Jay's Blog

Do You Have a Bad Attitude?

Jay Shepherd (RE/MAX Professionals Select) — Tue, 09 Oct 2007 07:22:36 -0500

Ever notice that a home sells better if you like the Sellers, like the home or just feel comfortable that everything is a good fit. I think a lot of us get into a "Bad Attitude" when we take listings just to have them even when we know they are overpriced, in unshowable condition or the Sellers are unreasonable. Deep down you know the situation is not right and all you do is beat yourself up and hate to talk to your clients. Ever notice that when these finally disappear there is a very short period of morning and you almost immediately start feeling refreshed and upbeat. Of course taking a pass on these losers is easier said than done, especially when you want some type of inventory to drive in some buyer clients.

Take a look at what this one has to say:

Stop going to war with yourself and watch peace come rolling in - for your business and your personal life.

BY KELLE SPARTA

Are you one of those practitioners who's never satisfied with their sales numbers? And no matter how hard you work, it seems like it's never enough? What's more, the slower real estate market in your community is making your job impossible, right?

If that sounds like you, then here's some advice: Stop the pity party. Your negative thoughts may be sabotaging your career and destining you to fail.

When you let a bad attitude or negative thoughts consume you, then it doesn't matter how smart, creative, talented, and knowledgeable you are; you will create bad outcomes in your career and in your life. After all, when you're wasting so much time dwelling on the bad, you never have time to focus what's good.

Case in point: Many practitioners struggle to exceed the number of houses they sold in their second year in the business. That's where their bar is set - their norm - and they can't seem to focus on anything else. When they do try something different to accelerate their sales, their comfort zone kicks in and they find a reason to slow down, or they stop working at the end of the year believing they "deserve it" for working so hard.

The result? They end up with the same production level for the year even though they were on track to do more.

Don't let your attitude slow your business down any longer. Here are seven ways you can use the power of positive thinking to turn your business around:

1. Acknowledge your negativity. Do you tell yourself the open house won't be a success before it even starts? Do you second-guess yourself before a listing presentation? One of the biggest battles in escaping the cycle of negativity is realizing and accepting that you need to improve your attitude. It's much easier to notice negative behavior in others than in yourself. Your inner thoughts are insidious things. So watch your words and thoughts - the next time you tell yourself you can't do something or that something is impossible, give it a second thought. What's the harm in thinking you can?

Here's one test if you're wondering whether a thought you're having is healthy for you or not: Consider whether if this was a permanent state of being for you (whatever the thought describes), would you be a happy person? If not, then it's a good time to re-evaluate that thought.

2. Avoid the blame game. But it's not your fault, you say? Stop trying to pin the blame on others or on a situation. When you see yourself as a victim, it gives you an excuse to say that you were right and the other person or situation was wrong. Blaming others will only cause you to dwell on a negative situation and prevent you from moving on.

3. Stop being a know-it-all. You don't always have to be right. When you're so attached to being right, you often live in fear of being wrong - which keeps you from being able to relax and just be happy. No doubt there's satisfaction in being right, but it can be an exhausting, overwhelming, and thankless job. Plus, other people are often turned off by someone who always has to be right. Accept that others can sometimes come up with an answer, too, and welcome their feedback. You'll find your thoughts are much more peaceful.

4. Find a good role model. If you're always a downer, then that's the kind of crowd you'll attract. Instead, gravitate toward people who have an upbeat, optimistic view on life. Find a business role model: Someone in real estate who has the kind of attitude that you want to have. Then, follow their lead.

5. Expect the best. Don't obsess over that one thing that isn't working in your business. If you believe that you are a 15-house a year producer, then you will never be more than that. If you believe that you don't need more than $50,000 per year, then that's all you'll ever make. Your underlying assumptions and beliefs are what create your reality. If you want to be the top salesperson in your community, don't tell yourself "that will never happen." Instead say "I will be the top salesperson." Now you're focused on making it happen, and your attitude won't get in your way.

6. Be patient. You're not going to change your attitude overnight. You need to rewire your mind to see the positive, which takes work. Constantly monitor your thoughts. You might even wear a rubber band around your wrist during your workday to give yourself a little zap whenever a negative thought enters your head.

7. Smile. One of the best ways to change a negative attitude is to start smiling more. More people report having a positive impression of a salesperson who smiles than a salesperson who has a neutral facial expression, according to psychological research. So put a smile on your face.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

Do Something Different

Jay Shepherd (RE/MAX Professionals Select) — Tue, 09 Oct 2007 07:11:35 -0500

I don't know how many of my friends I have talked to over the last couple of months that have
mentioned being in a "funk" this last couple of months. I've always found when that occurs I get back
to some basics - do anything to get yourself back into the game. This beats sitting around hoping something is going to change. This article has some good ideas to get going and maybe in a new more exciting direction. Take account of all the things you have done over the years that have worked, evaluate to see if it will still work in this market and give it a try. Take some of these free seminars from the Real Estate Gurus - one idea or even if it gets you motivated it is worth the time.

This article has some good ideas:

If you keep doing the same things, you'll keep getting the same results. Here are some strategies for breaking out of your mold and trying new ways to get the job done.

BY JOHN D. MAYFIELD

Many practitioners never bother to change the way they do business on a daily basis. They stick with the tried-and-true, finding comfort in their habits. If it ain't broke, why fix it? But if you have that mind-frame, you may unintentionally be putting a lid on growing your business to new heights.

After all, time's change, customers' wants and needs change. Perhaps it's time that you change, too.

Of course, I'm not saying you should abandon the core tasks that have sustained your business over the years - tasks like staying in constant contact with your sphere of influence, prospecting expired listings and FSBOs, and hosting open houses. These activities may not be too exciting, but they are a necessary part of any real estate business plan.

However, I am suggesting that you try new ways of communicating with clients, managing your time, and marketing your skills. If you haven't yet given these four ideas a test ride, now may be the time. What's stopping you?

1. Start a blog.

Yadda-yadda-yadda, you've heard it all before, right? But many real estate agents are still not taking advantage of this Internet marketing tool. In fact, only 4 percent of REALTORS® have a blog, according to the NATIONAL ASSOCIATION OF REALTORS®. And that 4 percent may be taking a big bite out of your market - so start blogging.

A blog can help you drive more visitors to your Web site by providing useful real estate information to buyers and sellers on a regular basis. Here are just a few topics you can start blogging about:

Local report on the housing economy.
Value of a home warranty.
Ways to improve your credit score.
Tips for selling your home quickly and the importance of pricing correctly.
Local events and activities.
Zoning laws and ordinances.
The need for inspections, survey's, etc.
Details about the closing process.

Read more on step-by-step blogging at REALTOR® Magazine Online, including details on how to go about setting one up.

2. Begin a podcast.

Like blogging, podcasts - which are audio files that can be downloaded onto MP3 players and iPods - are another Web tool that can help you expand your reach to buyers and sellers and show off your real estate expertise. Podcasting will require a bit more technical experience, but it's a good way to get your voice heard above your competition.

According to the Web site Engadget, Apple sold 270,000 iPhones in the first 30 hours of its release. With the craze and wave of iPod and MP3 users, many consumers will continue to use their iPods and other MP3 players to download content and information for buying and selling real estate.
By providing podcasts and adding them to your Web site, consumers can visit your site on a regular basis to download your content, taking it with them on the road to listen at a later time.

3. Fit your marketing materials to your clients.

Many agents still follow the philosophy that "one size fits all" when it comes to working with their customers. But customers have different needs, wants, and buying and selling decisions and you're marketing materials should fit those concerns. For example, you're listing presentation for a for-sale-by-owner should be different than a presentation for expired listing prospects. A buyer's kit for first-time home buyers should have a different slant than a presentation for customers relocating to your area. Plus, customizing your materials to fit the types of customers you deal with on a regular basis will help you set yourself apart.

4. Use checklists and action plans.

When you take a new listing, do you have a checklist of "to do's" and "tasks" that are completed for this client? If not, you need to create a system so you can put your business on autopilot. Rather than trying to perform your marketing functions from memory (even if you've been in the business for years), institute a formal action plan of items to perform for a listing that will help you streamline your day and make you productive. Delegating tasks will be easier than ever, and customer service will improve. Don't believe me? Then try it!

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

Getting the Listings Sold

Jay Shepherd (RE/MAX Professionals Select) — Sun, 07 Oct 2007 22:06:51 -0500

Good article to make you think a little about what we are really supposed to be doing for our clients - sell their homes. In the past that was pretty much a given and our listings were leverage solely to bring us more business with either more listings or buyers. All the "Real Estate Gurus" that I have heard over the years rarely touched on how to sell the house, just how to get more listings and very rarely on getting buyers. Remember Lister's Last.

I know a few Agents and myself included that would give up half a dozen slow moving listings for some good solid buyers.

Jay

In many parts of the country, the inventory has increased and it is taking longer for homes to sell. For many who were in a very fast seller's market, these conditions are requiring a shift in strategies for them to have the success they want this year.

Are your listings sitting on the market longer? In many price ranges, if your property isn't in the bottom 25 percent, it's just going to sit there. What's an agent to do?

First and foremost, the communication with your sellers is critical to their understanding of the new marketplace dynamics. Most sellers are living with last year's expectations, i.e. that they'll get 10 percent above the last sale, whereas in many places, it may well be that they will get 10 percent less! Your ability to educate them and help them modify their expectations to the new realities will keep them loyal and appreciative of your efforts.

It is very important to avoid becoming adversarial in giving them the bad news. People get attached to their opinions and will dig their heels to defend their point of view. Instead of trying to convince them you are right and they are wrong, bring empathy and understanding into your conversations. Let them know you understand why they would think the way they are, and then say that the updated information on the market is telling us something else.

Next, show them the facts regularly. This would include a weekly or monthly CMA report, the market absorption numbers, average days on market, and the amount they are losing each month the house doesn't sell. Then let them decide. It's their house, after all. This information sometimes takes a while for them to digest, but you are planting the seeds for them to make the decision that is right for them.

This doesn't mean you have to take overpriced listings. You need to know at point this listing isn't for you, as well.

Shifting your marketing strategy is the work you need to do. Determine where are the buyers coming from? How can you reach those buyers more effectively? Is your internet strategy serving you? With over 70 percent of buyers starting there, it may be time to upgrade your website to add ways to capture more leads.

When the average time on market lengthens, it is harder to justify using low return/high cost print advertising or other advertising that isn't bringing in prospects or buyer leads. Some higher return activities include:

Open Houses. Make these events and leverage them by personally inviting neighbors or doing a neighborhood tour to share marketing costs and increase traffic.
Staging The Home can make a big difference. Make sure that when it hits the market it is spotless and shining and all repairs and clean up is done.
Advertise in small, targeted media. Determine the most likely potential buyer and put an ad in something they would read, such as a local paper or magazine for seniors.

Use a Call Capture System to differentiate yourself and double end more sales.

Lastly, monitor your beliefs! In all markets, there are still buyers buying. If you buy into a "nothing is selling" mantra, you will probably be right, but if you look at this as an opportunity to be the most creative agent in your market, you will create success.

Henry Ford reminds us, "If you think you can or think you can't, you're right." What are you thinking?

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

Adjusting To A Buyer's Market From A Seller's Market

Jay Shepherd (RE/MAX Professionals Select) — Sun, 07 Oct 2007 21:58:54 -0500

Some interesting thoughts....

For agents used to brisk sales with multiple offers from eager buyers, a shift to a less frenzied market can be a shock. How do you regroup and get business into high gear again?

Realty Times responds:

I've long thought that the industry's concentration on sellers is a good thing, but there should always be an equal effort to cultivate buyers.

When markets change, then you have more of one than the other. If you have systems and strategies in place for both, then your business and that of your agents doesn't suffer as much.

Right now, you're putting a lot of marketing dollars, time and effort into homes that simply aren't moving, so it's time to regroup.

The first thing you have to do is educate your agents about the mindset of buyers in a changing market. Why do they take a herdlike attitude toward piling into or pulling out of a market. If they understand this, they'll better understand what buyers' needs are and you can help your agents develop services that will appeal to them.

The beautiful part is you can cultivate buyers without harming your business with your sellers because buyers are what your sellers want you to deliver!

So you have two areas you need to focus upon: bringing buyers into your brokerage and serving your sellers. Here's how to pull it off.

Buyers

Nearly two-thirds of buyers use the Internet to view listings, learn about the home buying process and meet service providers. What this means is that buyers are getting their information from other sources than you.

You need to intercept them first. Here are some ways to do that:

Start holding monthly or weekly educational seminars for homebuyers. Arrange speakers such as mortgage loan officers and title company representatives to explain borrowing and closing processes. Rotate your top agents (the ones who enjoy speaking or do this yourself) to explain where the market stands and where they can find good buys. Charge a fee for the seminar that is refundable if the buyer uses one of your agents to buy a home.
Arrange tours of specific neighborhoods where you have lots of listings. You'll get more play in the paper if your tours are coordinated efforts that include several homes. Selling a neighborhood is a fresh new way to get buyers interested in homes. It also is a way to make your advertising stand out from your competition, who may still be advertising homes in block ads. Getting several homes featured in one advertorial also gives you more bang for the buck.
Invite interior designers and remodelers to participate in "remodeling" seminars so you can educate buyers about buying properties that need updates. This also will help your sellers because it will demystify the remodeling process for buyers who want bargain homes but are afraid of the time and costs of remodelling an existing home.
Start using your seminars and neighborhood tours as selling points for your sellers. In a listing presentation, worried sellers know that a buyer's market could take a long time to find the right buyer at the right price. Show them your seminar/home tour schedule and they will know you are actively trying to cultivate buyers to bring to their homes.
Start an investor program where interested agents "mentor" investors through their first purchase. Invite mortgage brokers to explain the difference between mortgage loans for investors and those for homesteaders. Again, this is a program that could appeal to sellers at the listing appointment level, as they will see you are doing creative things to bring buyers into your brokerage.
Add property management services to your brokerage. If you don't already have property management services, now's the time to incorporate them. The reality is that some homes aren't going to sell, but might be candidates for rentals. You can train your agents to offer property management services to sellers in the event that their home doesn't sell by the date they wish. Getting the mortgage covered with some chance for a little profit might help some sellers.

Your Agents

Your buyers' programs won't be successful unless you get your agents on board, and the ways to do that is to remind them that their job is to put people in homes. That means renters as well as buyers. Look at it as a way to fish further upstream. If most renters become buyers at some point, wouldn't you like to be the agent(s) they use?

Also, last year over one-third of the homes sold in the U.S. were sold to non-occupying owners -- investors and second-home buyers. Second, a huge number of homebuyers purchased homes with exotic loans such as interest only loans. The MBA says that half the loans that are outstanding today were originated in the last three to five years.

What that should tell you is that you have a large number of homeowners who are at risk. They've either refinanced and used up their equity, or they haven't been in their homes long enough to build sufficient equity to sell without bringing money to the table. If they need to move to another home, they're in trouble.

No longer can you put a listing into the MLS and hope it sells. You have to have multiple strategies to help sellers in this position from helping them rent their homes to cultivating buyers for their homes.

Adding property management is simply being able to provide a different suite of services to the seller.

Bring in trainers and support staff that can help teach and show your agents how to include property management services in their bag of tricks. They need to know mortgages and strategies, such as 1031 exchanges, and they need to know how to work with HUD, Fannie Mae and Freddie Mac on foreclosures. They need to know how to educate sellers to keep their homes out of foreclosure.
Explain that housing rental commissions can be quite lucrative. In most markets homes rent for approximately one percent of market value per 12-month contract. On a $100,000 house, your brokerage would collect $1000 annually for every year the rental contract renews, plus you would be making monthly management fees. Just to be conservative, let's say to collect rents, deal with problems such as repairs or evictions, you collect an additional monthly property management fee of $50. That's $1600 annually, which is certainly better than nothing.
If you were to sell the same house at 6 percent, you would collect $6000, which is hard to pass up, but let's look at the worse case scenario. Half the proceeds may go to another brokerage as cooperation. Now you're down to $3,000. Thirty-five percent may go to a relocation company or lead generation company. Now you're down to $1,950. That's only $350 more if you sold the home than if you rented it for the seller, not counting the revenues that could come in if the seller listed the home as a rental year after year.
Help your agents understand that markets are constantly changing but a buyer's market doesn't have to mean that you'll make less money. You just make money differently. You'll stay busy because you will do the things that are necessary to adjust to the present, while your competition may still be rooted in wishing and hoping things would change back to the way they were.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

Survival Skills for a Cooling Market

Jay Shepherd (RE/MAX Professionals Select) — Sun, 07 Oct 2007 07:09:56 -0500

I think sometimes we forget we are all running a business, one that sells or markets big ticket items. Our Broker, CEO or VP of Something is not running it us. Good business practices and smart marketing payoff in tough times for Microsoft and individual Realtors.

As the old adage goes, "All good things must come to an end."

Yes, the real estate market that boomed for the past several years is slowing to more regular, consistent pace. Mortgage rates are rising. Prices are cooling. Buyers are no longer racing each other to open houses.

But there's no need for wringing your hands and wailing. Sure, some practitioners who didn't have their heart in the business will drop out or find it too hard to compete in a more challenging environment.

However, as anyone who has worked in the real estate business during a slowdown can attest, there's always demand for skilled real estate practitioners. After all, people don't stop buying and selling just because the market cools.

That doesn't mean that you can thrive by doing business the same way you were a year ago, or even a month ago. Rookies and industry veterans alike must sharpen their skills, reconnect with the consumer, and - as my favorite chef, Emeril, would say - "kick it up a notch."

To stay at the top of the game in your changing market, follow these 10 tips:

Focus on relationship-building. Work hard on developing customer relationships that will provide you with downstream business for years to come. Although we are light years advanced from 10 years ago when it comes to database management and communicating with clients, real estate is as much of a relationship business today as it ever was.

Work an extensive mailing list. Even if your business slows down a bit, don't stop contacting prospects and past clients, either by e-mail or snail mail. Plan to make 12 contacts per year for everyone on the list. Build your list to 1,000 or more and watch that list generate 10-15 transactions additional yearly.

Invest in marketing. Reinvest 20 percent to 30 percent of your gross revenue on personal marketing and advertising that will get new clients and customers to come to you. Your message could emphasize your experience working with buyers and sellers in tough situations.

Use technology to your advantage. Take a look at the technology that you are using to communicate with clients and co-workers, organize your business, and manage each transaction. Evaluate whether it makes sense to upgrade your tech tools to boost your efficiency and deliver a higher level of customer service. However, don't let technology stand in for face-to-face meetings and networking.

Make sure the price is right. Become masterful at pricing right the first time. Don't add to the problem of oversupply and increased absorption rates. Every time a home is priced to "expire," you increase the number of FSBOs on the market. How? When a listing expires, it's not uncommon for the owner to get mad at the whole real estate profession. They might just try selling on their own the next time around.

Welcomes objections for what they are. Don't get mad at objections. Instead, recognize them as valuable market signals and become masterful at handling them in a relaxed, but serious way. Learn from what buyers and sellers are telling you. For example, if a seller objects to a list price you suggest, maybe that means you must do a better job at educating clients on market conditions. Also, know what the most common buyer objections are and practice your response so you are confident and prepared to respond.

Strengthen your community ties. Build your community involvement in a variety of ways: little league sponsorship, networking groups, charity events, volunteering as a big sister/brother, and so on. The more you're out there and visible in the neighborhood, the more opportunities you create to reinforce your expertise as the local real estate expert, ask for business, and get referrals.

Embrace continuing education. The market keeps changing, and you must know how to change with it. Stay up to date on new technology, risk management, and hot marketing techniques. Participate in every educational opportunity that comes along. While it is keenly important not to be one of those agents who is forever getting ready to get ready, it is critical to "sharpen your axe" when it comes to staying ahead.

Hire a coach. Invest in the single most effective thing you can do to rouse the superstar within. A good coach aligns his or her goals with yours and is there for you every step of the way. By learning from an outside expert, you can refine your business plan, respond to challenges, and open your eyes to opportunities that you may not have otherwise seen. That's an asset worth its weight in gold.

Don't just sit there! When all is said and done, there will never come a time when sitting on one's haunches or doing things "the old way" will be an acceptable way to do business. Make it your mission to adapt to changes and be open to new ideas to propel your business.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

Turn Any Market into a Go

Jay Shepherd (RE/MAX Professionals Select) — Sat, 06 Oct 2007 19:36:49 -0500

This article talks about getting into a new mindset - there are buyers and actually a lot of
sellers out there really needing our help at this time. The buyers have more to choose
from and need our help in weeding out the crap. Obviously the sellers in many markets need
all the help they can get. Comment someone made this week - "Would you rather have it be
1982 with 18% interest rates".

We are still in the best business in the world and have the freedom of being the captain of our own ship!!

Admit it. You kind of hoped it would last forever: rising prices, multiple offers for every listing, selling times measured in days or even hours.

After five years of record breaking sales, today's shifting markets may come as a relief.

But it's also a little scary, especially for practitioners in those limited number of markets where prices are falling significantly. Let's be clear: Most markets are a far cry from depressed, especially when compared with 1982, when the 17 plus percent rate on a 30 year fixed mortgage and a 13.8 month supply of homes combined with a slow economy to make the perfect housing storm.

Still, it's definitely a different world. In some markets, consumers appear to be taking a momentary breather from housing while they consider the future direction of home prices and interest rates. Real estate salespeople in some parts of the country are confronting a selling environment that's different from the one they faced even six months ago, and many aren't sure how to shift gears.

"Now may be the best time to buy a home," says Jim Colhoun, Prudential California Realty, Lafayette, Calif.

"There's a whole crop of people in the industry now who've never experienced a normal market, let alone a down market," says Chris Pollinger, a broker and in-house sales coach for RE/MAX Real Estate Services in Newport Beach, Calif. "They think listing a house on the MLS and selling it 48 hours later after receiving multiple offers is normal."

"People are starting to panic a little bit because suddenly the market forces they've been relying on for the past few years have changed," says Sean Conlon, founder and partner of Century 21 Sussex & Reilly in Chicago. "But there's still business to be had out there. Salespeople just have to approach it in a different way."

Recently REALTOR® Magazine talked to a number of salespeople who are doing just that recognizing that every market offers opportunities. These go-getters are jumping right into the new reality; some are even having their best year ever.

Get buyers off the fence

Perhaps the most important new dynamic is the power shift that has occurred between buyers and sellers. The ramifications of this shift reverberate through almost every area of a salesperson's business.

"Over the past few years, you didn't worry about finding buyers. You assumed they would come if you had listings," says Louisa Enz, ABR®, a broker with Stark Co., REALTORS®, in Madison, Wis. Today, however, it's more of a buyer's market. According to National Association of REALTORS® research, the monthly supply of home inventories rose from 4.9 months in October 2005 to 7.3 months in November 2006. Extensive media coverage of the housing bust has also created a wait-till-it's-cheaper mentality among some buyers.

For buyers, of course, this is good news. "The paradox is that now may be the best time to buy a home," says Jim Colhoun, sales associate of Prudential California Realty in Lafayette, an East Bay suburb of San Francisco; Colhoun's 2006 sales numbers are ahead of last year's. "The fundamentals increased inventory, more room to negotiate, low interest rates - are actually very good for buyers right now."

NAR is getting this message out to consumers through its "Buy Now" advertising campaign, which was launched in November 2006.

So far, buyer traffic open houses, walk-ins, and ad inquiries remains down, say practitioners. But that doesn't mean there's no business. "You have to know your market and what's happening there," says Stephen Johnson, GRI, broker-owner of Dealers Real Estate and Land Office Inc. in St. Francis, Minn., a suburb of Minneapolis. "Even in a slowdown, housing in some communities sells faster than in others. You have to find those areas and focus on them."

An active market right now is buyers who've been ignored or overlooked in the past few years," says Pollinger. "For instance, first-time buyers and people who have had some credit problems in the past but have worked to overcome them are great targets. They're ready to buy. And now you can talk frankly to sellers about making some concessions to make those deals happen."

According to Traci Smith, president and owner of Century 21 Smith & Associates in San Antonio, "Now is a great time to call people in apartment complexes and offer to do a rent-versus-buy analysis for them." Driven by empty nesters and Gen Y's, apartment demand has increased steadily for the last 13 quarters (through October 2006), according to the National Multi Housing Council. Typically as demand rises so do rents. So the results of such an analysis will be more positive than any time in recent years.

If you can't sell renters a house, maybe you can rent them their next apartment. Salesperson Marsha Cook of South Beach Investment Realty Inc. in Miami has developed a lucrative side business as a rental agent. "I rent luxury properties in the South Beach area that start at about $2,600 a month and go much higher. The commission rate is usually about 5 percent. I just picked up a commission check for $600. If you can do a couple of those deals a month, it's a big help," she says. Cook, who started selling real estate two years ago, says she finds rental work considerably easier than selling homes because there's no mortgage approval step involved.

Another readily accessible pool of buyers in the current market is more experienced real estate investors. Talk of a bust has scared off the come-lately investors, but "when the market slows down," says Smith, "it's a spectacular opportunity to pick up discounted properties."

The investor boom is also being driven by demographic trends. "There are a lot of baby boomers who are starting to inherit money from their parents' estates. They want to invest it wisely, and real estate, historically, has been a very good investment," says Pollinger.

"I've got probably 11 investors I'm working with right now," says Cindy Brandt-Buroker, a sales associate with Prudential One, REALTORS®, in Troy, Ohio. "Most are looking for HUD [U.S. Department of Housing and Urban Development] houses they can fix up and flip. Investors are usually much easier to deal with than regular buyers because it's basically a numbers game. It really comes down to, ‘Here's the house; this is what I'm going to put into it; this is what I need to get out of it; can I get it?' "

Pick and chose your listings

As days-on-market stats have risen, especially in some formerly hot markets, such as the East and West coasts, listings aren't exactly hard to find today. In fact, many salespeople say they're making some tough decisions about which listings to accept and which to pass up.

"It's very expensive to have listings today," says Cook. "Longer selling times mean much higher advertising costs."

Says Johnson: "I limit the number of listings I carry to about eight today because I know what it takes in terms of time and money to market them."

Some salespeople say they'd rather sit out the first listing round entirely. "If you don't get a particular listing the first time because you're honest with the seller about the price, just wait until it expires. It might be best to get it the second time around because that's when the sellers are more realistic about price and selling time," says Enz.

An upside to this situation is that commissions actually seem to be strengthening. "In the past few years," says Pollinger, "salespeople often had a hard time justifying their commission because in many cases they had a listing for only two or three weeks. Now, however, commissions are going up because of the dynamics of the market."

Use creative financing for sellers

Salespeople are also dealing with increasing numbers of "upside-down" sellers today that is, sellers who owe more on their mortgages than they can reasonably expect to make on a sale. Having the skills to make the numbers add up for a seller can get you a listing and a sales price that fits the market.

"There's a lot of pain out there with sellers right now," says Glenn Bill, co-owner of Century 21 at the Crossing in Indianapolis.

Sometimes the best advice a salesperson can offer an upside-down seller is, don't move stay put for another year or so until the market recovers.

In other cases, it's possible to balance the old sale with a new one. "What sometimes happens is that an upside-down seller will go to a builder and say, ‘I want to buy a new house, but I'm upside-down $5,000 or $6,000 on my old house,'" says Bill. "The builder then comes up with an incentive - maybe he agrees to pay the salesperson's commission to cover the difference."

Of course, sometimes matters have progressed beyond such relatively painless solutions to foreclosures and preforeclosures, both of which represent significant opportunities for salespeople.

There's a crucial difference between the two: The former involves working with banks to dispose of properties they have acquired as a result of mortgage defaults. The latter involves striking a deal between a seller and a mortgage company that allows the seller to walk away from the property before foreclosure.

Brandt-Buroker had been doing foreclosure sales for a while when she decided to get more aggressive about it about a year and a half ago and hired a buyer's agent and an REO specialist to concentrate on that segment. "It's a steady source of listings and one of the main reasons I beat my 2005 numbers last year," she says. With foreclosures and delinquencies on the rise, this niche will probably offer business growth opportunities during 2007.

According to the Mortgage Bankers Association, the delinquency rate for mortgage loans on one-to-four unit residential properties stood at 4.67 percent in the third quarter of 2006, up 28 basis points from the second quarter. The percentage of foreclosures in the third quarter was 1.05 percent, up six basis points from the second quarter.

Preforeclosures, or short sales, as they're sometimes called, are somewhat more complicated. Explains Johnson, "What usually happens is that you negotiate a settlement with the mortgage holder usually a bank to prevent foreclosure."

A typical settlement is having the house appraised and asking the bank to accept that amount, even if the seller owes more on the mortgage. Most banks agree because it saves time and money by avoiding the foreclosure process. The upside for sellers is that they walk away free and clear with their credit intact.

Because both foreclosures and preforeclosures are legal actions that require public notice, newspapers and the Internet offer easy ways to look for prospects. "I call an owner facing foreclosure and offer to help sell the house first," explains Johnson. For both foreclosures and preforeclosures, commissions are about the same as for traditional sales. The one difference is that banks will sometimes guarantee some kind of minimum commission for low-end properties.

Johnson adds that "if you're not teaching your salespeople how to do short sales, you're not full service in today's market."

Hone your selling skills

No matter what kind of buyer or seller you're dealing with, however, salespeople are having to dust off selling skills and tools that fell into relative disuse during the heady days of the boom.

"Correct pricing is paramount," says Colhoun. "Two years ago, you priced something with the expectation of setting off a bidding war and possibly making a deal for $100,000 more than the asking price. Now, however, the goal is to set a realistic price that will lead to a successful negotiation with a buyer."

Some sellers are already getting more realistic in their pricing, says Enz, and even more are willing to consider a reduction after the first 60 days if they haven't had an offer.

To price it right, consider not only recent comps but also the direction the market is moving and how quickly the seller needs to dispose of a home. "Instead of doing one market analysis when you first list the home, you may have to go back to the seller every two or three weeks and say, ‘I know we priced your home at this much, but the market is changing. If you want to be competitive, we have to be more realistic about the price,'" says Smith.

And once you price it right, you'll have to do a lot more to get buyers through the door. "During the past few years, many salespeople got lazy when it came to marketing," Pollinger says. "After all, when there are only six houses on the MLS in your price range, you don't have to be a genius to get traffic through a listing. But it's a different story when there are 600."

One tactic that's suddenly back in full force is incentives. Partly this is an attempt to avoid price reductions (compounding the problem of pricing it right). Partly it's about distinguishing your listing from all others in the area.

"Everybody's trying something different," says Cook. "I've got a seller who's offering two years of free condo maintenance. Since the monthly fee is $500, it's actually a pretty substantial incentive."

"We're seeing everything from a new Ferrari at the very top end to a plasma TV at the lower end," says Pollinger. "When you do the math, it's still cheaper than dropping the price 5 percent."
The current shift is also highlighting the primacy of the Internet as a marketing tool. "Print advertising is something I'm dubious about right now," says Colhoun. "In my area, it's priced out of proportion to its benefit. All my customers use the Internet, and that's where I'm directing more of my marketing efforts today."

"One of the things I do regularly is check out where my listings come up on the MLS," says Johnson. "If there are three pages of houses priced at $269,000 and I'm on page three, I may ask the seller to let me change the price to $267,000. Then the property will come up first in that price range."

Another way to get your listing noticed is to be sure your description is complete, adds Johnson. For example, if your listing is near a big employer or a great school, be sure to mention it in a way that sets the home apart.

Targeting also becomes more critical in a shift, says Smith. She uses direct mail over newspaper ads because it can be focused more closely on one group. But you can't just mail one postcard; you have to send seven or eight mailings to have an effect, says Colhoun.

Whatever niche or strategy you choose, the most important thing to remember is that "you can't panic about a slowdown," Colhoun says. "You have to have a plan in place and stick with it. Stay in touch with your clients. Make sure you're the first person they think of when it comes to serving their real estate needs."

Sidebar: A little perspective

It's hardly news to anyone who's been in the field for a while that real estate is a cyclical business. In fact, if you review the history of the industry since the 1970s, a slowdown every 10 years or so is more or less the norm.

"When I started in the business in 1991," says Stephen Johnson, GRI, broker-owner of Dealers Real Estate and Land Office Inc. in St. Francis, Minn., "the interest rate was 11 percent, and if you listed a house and it sold within six months, you felt as if you had done a good job." That's why Johnson doesn't view current market shifts with much trepidation. In fact, his past experience gives him a head start this time around. "I'm returning to some of the same methods that worked for me last time, like intensifying my marketing with more frequent direct mailings," he says.

The worst period in modern memory was undoubtedly the late 1970s and early 1980s, when interest rates soared to 17 percent and an overall economic recession gripped the country. After a record 3.986 million units sold in 1978, sales didn't reach that level again until 1996.

"The early 1980s were the toughest period I've seen," says David Short, a salesperson with Century 21 at the Crossing in Indianapolis, who began selling real estate in 1974. "We did FHA loans at 17.5 percent, but we didn't do very many of them."

In an effort to neutralize the higher rates, Short and many other salespeople relied on "creative financing techniques." One of the most popular was the land contract, whereby the seller essentially carries the financing and retains title to the house until the mortgage is paid or refinanced when rates fall. Today's relatively low interest rates don't require such extreme measures, but working with sellers to sweeten the deal with better terms or giveaways taps into the same set of techniques.

Another problem of two decades ago was limited financing options. "In the early 1980s, there were three basic financing options: 10 percent down, 20 percent down, or cash. Today there are hundreds of different loan programs that make housing more affordable even with today's higher prices," says Sandy McReynolds, a broker-associate with RE/MAX Executives Plus in Decatur, Ill., who began selling real estate in 1973.

And while the number of sales associates might have been lower (NAR's membership in the mid-1970s was some 400,000, compared with 1.3 million today), so were the housing inventories.

"In those days, housing was scarce. If you had five or six listings, you had a boatload," recalls Short.

With a perspective only time can bring, these experienced REALTORS® see current shifts with the exception of a few hard-hit areas as manageable by comparison.

"It's just not as bad today," says Bonnie Clement, a broker-associate with Realty USA in Williamsville, N.Y., who started selling real estate in 1978. "Good houses still sell, and the ones that are priced right sell immediately."

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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Surviving the Slump

Jay Shepherd (RE/MAX Professionals Select) — Sat, 06 Oct 2007 19:16:25 -0500

I'd like to think the slump is getting a little better or maybe I'm just
working smarter and harder in order to get new clients and business.

Realtors across the country are hurting. Housing markets are in a downward spiral. Homeowners are flocking to FSBO websites to list their own homes. Internet lead generation services are heating up the competition. And many agents are offering cut-rate commissions to survive the cutthroat market.

Realtors have to remember, however, what most retailers already know -- competing on price alone is for suckers. Start offering sellers lower commissions and you are setting yourself up for a world of hurt, both in the short-term and well into the future. Once you establish a reputation as the "cheapest agent on the block," turning that around later can be nearly impossible.

Instead of competing by offering lower commissions, find something else to compete on -- quality service, experience, and know-how. Adjust your marketing materials to highlight current market conditions and your unique ability to sell homes in a down market:

Do not sugarcoat news that the market is down. Provide facts and figures showing the current condition of the market. Let prospective clients know that other agents may try to present them with a rosier picture just to get their business.

Inform clients that according to the NAR, a home sells for 16-percent more on average when sold through a Realtor than when sold by the owners or someone less qualified. Most homeowners are unaware of this fact and may need to be reminded that you are likely to earn much more than your keep.

Highlight your experience. If you have been a Realtor for ten years, that is a big plus. Make sure your clients know the value of your experience and that you have sold homes in slow markets before.

Highlight your dedication. If you are a full-time Realtor, market yourself as a full-timer and let you clients know that selling homes is your passion. Let them know that some of the agents they talk to may be part-timers and may not be quite as responsive as you.

When you meet with prospective clients for the first time, make sure you have a marketing plan in place for their home. Highlight your three-pronged attack for selling a home in a slow market:

Pricing the property to the market. Explain why setting the right price is so important in generating interest in the property. Explain how you arrived at the asking price, and back it up with plenty of facts and figures from comparable properties.

Getting the property in tip-top condition. Explain why curb appeal is critical and why the home needs to make a great first impression. Consider putting together a team of consultants, including a home inspector and a professional stager to write up a plan of action, complete with an estimate for the work that needs to be done, and how much these improvements are going to increase the salability of the property.

Marketing the property online and off. Demonstrate to your clients your ability to get the property listing in front of as many prospective buyers as possible. Explain the access you have to MLS listings and show your client at least eight places on the Internet where you plan on marketing their property, including Craig's List and Backpage.

In a slow market, many sellers are worried that in addition to losing money due to market conditions, they stand to lose an additional 6 or 7 percent by having to pay your sales commission. Make sure they realize the benefits of using a licensed Realtor, including the following:

In addition to marketing the home to the general public, you market to other Realtors, who can show the home to their clients.
You prescreen prospects, so only the most serious prospective buyers can look at the home, and you accompany all qualified prospects as they tour the sellers' home.
You can help the sellers compare and evaluate purchase offers.
You can negotiate with the prospective buyers without tipping the sellers' hand or compromising the sellers' negotiating position.
You can handle all the details related to closing to make sure the sellers' interests are protected.

When a sluggish market and other changes in the industry heat up the competition, you have to make some adjustments in the way you present yourself to prospective clients, especially those who are in the process of considering hiring you as their listing agent. Step up to the challenge. Never simply give in and lower your commissions. Offer more value, and earn your commission.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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Go Cubs...........

Jay Shepherd (RE/MAX Professionals Select) — Sat, 06 Oct 2007 19:11:57 -0500

Can Chicago stay in there tonight.

Anything is possible and this city loves
to hate It's teams - good times or bad.

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

FHA Home Loan Program Poised to Take Off

Jay Shepherd (RE/MAX Professionals Select) — Mon, 01 Oct 2007 08:37:46 -0500

FHA Home Loan Program Poised to Take Off

FHA-insured home mortgages -- marginalized or squeezed out of the market during the subprime loan boom years -- are poised to roar back. And if Congress passes a compromise version of FHA reform legislation, maximum loan limits for FHA could rise immediately to $417,000 -- or even a lot higher.

Last month the House overwhelmingly approved a reform bill that would cut minimum downpayments to zero, and increase loan limits in high cost areas of California well beyond $500,000. Under the House-passed bill, FHA could insure mortgages as high as 125 percent of the median home price in a market area, or 175 percent of the conforming loan limit for Fannie Mae and Freddie Mac -- currently $417,000. In addition, the HUD Secretary could raise limits by another $100,000 if local conditions required such a move.

In effect, southern California, where FHA loan applications have been almost nonexistent in recent years, could conceivably see a new wave of jumbo FHA mortgages in the $700,000 range and beyond.

Meanwhile, the Senate Banking committee last Wednesday reported out its version of an FHA reform bill, but with much tighter loan limits - $417,000 maximum - and a 1.5 percent minimum cash downpayment, down from the current 3 percent minimum. The full Senate is expected to approve the Banking committee's bill soon, sending the FHA issue to a House-Senate conference committee to work out the differences.

What's likely to emerge in the final bill sent to the president in the coming weeks? At the very minimum, Congress is now almost certain to make FHA competitive again in high-cost markets. A $417,000 limit for California would still be well below the state's median home price in the mid-$500,000s. But it would provide potentially tens of thousands of home buyers an attractive, consumer-friendly alternative to what they've got now.

The huge gap between the House and Senate loan ceilings will need to be bridged in the upcoming conference. There may also be pressure to raise Fannie's and Freddie's limits during Senate floor debate or through a separate bill -- opening the door to at least a temporary "jumbo" program for FHA, Fannie and Freddie.

There are some potential minefields facing conferees however: The House version of the bill contains a proposal from Financial Services committee chairman Barney Frank (D-Mass.) to tap into FHA premium revenues to help finance a new National Housing Trust Fund for affordable housing activities. Separate legislation from chairman Frank would also tap into revenues of Fannie and Freddie. The Bush administration opposes siphoning off FHA resources for the Fund, and the Senate did not include the concept in its bill.

Another sticky issue: The Senate bill prohibits "downpayment assistance" for FHA loans involving "anyone party to the transaction." That would presumably cut off dozens of nonprofit groups around the country that now provide such assistance. The House bill imposes some restrictions on downpayment assistance providers, but does not ban them.

The House bill authorizes FHA loan terms up to 40 years, but the Senate bill is silent on that issue. The Senate bill allows FHA to use "risk based pricing" on all loans where borrowers make less than a 3 percent downpayment -- a provision favored by the Bush Administration. The Senate bill has no language on the subject, but some Republicans are strongly opposed to allowing FHA to directly compete with private mortgage insurance firms for borrowers who present varying levels of default risk.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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Nailing Down Housing Costs

Jay Shepherd (RE/MAX Professionals Select) — Mon, 01 Oct 2007 08:35:44 -0500

Nailing Down Housing Costs

The federal agency charged with maintaining stability and public confidence in the nation's financial system can help you feel stable and confident about your home loan -- at the lowest possible cost.

"FDIC Consumer News Special Edition: 51 Ways to Save Hundreds on Loans and Credit Cards" suggests consumers consider mortgages, credit cards and other loans as not just financial services, but tangible products requiring before-you-buy scrutiny and careful use after you sign on the dotted line.

The FDIC's timely treatise offers advice on financial services from auto loans and credit cards to fraud and small business loans, and there's a heavy dose of advice on mortgages.

The information comes in the midst of a mortgage market meltdown that makes home loans tougher to land and more expensive own.

Here's how to cut costs in a number of areas.

Look for a mortgage like you shop for a car. Haggle. It's tougher to haggle today, but you can negotiate the rates and terms of a loan, especially if you comparison shop.

Go with a fixed rate even if the adjustable rate mortgage (ARM) carries a lower initial interest rate. A fixed-rate loan gives you a monthly interest-and-principal mortgage payment that won't change. That's piece of mind when other costs, including taxes, insurance and maintenance can change.

Many borrowers are discovering today what Mortgage-X.com reveals on its charts of indexes used to set interest rates -- that indexes can double, even triple quickly.

"Most of the time people don't read documents and don't get the idea that these indexes could really go up. How could you anticipate they would double so quickly?" said Warren Winsness, president of the Santa Clara County Association of Realtors in San Jose, CA.

Janet Kincaid, FDIC's senior consumer affairs officer, agrees.

"If you are thinking about an ARM, make sure you know how much and how often the interest rate and payment could go up before you sign on, and be comfortable that you can meet those higher monthly payments. Don't let a low teaser rate lure you in; you may be surprised later," she said.

Likewise avoid "no-doc," or "NINJA" (no income, no job or assets) mortgages that require little or no documentation of your income or assets. The extra risk the bank takes is passed onto you in the form of higher costs.

"If you have income that's easy to document, such as regular statements from your employer or a monthly Social Security payment, it's probably not worth paying extra over the long term of the loan just to save a few days during the application period," said Mira Marshall, an FDIC senior policy analyst.

Consider a loan with a shorter term, 15 instead of 30 years, 30 years instead of 40 years, provided you can afford the higher payment. Over the term of the loan you'll pay less interest.

Also consider paying off your existing mortgage sooner with extra payments earmarked for the principal each month.

"This is an easy way to pay off the loan and save thousands of dollars in interest charges without incurring the cost of refinancing," said Marshall.

Consult with a financial or tax advisor to learn the pros and cons of each approach.

Get subsidized. Look for federal government (U.S. Department of Housing and Urban Development); state government (National Council of State Housing Agencies); and local public and private (The National Association of Local Housing Finance Agencies) incentives for first-time home buyers, low- or moderate-income households and community workers (like teachers and police officers). If you are eligible, you can save on interest rates, closing costs, down payments and other terms and get some extra tax benefits, say with a Mortgage Credit Certificate.

Don't drain your equity. Equity loans -- pulled from the difference between your loan balance and the property's value -- are, by nature, equity draining loans. They can be cheaper than credit cards, signature loans and other credit but should only be used for emergencies and capital improvements -- those purchases that provide a return, including home improvements, business start ups, education, etc.

Know when refinancing a mortgage makes sense. Refinancing could be a good idea if you can get a rate that is at least one percentage point lower than your existing mortgage rate and you plan to keep the mortgage for several years. Refinancing from an ARM to a fixed-rate with a higher interest rate could also be wise if the rate on your current ARM will soon adjust up to a level higher than the rate on the refinanced fixed-rate mortgage. Again. Do the math. Know what you can afford.

Avoid fraud and come-ons. If it appears too good to be true it probably is or it soon will be. Steer clear of low teaser rates that could last only a few months and then balloon to an unaffordable level. Avoid replying to emailed and direct mail mortgage offers. Use them as comparison tools to do your own shopping. If you aren't certain about any offer, get help. Ask for referrals to help from family, friends, co-workers, professionals you've worked with and others you trust.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

Could Your Closets Be Turning Off Buyers?

Jay Shepherd (RE/MAX Professionals Select) — Mon, 01 Oct 2007 08:34:23 -0500

Could Your Closets Be Turning Off Buyers?

Homeowners are always looking to fine-tune the look of their homes before they put their house on the market. But all too often an area that gets forgotten is the closet.

Everyone seems to have more stuff than ever before and a lot of that stuff gets crammed into the closets. Then when you list the home on the market, and Mr. and Mrs. Buyer come to have a look, they reach for a closet door and are greeted with an overstuffed, unorganized mess. The prospective buyers don't see your valuables as prized possessions; instead what they see is too much stuff and too little space. Often buyers can't picture their belongings in a home that's filled with clutter. That's why a lot of agents will recommend organizing, not just the space you see immediately upon entering the home, but also the closets.

"I think that instead of being kind of a luxury, now it's something that everybody thinks they need," says Paula Gallegos, co-owner of Conejo Closet Designs in Thousand Oaks, California. Gallegos says an organized, well-planned closet can be a huge attraction. "Who wants just a regular shelf and pole when you have all these capabilities of the hangers and the drawers and the belt racks, shoe shelves -- everybody needs storage" she says.

The requests for closet organizers are growing in an interesting way. Closets are turning into spaces where people don't just store their clothes. They're also considered an important upgrade for many buyers. Just as a large renovated kitchen and bathroom area are typically more appealing to buyers, so too are organized closets.

"They're getting bigger. They want more bells and whistles. They want more accessory items. There is one home we're bidding (on the project) right now that has an upstairs bedroom and they're putting a refrigerator in the closet," says Gallegos.

At the top of every homeowner's list is how to maximize space. "Sometimes that might be extending your organizers higher than what you have, maximizing the overhead space and sometimes it's a matter of using the extra space you have below with baskets and shoe shelves and things like that," says Gallegos.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

One of the newest trends for closets is being borrowed from the dry cleaning industry. It's a rotary closet device called Rotabob and it literally brings the clothes that are stuck in hard-to-reach places right to you.

"For instance, you probably see a lot of closets that are not too deep -- you know a reach-in closet and they've got a real long return where you look down the side of it and it's two or three feet of really hard-to-get-at space. So, with the Rotabob you can install one of those and just basically bring your clothes to you instead of having to reach in for them," explains Gallegos.

They carry a price tag of about $900 to $1,200 for a unit with installation but after it's put in there's nothing else to do. "They are stainless steel units with ball bearings so there's no maintenance and no electricity and they work for just about any closet," says Gallegos.

These units are becoming popular not just for closets but also laundry rooms, storage spaces, and garages. "Someone actually put it in a utility closet and loaded it up with baskets and hung their mops and rags on the handles and put their cleaning supplies in the basket," says Gallegos.

Being organized on the outside of your home creates curb appeal that gets prospective buyers in the door. Then keeping them there long enough to decide they can't live without your home requires careful, well-thought-out organization inside your home including those areas that you don't notice right away but your prospective buyers most certainly will.

Back To Basic Home Buying Skills

Jay Shepherd (RE/MAX Professionals Select) — Mon, 01 Oct 2007 08:32:59 -0500

Buyers need direction and help in the home they buy, but they also need some guidance on basic life and finiancial skills. This type of help is usually not available directly over the Internet - it's nice having someone you can sit down with and get honest answers.

Back To Basic Home Buying Skills

Lenders tightening their purse strings are sending a signal to potential home buyers to do the same.

There's really little choice.

Just as lenders make certain mortgage applicants are gainfully employed, are sure they can actually afford to pay the mortgage during it's full term, and carefully document that buyers have the cash to cover additional costs that come with home ownership, potential home buyers need to get their financial house in order as well.

If people were more responsible for their own financial behavior, that would have taken the power away from the people who put them in risky loans. The reason for all the creative financing was because people didn't want to do the work.

This involves hard financial work and sacrifices many households have long avoided.

As a carrot, keep in mind, the benefits of owning your own home, likely to be your most valuable asset, far outweigh any passing pain you may endure to achieve that goal.

Here's how to prepare for what's become a more difficult home buying ordeal.

Set A Tight Budget.

You need to know all sources of every penny and you need to know where every penny goes. You can't know where you can cut costs until you know in detail what those costs are.

Offering a budget template, the Better Business Bureau says, "A budget will provide you with a roadmap to financial security. If you drive carefully, perform the right repairs and maintenance along the way, and steadily steer toward your long-term goal, you'll wind up where you want to be."

Save. Pinch Pennies. Save Some More.

Saving is a prerequisite to homeownership.

If your budget reveals you are spending money on eating out when you can eat healthier for less at home; if it shows you gulp way too many cups of Joe at the local cafe when you can invest in a commuter mug and brew your own at home; if it shows movie rentals by mail cost less than screening every major motion picture live, you've already found hundreds of dollars to save.

Stop traveling, stop partying and stop unhealthy habits that could leave you too weak to take on that second job. Bulk up your habit of spending only for what you need, not what you want.

If you don't have a savings account worth three to six months of your net income, you are already a financial disaster waiting to happen should there be an emergency.

In addition to money for the down payment, lenders today will expect you to have some cash left over for insurance, taxes, maintenance and other costs that come with homeownership.

Certainly, it could take years to build the kind of down payment pot that will get you the lowest possible rate in an expensive housing market, but think about the time it will take you to recover from a loan you can't afford should that loan lead to foreclosure and a financial meltdown.

You really can't afford not to save. You really can't afford not to find more ways to save.

Read Your Credit Report.

Don't just get it. Read it. AnnualCreditReport.com is the only federally-approved website you should visit if you want a truly free credit report. Other websites will give you your report for "free" but typically only after you sign up for other cost-based services. You are trying to save money, not come up with more things to buy.

Your credit report is a report card on your credit use, the good, the bad, the ugly and, too often, the incorrect. Which is why you want to see it, If there are errors follow the instructions to correct them.

Also visit MyFico.com to learn how to improve your report and your credit score -- a numerical rendition of your creditworthiness.

Get Some Help With Direction.

Can't figure what your credit report is trying to say? Not sure how to calculate what you'll need to save? Don't know how to set up a budget?

It's okay to ask for help. It's smart to ask for help. You don't know everything about buying a home. If you are a first-timer you likely know very little.

Learn how to find answers.

Whether it's your REALTOR, financial planner, financial counselor, or mortgage broker, they are all here to help you.

Get help in setting goals, sifting through mortgage programs, understanding the title and escrow process, finding a home and keeping a home -- all well before you are actually in the market for a home.

Again -- well before you actually begin to shop for a home.

Learn about market and economic conditions that could impact your decision. Learn about home prices, mortgage rates, home buying costs and other issues surrounding what's likely to be your most complicated purchase ever.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

Surprising Demographic Changes That Will Impact Housing In the Future

Jay Shepherd (RE/MAX Professionals Select) — Mon, 01 Oct 2007 08:27:09 -0500

Reatly Times has some interesting stats:

The latest 1,200-table 2006 American Community Survey from the U.S. Census Bureau indicates key changes in social, economic, and housing characteristics for the nation.

As part of the Census Bureau's re-engineered 2010 Census, the data collected by the ACS helps federal officials determine where to distribute more than $300 billion to state and local governments each year. The 2006 ACS estimates are based on an annual, nationwide sample of about 250,000 addresses per month. In addition, approximately 20,000 group quarters across the United States were sampled, comprising approximately 200,000 residents. Geographic areas for which data are available are based on total populations of 65,000 or more.

Among the findings, which are designed to refresh the often out-of-date 10-year census data, are the following hot topics that will impact housing in the future:

Older Workers

Wages have not kept up with inflation, which is one of the reasons why nearly one in four people between the ages of 65 and 74 (23.2 percent) are still in the labor force (either working or looking for work) in 2006. That's an increase from 19.6 percent in 2000. States with some of the lowest rates of older workers in the labor force include West Virginia (15.7 percent), Michigan (18.8 percent) and Arizona (19.4 percent). Michigan and Arizona were not statistically different.

Some of the highest rates were found in South Dakota, Nebraska and Washington, D.C., all with about one-third of people in this age group in the labor force. Among the 20 largest metro areas, Washington, D.C., had the highest percentage of people in the labor force in this age group (31.8 percent). Others with high percentages include Boston (28.1 percent), Dallas-Fort Worth (27.9 percent), Minneapolis-St. Paul (27.4 percent) and Houston (26.5 percent), none of which were statistically different from the other.

Homeownership

Only recently has homeownership receded slightly, but it has increased overall since 2000, with more than two-thirds of all occupied homes (67.3 percent) currently owned by the occupant, compared to 66.2 percent in 2000. In 2006, the highest rates of homeownership were found in Minnesota (76.3), and some of the lowest were found in New York (55.6 percent) and Washington, D.C. (45.8 percent). Among the 20 largest metro areas, Minneapolis-St. Paul shared the top spot with Detroit (75.2 and 74.6 percent, respectively), with St. Louis ranking third (73.1 percent).

California and Hawaii were the two states with the highest median value of owner-occupied homes (more than $500,000). California cities Newport Beach and Santa Barbara had median home values of about $1 million.

More than half of California homeowners with a mortgage spent 30 percent or more of their household incomes on mortgage payments and other owner costs. Less than a quarter of North Dakota homeowners spent 30 percent or more of their household incomes on mortgage payments and other owner costs.

Non-English Speakers

In 2006, about 8 million more people spoke a foreign language at home than in 2000. Nationally, one in five (19.7 percent) over age 5 spoke a language other than English at home, compared to 17.9 percent in 2000. Among the states, California (42.5 percent) had the highest percentage in this category, followed by New Mexico (36.5 percent) and Texas (33.8 percent). About one in 10 California households were linguistically isolated, which means everyone 14 or older in those households had at least some difficulty speaking English.

Among the 20 largest metro areas, more than half of all people over 5 in Los Angeles (53.4 percent) spoke a language other than English at home. Miami ranked second in this category (48.6 percent), followed by San Francisco-Oakland and Riverside, Calif., where about four in 10 spoke a language other than English at home (not statistically different at 39.5 percent and 39 percent, respectively).

Married with Children

The percentage of households that were married-couple families with children under 18 decreased from 23.5 percent in 2000 to 21.6 percent in 2006.

All states, except Connecticut, saw a percentage point decrease in households in this category since 2000. In 2006, Utah had the greatest percentage of married-couple households with children under 18, at 32.3 percent. Other states with high rates included Idaho (25.5 percent), California (24.8 percent), Texas (24.7 percent), New Jersey (24.6 percent) and Alaska (24.3 percent), none of which were statistically different from each other. Florida (18.2 percent) and Washington, D.C. (7.3 percent) had some of the lowest.

Among the 20 largest metro areas, Riverside, Calif., had the highest percentage in this category (29.6 percent), followed by Dallas-Fort Worth (26.6 percent) and Houston (26.1 percent), which were not statistically different from each other.

The ACS estimates released are for the total population and, for the first time, include populations residing in group quarters.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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Ask Realty Times - $350 cost reimbursement fee...

Jay Shepherd (RE/MAX Professionals Select) — Sun, 30 Sep 2007 11:02:27 -0500

Ask Realty Times

Question: I signed a listing contract to sell my house with a 90-day kick-out clause, meaning I can end the agreement with 90 days' notice. Recently I sent a letter to the broker to give notice Unfortunately for me, he had included a $350 fee for reimbursable expenses. It was my impression that this $350 would be payable only if the house sold and would be part of the summary transaction. During this period only one person he brought was interested in my four-year-old house and I was dissatisfied with the broker. Am I obligated to pay this amount?

Answer: I don't have access to the listing agreement, but if it says you will pay up to $350 for the broker's cash costs if the listing is terminated early then that's the deal.

The fact that you're dissatisfied with the broker does not mean the broker did not place ads, enter the property into the MLS, print flyers, post the property online, etc. Moreover, the fact that a home is only four-years old does not mean it is instantly or assuredly marketable.

"Lucky we are all thick skinned - Realtors and Brokers are the primary reasons homes don't
sell in this market - yea right!"

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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Ask Realty Times - Loss of earnst money

Jay Shepherd (RE/MAX Professionals Select) — Sun, 30 Sep 2007 10:58:13 -0500

Question: A few years ago a prospective buyers put 10 percent down as earnest money toward the purchase of our property. And at the request of our broker, the buyers provided signed documentation stating that the contract was not contingent on the sale of their other property. One day before closing they backed out because they could not get their property sold. Now they will not release the earnest money.

I was contacted by the title company that handled the transaction by letter stating they had money held in escrow that may be ours. This was no more than a cursory contact wanting to know if I would release these monies to the other party. What should I say?

Answer: The purpose of a contract deposit is to assure performance by the purchaser. By accepting an offer you may have lost an opportunity to sell the property to another buyer, perhaps one who would pay more or who would at least complete the contract. By depending on the buyers to complete the purchase you may have entered into an agreement to buy a replacement property or actually moved.

If it was me, I would do two things. First, I would not release the money -- once the money is released you have no leverage. Second, I would have an attorney or legal clinic review the sale agreement to see what damages and remedies might be available. I would look for damages in addition to the deposit, if possible. Third, I would check to see if the listing broker has any claim to the deposit, in whole or in part, because of the services he provided.

Your broker was smart to get a specific confirmation from the purchasers that they understood their obligation to perform regardless of whether or not they were able to sell their property.

These are the types of headaches we all wish would just go away, but only linger until someone backs down.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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Getting Back on Track

Jay Shepherd (RE/MAX Professionals Select) — Sun, 30 Sep 2007 09:40:52 -0500

Saw this article from the National Association of Realtors.

They talk about getting inventories in line and that builders will need to
slow down a bit in this period of transition.

This got me to thinking that maybe having a few listings expire with Sellers
who refused to lower their pricing was good - I was doing something good for
the housing economy. By getting them off the books if they didn't want to be
realistic with their price for this market I helped speed up the process - of course
all of us that go after Expireds look at this as an opportunity to build our business.

Jay

Getting Back on Track

The summer has been tough - historically high temperatures in many parts of the country, Midwest floods, and almost everywhere major airline flight delays. Housing didn't have such a great summer either, with home sales and price appreciation still waiting to recover. The subprime mortgage mess didn't help either. So everyone wants to know: now that the summer is over, when can we expect the housing sector to get back to normal? There's actually a sequence of events we should look for that need to happen before housing is back on track, and as each of these occurs, the closer the housing recovery will be. Let's take a look at them.

Mortgage Rates Will Stablize Favorably
Despite the headline news coverage of turmoil in the mortgage market, mortgage rates have actually been falling for borrowers who take out prime conforming loans. Because these borrowers account for the majority of home buyers, affordability conditions for most buyers have improved. FHA loans - the traditional financing vehicle for low-and-moderate income households - have also begun to build market interest and momentum. FHA loans offer very attractive rates nearly comparable to those of conforming loan rates and save homeowners a bundle - about $180,000 in lower interest payments over a 30-year loan cycle compared to high-interest rate subprime loans. A near-certain legislative change that will allow higher FHA loan limits in high cost areas will further free up the mortgage market to offer safer alternative products (i.e., FHA loans) and away from subprime loans. It is important to note, though, that subprime loans may make sense for some home buyers such as young couples with large income potential but little downpayment. But the subprime market share at most should be no more than 5% rather than the 20% market share of recent years.

While mortgage rates look good for conforming and FHA loan clients, the same is not true for jumbo loan borrowers. Without the backing of a guarantee by Fannie Mae and Freddie Mac, bond investors are shying away from jumbo loans. As a result, interest rates on these large loans have increased and will significantly hold back home sales in the high cost housing areas like California. The whiplash will be short-term, however. After sorting through the numbers, bond investors will likely conclude that jumbos are quite safe - even without the government guarantees. A million dollar borrower generally has solid credit and pays bills on time. Any temporary legislative change in raising the loan limit well above the current $417,000 or in permitting the GSEs to purchase jumbos loans to include in their portfolios will mitigate the crisis. (The median prices will artificially trend lower during the period of jumbo loan crisis just due to fewer higher priced home sale transactions).

Pent-Up Demand Will be Unleashed
Consider this - four million net job additions in the past two years during the housing market slump. Yet, home sales have fallen. As home sales fell, people doubled and tripled up because apartment rents increased at their highest pace in five years. These people are waiting to buy a home. Then there are the approximately two million marriages that occur each year. Those newlyweds are waiting to buy a home. About four million babies are born each year - forcing some families to consider trading up from a smaller house or condo to a larger one.

Homebuilders Take Heed
The inventory of both new and existing homes is at high levels. Builders have already cut back production and are encouraged to cut back even further. The market needs less inventory additions in a time of transition. Wall Street should and will punish any builders who add to inventory in the current market. Why build only to lose money on the home? With builders cutting back, inventory will fall. Some home owners of vacant homes will also consider the juicier rent growth and take their "empty" home off the market. In addition, many owners are in a no hurry to sell their home that they actually occupy (except perhaps for those in the few areas of the country that are losing jobs), and they may also choose to delay listing their home for sale or de-list it. Unleashing of that pent-up demand for home buying will also eat into inventory.

Drawing Down the Inventory
The law of (lower) supply and (higher) demand will then firm up home prices. The media will be forced to report on the price gains. Many potential buyers, with solid financial wherewithal, will regain confidence. The wheels of housing turn faster and faster. The full unleashing of the pent-up demand could mean about two million additional homeowners. Such absorption into the marketplace will bring down the current existing-home inventory of four million units and the new home inventory of one million units to a total of three million homes (new and existing) available for sale. That level of inventory equates to a 5-6 months' supply - generally considered a balanced market condition.

Balanced Gains Ahead
As the housing market recovers, potential home buyers (both first-timers and repeat purchasers) will gain more confidence in the housing sector. This, in turn, will drive more demand for homeownership, helping to keep inventory at or slightly below market balance and spur additional increases in home price appreciation. In sum, a closing of the subprime market does not directly mean equally lower home sales. FHA/VA and conforming government-backed loans will pick up a large chunk of the former subprime market. The jumbo loan concerns will be mitigated over time with better market knowledge, and will be assisted by changes in legislation permitting higher loan limits. Pent-up demand is strong. Inventory will move in the right direction. Builders are assisting by holding back production. A market recovery in 2008. Back-to-the-historical norm in 2009.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

Coming to America -- to Buy Homes

Jay Shepherd (RE/MAX Professionals Select) — Sun, 30 Sep 2007 09:29:44 -0500

Thought this was interesteing. I have had very good experiences with all the
"Out of Country" buyers I have worked with this year. They usually turn into
very good friends with lots of interesting stories of parts of the World I wish
I could visit.

NAR's Profile of International Home Buying Activity

by Keunwon Chung, Statistical Economist

All real estate is local. But not all buyers are local. During the real estate boom, many home buyers were from countries outside the United States. In some states, foreign buyers accounted for a significant share of REALTOR® business.

To ascertain the extent of international homebuying activity in the U.S. post-real estate boom, NAR surveyed REALTORS® across the nation in mid-2007 to determine the extent to which their business was with foreign home buyers. The results of the survey - published in the 2007 NAR Profile of International Home Buying Activity- show that international home buying activity in the U.S. is still significant. Below are highlights from that report.

REALTORS® and Foreign Home Buyers
Despite the housing slowdown, international clients still accounted for a significant share of REALTORS^® business in the U.S from April 2006 to April 2007. Almost one third of REALTORS® reported that they had some business with international clients during that time period. More than half of those international clients actually purchased a home. Eighty-six percent of REALTORS^® who sold homes to international clients reported that those home sales accounted for 1-25 percent of their transactions. For seven percent of REALTORS^®, over half of their transactions were with foreign buyers. Eighteen percent of all REALTORS^® who had international clients had successful home sales transactions with those foreign buyers.

International Home Buyers
Foreign home buyers come from around the world, buy different types of properties at various prices, and plan on using the U.S. property for different reasons.

Home Buyers from Around the World. Buyers of U.S. residential real estate come from many different regions and countries around the world. The majority of foreign buyers - 33 percent - were from Europe. But buyers from Asia and North America (outside the U.S.) were also very active, accounting for 24 and 23 percent of international clients, respectively. Latin America was home to 16 percent of foreign buyers, with Africans and those from Oceania accounting for 2 percent each. Among individual countries, the largest share of foreign buyers - 13 percent - were from Mexico. Next was the United Kingdom, which accounted for 12 percent of foreign buyers. Canada, India and China rounded out the top five countries of origin for foreign home buyers in the U.S.

What They Bought. Detached single-family homes or townhomes are the most popular housing choice among all home buyers in the U.S. The same is true for international home buyers, but foreign buyers show a stronger preference for condominiums/apartments compared to home buyers in general. In 2006, condominium/apartment sales accounted for 12 percent of all existing home sales. Between April 2006 and April 2007, more than one fifth - 22 percent - of homes purchased by foreign buyers were condominiums/ apartments.

Price of Homes Purchased by Foreign Buyers. The median price foreign buyers paid for a home was $299,500 - significantly greater than the national median sales price for all of 2006 which was $221,900. More than a fifth of international buyers purchased a home that cost between $200,001 and $300,000. Fourteen percent of foreign home buyers paid more than $750,000 for their U.S. property.

Financing the Home Purchase. In 2006 more than 90 percent of all home buyers purchased their home using a mortgage loan. The majority of foreign buyers also used a mortgage loan to finance their home purchase, but the percentage was much smaller. Sixty-nine percent of international home buyers used mortgage financing, while 28 percent purchased their home with cash. Three percent of REALTORS® were not sure or did not know how their foreign clients financed their home purchase.

The proportion of foreign buyers who paid cash for their home was much greater than that for the general home buyer population - 28 percent vs. 8 percent. This could be due to the fact that those international home buyers would be expected to be wealthier households with ready cash on hand. The tax benefits of mortgage interest deductions may not apply - depending on the buyer's home country's tax code - which lowers the incentive to take out a mortgage.

Why They Buy. The majority of foreign buyers - because they are not U.S. residents - purchase homes for other reasons than as a permanent residence. Almost half of them - 47 percent - bought a U.S. home to use as a vacation venue for family and friends. Twenty-two percent purchased a home as a rental property for investment. Nearly a third - 31 percent - of foreign buyers purchased a home as both a vacation and rental/investment property.*

U.S. visa rules only allow non-residents (unless under a student or work visa) to remain in the country for six months. Because foreign buyers are non-residents of the U.S., most of them plan to spend less than six months in their U.S. home. A small percentage - 6 percent - spend less than two weeks. Forty-four percent intend on using their U.S. property for one to six months.

Where They Buy. Foreign home buyers purchase U.S. properties everywhere around the country, but two regions and several states dominate the list of locations. The South accounted for the largest proportion of foreign home purchases - 49 percent. The West was also popular, with 31 percent of foreign buyers purchasing homes in that region. The Midwest's share of foreign home buyers was 11 percent, and that for the Northeast 9 percent.

The number one state for foreign home buyers was Florida-- the state accounted for 26 percent of all international purchasers. California was next at 16 percent followed by Texas at 10 percent. The fact that these states were the top three locations for foreign purchasers should come as no surprise. Each of these states is a major "gateway" for visitors to the U.S. from other countries.

Challenges for Foreign Home Buyers
While 32 percent of REALTORS^® report having had international clients between April 2006 and April 2007, not all of those clients were able to successfully purchase a home in the U.S. The survey did ask why international clients did not purchase homes. Almost half of respondents reported that the cost of property was the main reason for an unsuccessful home sale.

But nearly a third indicated that U.S. visa restrictions were barriers to buying a property in the U.S. In a previous survey of international home buying activity focused on the Florida market, U.S. visa rules were a major point of contention among many respondents. They claimed that the six-month stay restriction is insufficient for some potential foreign buyers - particularly among those who are no longer working. A retirement visa of some sort that would permit a longer continuous stay in the U.S. would undoubtedly enlarge the pool of potential international buyers. The national survey results support this contention: 34 percent of REALTORS^® responding to our survey expect that foreign retirees could be potential buyers of U.S. real estate.

Conclusion
While U.S. housing markets are no longer performing at record-breaking levels, U.S. real estate is still considered a prime investment opportunity for foreign buyers and a "safe haven" in which to put their money. Whether they use their U.S. home as rental/investment property, as a vacation home or both, non-U.S. residents account for a significant share of home buying activity. It is likely they will continue to do so. With the weakened U.S. dollar against foreign currencies, those currencies buy a lot more than in previous years. For example, the British Pound Sterling was worth $1.44 in 2001; by 2004 it was worth $1.83. As of mid-year 2007, the pound was worth nearly $2.00. The Euro has also increased in value against the U.S. dollar. More purchasing power for foreign buyers means they can afford "more house" - particularly in a stabilizing U.S. housing market.

We live in a global economy where there are virtually no trade borders. The Internet is accessible from nearly all countries around the world. Web sites display information about U.S. real estate to any potential home buyers regardless of where they live. And as more and more people in different nations recognize the value of owning property, the opportunities and challenges for real estate professionals to broker U.S. property to foreign home buyers are numerous.

Notes on the Survey
The survey was conducted in May/June of 2007. Results were based on responses from REALTORS^® who had at least one international client during the then recent 12-month time period; thus, information in the 2007 Profile of International Home Buying Activity refers to foreign home buying activity between April 2006 and April 2007. For purposes of this survey of International Home Buying Activity, an international or foreign home buyer is defined as one who principally resides in another country (outside the U.S.) and who is not classified as a foreign-born resident of the U.S. International buyers are not U.S. citizens (either naturalized or native-born and living outside the U.S.), a U.S. immigrant, or a foreign student or worker on a temporary visa.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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Illinois Median Sale Price Up 1.2 Percent to $212,500 in August Sales Down Compared to Last Year

Jay Shepherd (RE/MAX Professionals Select) — Sun, 30 Sep 2007 08:57:34 -0500

Some Interesting news from the "Illinois Association of Realtors"

As we all know every area even within a State, City or neighborhood will show different sides of this slowdown.

It's the market we have and we cannot change it so best to make it work for us. Easier said than done at times.

SPRINGFIELD, Ill. - The Illinois median home sale price held strong in August while sales were lower than last year at this time. According to the Illinois Association of REALTORS latest report, the Illinois median home sale price in August was $212,500, up 1.2 percent from $210,000 in August 2006. The median is a typical market price where half the homes sold for more, half sold for less. The statewide average home sale price in August was $275,612, up 2.6 percent from $268,709 a year ago.

There were 14,349 total home sales (which include single-family homes and condominiums) in August 2007, 17.9 percent below August 2006 which logged 17,467 home sales. Year-to-date, sales were down 14.6 percent to 101,737 homes sold January through August 2007 compared to 119,190 homes sold during the same period last year.

"While buyers with good credit have options out there for financing, the credit crunch combined with more hesitant buyers waiting out all the mixed messages on the housing market took a toll on sales in August," said Kay Wirth, president of the Illinois Association of REALTORS. "Mortgage interest rates remain attractive in the mid-six percent range and Illinois recently rolled out the Assets Illinois Homeownership Project and I-Loan 40 Mortgage program to help first-time buyers join the homeownership ranks."

The monthly average commitment rate for a 30-year, fixed-rate mortgage for the North Central region was 6.58 percent in August 2007, down 0.16 points from the 6.74 average rate during the previous month, according to the Federal Home Loan Mortgage Corporation. Last year in August it averaged 6.57 percent.

The median home price for the Chicagoland Primary Metropolitan Statistical Area (PMSA) was $266,500, up 4.9 percent from $254,000 in August 2006. The average home sale price for Chicagoland was $343,079, up 5.0 percent from $326,755 in August 2006.

In the Chicagoland PMSA, home sales totaled 9,736 in August 2007, down 20.1 percent from 12,192 home sales in the same month last year.

"Home prices in Illinois remain a positive in the market and we can point to downstate Champaign and Sangamon counties as bright spots in August with sales increases compared to a year ago," said Wirth, a broker with Re/Max Unlimited Northwest in Crystal Lake. "REALTORS know that all real estate is local and you have to gauge a local community's economic factors to determine the best pricing and marketing strategies."

In the latest forecast from the National Association of REALTORS, senior economist Lawrence Yun said: "Unusual disruptions in the mortgage market are dampening the outlook for home sales, notably for August and September. The mortgage markets will calm further in the months ahead, but it's important to underscore the fact that conventional loans-the vast majority of financing-are available to credit-worthy borrowers."

Sales and price information is generated from a survey of Multiple Listing Service sales reported by 35 participating Illinois REALTOR local boards and associations.

The Chicagoland PMSA, as defined by the U.S. Census Bureau, includes the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will. The Illinois Association of REALTORS is a voluntary trade association whose 60,000 members are engaged in all facets of the real estate industry. In addition to serving the professional needs of its members, the Illinois Association of REALTORS works to protect the rights of private property owners in the state by recommending and promoting legislation that safeguards and advances the interest of real property ownership.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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Lenders' Worst Enemy in the Short Sale Arena

Jay Shepherd (RE/MAX Professionals Select) — Sun, 16 Sep 2007 12:46:52 -0500

With all the talk about the mortgage meltdown, you would think someone was put in charge of the internal communications to prevent a bad situation from becoming worse. You know, like getting all the department heads together to see how they were going to stop the financial blood-letting -- at least a training initiative for lenders to start discovering the best steps to take from this point forward.

Two cases that have come to my desk just this week have made me wonder who's in charge of the funny farm. If these two short sales -- or at least attempts at short sales -- are any indication of what's going on in the bowels of the short sale/foreclosure departments of lending institutions, then we all better get ready for a really big ride.

Case 1 - the property is in the DC area where condos are selling for about $230,000. An offer from the buyer was in the neighborhood of $219,000 -- a little low, but the agent was hoping to get a good deal for the buyer and the house was in dilapidated condition with leaks in the plumbing, mold issues and the like.

The short sale representative in California for this lender said he HAD to have $262,000, or the offer was a no go. The appraiser in Texas agreed with him, on this VIRGINIA-based property. The agent tried to reason with him, sent him the latest sales, showed what was happening in the region as far as the market was concerned -- but the short sale rep wouldn't hear of it.

"I'm going to stamp this one 'rejected' and send it on," he told the agent. Realizing the deal was dead, she retorted that if he didn't get a better connection with the market in this area, he was going to send a lot of houses to foreclosure. His reply? "Not my department." And, thus, part of the problem.

The eye-witnesses to these type of situations (understaffed short-sale departments handling an avalanche of transactions) confirmed to me that one of the challenges during an upswing in foreclosures is that the two departments don't talk with each other. A second case drives home the point.

Case 2 - this house is in a nearby suburb of Washington, D.C., in a short sale situation. The short sale department has done its job and found an agent to list the house and find a buyer for $550,000 on a list price of $559,000. But, the contract came in only 15 days before foreclosure. Since there wasn't enough time to settle with the buyer's required government-insured mortgage in the 15 days, it still went to foreclosure.

Here's the killer - an investor picked it up for $494,000.

It gets even better. The listing agent followed the case to the courthouse steps to see who would end up with it. He approached the investor and asked him if he would be interested in selling it right away to the buyers who originally had a contract on it. He said yes, and offered to sell it to them for $552,000. The buyers would have taken it, but a title search revealed that there was a federal government lien on the house, which was soon going to make the house a government-owned property.

In both cases, the lender employees didn't talk with each other. Seems to me a simple phone call from the short sale department to the foreclosure department would have saved this lender $56,000. Instead, the savvy investor will pocket the difference if the deal goes to settlement.

Lenders take note: there are people who want your houses -- get the short sale folks to accept realistic offers and take a smaller loss on the front side, rather than a huge loss on the courthouse steps. In addition, before the trustees go to auction, someone in their department should at least find out the current contract situation of the property.

Finally, remember, you make money in real estate when you buy, not sell, the house. Investors like the one above will be cashing in on this latest corporate SNAFU.

The Jay Shepherd Real Estate Update - RealtyTimes.com

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Tips for Showing a Small House

Jay Shepherd (RE/MAX Professionals Select) — Sun, 16 Sep 2007 12:44:23 -0500

With the median size of new homes on the rise, you might worry about trying to sell your home if it's on the small side.

Indeed, the size of the typical new single-family home continues to grow, according to a National Association of Home Builders report titled "The Next Decade for Housing." The median size of a new home today is about 2,100 square feet; in 1970 the median square footage was about 1,400.

Some of today's buyers are using the extra space for guest rooms, but many are incorporating home offices, studies or hobby rooms into their homes, according to NAHB.

Despite the trends, small homes have their own advantages when you're selling. For starters, there's a strong demand for entry-level homes.

So, if your smallish home is on the market, you'll want to do everything you can to get top dollar for it. Some things to think about when you're preparing your home for showing include:

Eliminating the clutter. Clutter is a downfall for any house, but in a small house, the more clutter the potential buyer sees, the less house he'll see. Keep the kitchen counters clear, eliminate all those knickknacks scattered about the house, and keep your accessories and artwork simple.

Curb appeal. Remember - first impressions are everything. Let your home make a strong impact the moment anyone pulls up alongside the house. Spruce up your landscaping, keep your lawn manicured, plant a few annuals out front, make sure your front door area is free from clutter, bikes, skates, and the like.

Letting the light in. This is a general rule for any home that will be put under the microscope by potential buyers, but is even more applicable for small homes. Open all blinds and curtains, and turn on lights throughout the house if you know real estate agents will be showing the home that day. Blinds that are the same color as the wall give a flowing, roomy feeling.

Keeping the walls light. Dark-colored walls will make a room appear even smaller than it is. You may want to consider sprucing up your walls with a fresh coat of paint anyway, so stick to a light color. To create the effect of more light, paint the ceiling a color lighter than the walls.

Paying attention to your furniture. If you have a lot of furniture, put some of it in storage. Then, think about the layout and focal point of the room and decide whether you're trying to accentuate roominess or coziness. If you're going for spaciousness, keep the large pieces against the wall. Furniture color should be similar to the wall and floor color. Too much will look cluttered and will subtract from the spacious feeling you're trying to achieve. If you're striving for a cozy feel, select dark pieces, whether it's fabric or wood. Go for big patterns on one or two pieces, placed away from the wall.

Mirrors. Strategically placed mirrors can help make a room appear larger.

Tall lines. Try to choose accessories that are long and narrow. Long, thin lamps and plants can help you achieve a sense of height versus accessories that take up a lot of horizontal space.

Accentuating your back yard. If you have a decent patio area, present this space as an extension of the limited living space. Display a nice patio table with a patio covering or umbrella, spruce up your landscape, and brighten up the area with some containers filled with colorful annuals. An inviting back yard will stand out as a plus for many home shoppers, particularly in warm-weather states.

In summary, let common sense prevail. Look at the house with fresh eyes and from the perspective of someone who has never seen the house before. With so many first-time homebuyers out there, your biggest job will be making sure your home looks better than others in the same price range.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com

Ask Realty Times - How much does the real estate industry spend on advertising? How much of that money is spent online?

Jay Shepherd (RE/MAX Professionals Select) — Sun, 16 Sep 2007 12:42:22 -0500

Borrell Associates says as of June 2006 that "while real estate advertising has remained stagnant at $11.6 billion, several dynamics indicate that dramatic changes are beginning to occur. Home sales have slowed down, meaning agents have more inventory to advertise but less money to spend on that marketing. Despite the hype about Internet advertising, there is plenty of room for growth: Most agents don't even have a website or advertise online. Online real estate advertising will grow to a $2 billion category this year and swell to $3 billion by 2010, surpassing the longtime leader, newspapers."

The Jay Shepherd Real Estate Update - RealtyTimes.com

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Back To Basic Home Buying Skills

Jay Shepherd (RE/MAX Professionals Select) — Sat, 15 Sep 2007 09:55:49 -0500

Lenders tightening their purse strings are sending a signal to potential home buyers to do the same.

There's really little choice.

Just as lenders more and more often make certain mortgage applicants are gainfully employed, are sure borrowers can actually afford to pay the mortgage during it's full term, and more carefully document that buyers have the cash to cover additional costs that come with home ownership, potential home buyers need to get their financial house in order as well.

"If people were really responsible for their own financial behavior that would have taken the power away from people who put them in these (risky) loans," says Shawneequa Badger, a real estate agent with Century 21-Alpha in San Jose, CA.

"The reason for all the creative financing was because people didn't want to do the work. Well, now it's time to do the work or cut your losses," says Badger and other agents who are stepping up to provide an approach to home buying that doesn't require classes in the school of hard knocks.

Their sage advice does, however, involve hard financial work and sacrifices many households have long avoided.

"There's still a market out there for people to keep things moving. Just stop the irrational financial behavior," Badger advises.

As a carrot, keep in mind, the benefits of owning your own home, likely to be your most valuable asset, far outweigh any passing pain you may endure to achieve that goal.

Here's how to prepare for what's become a more difficult home buying ordeal.

Set A Tight Budget.

You need to know all sources of every penny and you need to know where every penny goes. You can't know where you can cut costs until you know in detail what those costs are.

Offering a budget template online, the Better Business Bureau says, "A budget will provide you with a roadmap to financial security. If you drive carefully, perform the right repairs and maintenance along the way, and steadily steer toward your long-term goal, you'll wind up where you want to be."

Save. Pinch Pennies. Save Some More.

Being miserly is a prerequisite to homeownership.

Stop traveling, stop partying and stop unhealthy habits that could leave you too weak to take on that second job. Bulk up your habit of spending only for what you need, not what you want.

If you don't have a savings account worth three to six months of your net income, you are already a financial disaster waiting to happen should there be an emergency.

In addition to money for the down payment, lenders today will expect you to have some cash left over for insurance, taxes, maintenance and other costs that come with homeownership.

You really can't afford not to save. You really can't afford not to find more ways to save.

Read Your Credit Report.

Don't just get it. Read the darn thing. AnnualCreditReport.com is the only federally-approved website you should visit if you want a truly free credit report. Other websites will give you your report to you for "free" but typically only after you sign up for other cost-based services. You are trying to save money, not come up with more things to buy.

Your credit report is a report card on your credit use, the good, the bad, the ugly and, too often, the incorrect. Which is why you want to see it. If there are errors follow the instructions to correct them.

Also visit MyFico.com to learn how to improve your report and your credit score -- a numerical rendition of your creditworthiness.

Get Some Help With Direction.

Can't figure what you credit report is trying to say? Not sure how to calculate what you'll need to save? Don't know how to set up a budget?

It's okay to ask for help. It's smart to ask for help. You don't know everything about buying a home. If you are a first-timer you likely know very little.

Learn how to find answers.

As agent Badger says, knowledge is power.

Whether it's a financial planner, financial counselor, real estate agent, mortgage broker, loan officer, or real estate market nerd, ask family, friends, co-workers and others you trust for references to find those who can help you.

Again -- well before you actually begin to shop for a home.

Attend workshops, seminars and classes.

Browse for housing information from online content providers, including MyMoney.gov, "Better Business Bureau Tips for Troubled Homeowners" and RealtyTimes.com's "Advice for Consumers".

Pick up a few books, or save some bucks in the library reading "Buying Your First Home" (Nolo, $24.99), "The National Association of Realtors Guide To Home Buying" (Wiley, $19.95) and "Let's Get Real About Money" (Financial Times, $19.99), among others.

"The best thing is to sit down with a good professional," said Warren Winsness, broker/owner of Winsness Realty in Los Gatos, CA, and president of the Santa Clara County Association of Realtors.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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When It's Not A Good Time To Buy

Jay Shepherd (RE/MAX Professionals Select) — Sat, 15 Sep 2007 09:52:58 -0500

Maybe you should be perched high and hanging tight up there on the fence with the rest of the crows cawing about all the reasons not to buy a home right now.

It's your personal decision.

Contrary to the popular refrain, voiced even as aftershocks rumbled from the Loma Prieta, CA epicenter and repeated before Hurricane Katrina's swamp waters receded, it's simply not always a good time for everyone to buy.

The new "Buying Your First Home," (Nolo, $24.99) is 99.9 percent about buying and keeping your home, but not without recognizing conditions that should keep you out of the owner-occupied housing market -- if only temporarily.

For starters, the sheer cost of owner-occupied housing is often overlooked in the finger pointing blame game now being played out as the housing market slips into a realm not visited since the 1950s.

Fast rising prices compelled many buyers to buy before prices zoomed out of sight. Home prices rose an average of more than 50 percent nationwide in the past five years with some states experiencing home price appreciation jumps of 70, 80, 90, 100 percent or more during the same period, according to the Office of Federal Housing Enterprise Oversight.

While many homeowners today are getting the boot because they were sold on risky mortgages that ended up biting them in the assets, nearly as many simply bit off more than they knew they could truly afford.

In 2006, 36.9 percent of all mortgage holders, up from 2005, spent at least 30 percent of their gross income on housing. That means they are living close to their financial edge.

One financial shift, say, a lost job, medical emergency, new baby or an interest rate adjustment and they could lose their footing.

Renting could put you on firmer ground.

While you won't enjoy the tax saving and equity gaining benefits of owning a home, a long term lease can let you lock in costs at a level you can afford.

Home ownership isn't just getting in it's staying in by paying insurance, property taxes, maintenance or homeowner association dues, as well as the monthly mortgage and other costs.

Do the math. Learn the true cost of homeownership, from all the costs on the settlement sheet to the cost of driving to work vs. the cost of renting housing near your workplace.

"Buying Your First Home" recommends Rent Vs. Buy calculators available on the MyFICO.com; QuickenLoans.com and GinnieMae.gov websites.

"Buying Your First Home" says you likely won't need to make the calculations and probably shouldn't buy if:

You plan to move from the area within the next few years. During the last boom, you could buy and sell in six months to a year in many markets and recoup your buying and selling costs and still have enough cash left over to buy again.
That's no longer the case in a growing number of markets where home prices are inching up, flat or falling.
It's also easier, logistically, to move out of a rental home than a home you own and must sell.
You are inflexible. Buying is better suited for you when your life is on a steady course. If you are still in your globe-trotting youth and out to see the world, unless you want to also manage house swapping or renting, buy when you've settled down.
You expect a job change or income reduction. Similarly, if you plan to earn enough money to return to college, become a Hollywood celebrity or join the Las Vegas poker circuit, home ownership probably isn't for you. You can, however, opt to co-own, buy well within your means, say a tiny condo in an affordable community, or use some other affordable home-buying strategy.
Buying will cost far more than renting. Again, do the math. Some high cost housing markets have gotten so expensive renting makes sense based solely on the mortgage vs. rent difference.

It's a good time to buy when your finances, planning, goals and lifestyle mesh with the financial responsibilities required for homeownership.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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Apartment Industry Benefiting from Housing Downturn

Jay Shepherd (RE/MAX Professionals Select) — Sat, 15 Sep 2007 09:47:45 -0500

As the housing crisis deepens in many areas of the country, a growing number of younger potential home buyers are turning instead to the rental market.

While builders and real estate agents are feeling the pinch, the apartment industry is savoring its "rediscovery." According to National Multi-Housing Council chief economist Mark Obrinsky, apartment rents measured by both public and private data sources rose in the second quarter.

For the eighth straight quarter, the fastest rent growth occurred in the West, where housing prices tend to be the highest and the number of foreclosures and mortgage delinquencies are concentrated, while the South (outside Florida the lower median home prices) had the lowest rent growth.

With overall inflation at 2.8 percent over the last year, "real" rent was actually negative in all regions except the West, Obrinsky said.

For several years, apartment construction lagged behind home building, and average rents have increased because of the gap between growing demand and lack of inventory.

The equation will not change anytime soon. Obrinsky said that multifamily starts were virtually flat in the second quarter of 2007, while multifamily permits edged down, and completions dropped sharply.

In addition, financing is not as plentiful as before the current credit crunch. Growth in multifamily mortgage credit slowed in the first quarter to $12 billion (from $16 billion the previous quarter and $14 billion a year earlier), Obrinsky said.

Rising apartment rents have put a crimp in renters' budgets, according to data from Apartments.com. A recent survey taken on the website showed more than 60 percent of respondents spending more than the recommended percentage of their income on rent, with 20 percent devoting more pending more than half of their annual salary on rent.

Industry experts suggest approximately one third of an individual's annual income should be spent on housing. Ninety-five percent of the survey respondents said that rent was their largest monthly bill.

While many renters are concerned about the increasing costs of their monthly housing expenses, they are demanding amenities comparable to what home buyers want. More than 36 percent of respondents to another Apartments.com survey said that air conditioning is the one amenity they could not live without.

In addition to air conditioning, 22 percent of renters surveyed stated that parking was the one amenity they could not live without, and 14 percent said it was the in-unit washer and dryer.

Renters also showed great interest in specific service and technology amenity offerings; 61 percent of respondents indicate that digital cable was a desirable amenity, 59 percent would like the option to pay rent online and 53 percent of respondents are interested in in-unit wireless Internet.

When faced with selecting between two apartments that are equal in amenities and pricing, more than 52 percent of survey respondents said the location of the property would be the determining factor as to which apartment they would choose.

The strong market conditions for apartment firms will translate into small merit-based pay increases for industry professionals according to multi-housing council's annual National Apartment Survey of Compensation and Benefits Practices.

The 2007 survey also indicates that industry efforts to reduce employee turnover rates are producing results, but that companies are being challenged by rising health care costs.

Firms predict that employees at the vice president level and above will receive an average 3.8 percent merit increase in 2007. This is the same rate predicted last year, although actual raises for this group averaged 4.3 percent.

Managers below the vice president level can expect 3.7 percent average merit increases, compared with last year's 3.6 percent prediction and 3.9 percent actual boosts. Non-exempt employees (non-supervisory and hourly employees), such as leasing consultants and maintenance technicians, are budgeted to see the smallest average merit increases, at 3.6 percent, up from 2006's 3.4 percent forecast but consistent with last year's actual increase.

Controlling employee turnover was a priority for many firms after last year's survey posted a nearly 22 percent increase in overall average turnover rates (from 37.2 percent in 2005 to 59.2 percent in 2006).

This year, firms made up some of that lost ground, posting an overall average turnover rate of just 42.8 percent.

Leasing consultants were once again the highest turnover position, although their turnover rates remained virtually unchanged from last year at 54.5 percent and down significantly from a high of 70.8 percent reported in 2004.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
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Economy 'Certainly Close' To Realty-Made Recession

Jay Shepherd (RE/MAX Professionals Select) — Sat, 15 Sep 2007 09:43:55 -0500

As the housing market continues to slide though the mortgage morass, the growing economic impact is generating more talk of a housing industry-spawned recession.

The National Association of Realtors has steadily revised price estimates down as mortgage market woes and swelling inventories continue to add to the glut of listings.

The latest outlook calls for a 1.7 percent decline in the median price of existing-homes this year, compared to the previous forecast of a 1.2 percent decline, marking the first full year decline in existing home prices since NAR has been tracking the data.

NAR has lowered forecasts for existing home sales for eight-straight months.

New home sales were off by more than 10 percent in July and new single-family home starts fell 7.3 percent for the same period, according to the National Association of Home Builders.

In the University of California-Los Angeles Anderson Forecast "Turbulence", economists forecast "... the housing induced sluggishness in the U.S. economy to last into early 2008. For 2007, real GDP (Gross Domestic Product) growth is expected to be less than 2 percent ... roughly on par with the near-recessionary environment of 2002."

One major economic blip now, say, the failure of a major mortgage lender or two, some natural disaster, or some financial disaster, could put the economy in a tailspin.

UCLA Anderson Forecast senior economist David Shulman says if the forecast is dead on, the period from second quarter 2006 through first quarter 2008 will mark a "historically anomalous" long period of below-trend growth.

Even though growth is just above the traditional definition of a recession -- two consecutive quarters of decline in the GDP -- and the Anderson economists say the economy is "certainly close" to a recession, Shulman insists a recession is not imminent.

Shulman says that means the markets shouldn't expect a rate cut from the Federal Reserve before the fourth quarter. He also said the recovery in the housing market will more closely resemble an "L" not a "V."

The weakness in the housing sector has already spilled into the rest of the economy, especially consumption spending which had a growing dependence on equity gains. Retail sales stalled in April and auto sales have been weak.

The cost of housing itself creates some of the squeeze.

Even with the housing slow down, the U.S. Census reports more and more of Americans' income is going to housing.

Half of all renters and more than one-third of all mortgage holders, both up from 2005, spent at least 30 percent of the gross income on housing in 2006.

In California, 51.8 percent of homeowners spend more than 30 percent on housing, compared to the 36.9 percent average.

In a quirky example of how the housing market mash up is affecting spending, the spending that drives the economy, consumers are holding onto plastic and allowing their mortgages to meltdown.

Elizabeth Schomburg, senior vice president of the Family Credit Counseling Service said more and more consumers are arriving for help with impending foreclosures, but their credit card payments are pristine.

"This is the biggest surprise we're seeing," she told Associated Press.

Experts speculate that credit card delinquencies have remained low as foreclosures have surged because it's easier to hold onto credit cards than to borrow against a mortgage or refinance your way out of a bad home loan.

The collapse of the risky business of subprime mortgages and other self-destructive home loans has forced lenders to tighten underwriting standards on mortgages, as well as other credit.

But reliance upon revolving credit for cash on hand could shake out the already open Pandora's Box and put more lenders and credit card holders at risk while further exacerbating the economic slowdown.

Just as mortgages are repackaged as securities so are credit card receivables.

And even if a card holder is current with the plastic, a lender can reduce credit limits, raise the interest rate, cut off credit card use or take the back the card, if a borrower's credit report reveals financial trouble elsewhere, say, with the mortgage.

Some of a potential recession's writing on the wall is in the small print.

And once again, nobody's reading it.

The Jay Shepherd Real Estate Update - RealtyTimes.com

Check out my Web site for more info on Naperville and the surrounding area
Search for homes in Naperville and the Western Suburbs go to JayShepherdTeam.com