We are in a depression and here’s why it doesn’t matter

I wanted to be the first to declare that we are officially in a depression.  You can read about it by clicking depression.

There is no clear definition of the point at which a recession becomes a depression.  So now I’ve said it and we can all get on with our lives.

It doesn’t matter because people buy and sell houses, regardless of what the economy is doing.  The Great Depression was an example of this.  There are always real estate transactions, even if you have to work harder or differently in order to find them.  If you surrender to the idea that real estate will always be changing and you will always have to adjust your tactics, you will be fine.  Every agent, investor, manager, and owner needs to accept this if they plan to survive this market.

If you need a kick in the pants or simply don’t know what to do next, I have a few coaching slots left.  I’m putting a cap on the number of coaching clients in my life because I like to do other things too.  Email info@mangledmortgage.com for more information.

Onward!

Jon

Foreclosure lists

Foreclosure List Update:

Most of the lists of foreclosure information are available for free from your county office where you’re searching.  There are many title insurance companies that can provide the information in an electronic format for their customers as well.  You will usually have to be a customer in order to get access through the title companies.

Update for agents and brokers:

Some of the asset management departments and asset management companies are no longer allowing their asset managers to assign listings.  Countrywide has had this policy for a long time already.  The reason behind it is the potential for an asset manager and a less-than-honest agent to be in cahoots for stripping a house of valuable items.  When the asset management company has a neutral employee assigning listings, it helps limit their risk.

For specific questions about foreclosures, foreclosures lists for your area, or industry news and trends, send a message to Jon Sterling at info@mangledmortgage.com

Foreclosure myths

There are many common myths about foreclosures.  Some of them come from late-night infomercials and some of them come from people who are interested in selling advertising space instead of providing facts.  The myths are outlined in my book, and here are some of the common myths:

Myth:

All foreclosures are a steal.

Truth:

Lenders and their investors have a good idea of what a property is worth.  Granted, some of them are interested in selling property at a steep discount so they can meet their liquidity needs, but the discount is often built into the list price you see by the time it hits the market.  You will often find better deals by looking in an area with lots of foreclosures, but not necessarily with a bank-owned property.

Myth:

All foreclosures are damaged and need work.

Truth:

Not all foreclosures are damaged.  Many former owners cooperate with the lender when they realize they cannot keep their home and leave the place in good condition.  Lenders will usually try to negotiate “cash for keys” if the owner will leave the property in good condition.

Myth:

Making money investing in foreclosures is easy.

Truth:

It’s not as easy as it says on the TV commercial.  Yes, there are many people who have successfully made big money investing in foreclosures.  The question I always ask is, “If this person made so much money investing in foreclosures, why are they putting so much effort into selling an information product for three easy payments of $29.95?”

The best investors I know are spending their money on pre-foreclosures and short sales right now.  Check back periodically for updates on those investment strategies.   You can direct specific questions to info@mangledmortgage.com for a quick response.

The house strippers. Real estate’s latest nightmare.

No, not those kinds of strippers.

There are people in our area who are taking a bad housing situation and making it worse.  I call them the house strippers.

These guys and gals target homeowners who are losing their homes through the foreclosure process.  They approach the defaulting homeowners and make an offer:

“Before you get evicted, give us a call and we’ll get your keys from you.  We’ll pay you $1000 (sometimes much more…depends on the house) for the keys and you walk away.”

Once the homeowners leave the house, the strippers take everything of value out of the house.  I mean everything. Appliances, copper piping, light bulbs, doors, you name it.  Everything goes.

For whatever reason, the homeowners are often angry with the lender for evicting them when they stop making their mortgage payments.

This is especially nasty because it makes it harder for the lenders and their investors to recoup their money when they reclaim a house.  Many of these houses are going to have to be torn down.  Does it make financial sense to invest $150,000 bringing a house back to marketable condition, when the after-repair market value is $205,000?

For information on the other scams that are making the housing headaches worse, check out Jon Sterling‘s new book Mangled Mortgage.

Order a copy of Mangled Mortgage today!

For a copy of Mangled Mortgage:  Everything you need to know about foreclosures, short sales, and loan modifications, the only place to buy it is right here.

Send a message to info@mangledmortgage.com with BOOK in the subject line and I’ll send you a choice of payment options.

This site is designed as an informational place and those order forms are so cheesy looking.  Don’t get me wrong…I still want you to buy the book.  I just want to flirt with you before we get married, so to speak.

-Jon

First-Time Home Buyer Tax Credit

The first-time home buyer tax credit will help us burn through some of the short sale and foreclosure inventory on the market.  The tax credit has been through several iterations.  Here are the broad strokes:

-The tax credit does not have to be repaid.

-The tax credit is only for first-time buyers.

-The tax credit is 10% of the purchase price, with a maximum of $8,000.

-So far, this only applies to property purchased in 2009.

-To qualify, single people can’t make more than $75,000 and couples can’t make more than $150,000.

For a list of frequently asked questions on the tax credit details, visit the tax credit FAQ page.

Short Sales

I recently saw a short sale listing being advertised and there was an exterior photo of the house.  Parked in the driveway was a BIG speedboat.  The seller had refinanced the mortgage several times, had no equity (spent on a boat, perhaps?), and needed to sell.

Many people are not even being subtle about abandoning their obligations these days because it is commonplace to do so.  As long as borrowers are allowed to shrug and walk away, there will continue to be major challenges in the housing industry.

There are also people with legitimate hardships.  Those people did not necessarily do anything wrong; they are victims of the situation.  Because of the irresponsible actions of others, these borrowers are feeling the financial pain.  It is a basic economic law:  As supply increases, demand decreases.

As the number of homes on the market increases, the demand for all the homes on the market decreases.  As the demand decreases, prices adjust downward.  With the glut of foreclosures on the market from the over-leveraged homeowners and the “shrug and walk away” people, those who made responsible financing decisions are at risk of suffering the consequences of too much inventory and decreasing home values.

For more information on foreclosures, short sales, and loan modifications, or to order a copy of Mangled Mortgage, send a message to info@mangledmortgage.com.