flexible you are in your needs, the better deal you can strike. Some sellers are very motivated; it just takes working with an agent who is willing to provide the expertise and invest the time to help you get the best deal.