More Negative Publicity For The Home Sales Market

The National Association of Realtors needs to "revise" its home sales figures going back to 2007. Before you get any hope up, remember this is the same organization that seems to constantly flood the media with negative stats about home sales.

Yet, according to today's news, they have revisions. Now the NAR is showing everybody that home sales statistics are actually WORSE going back over 4 years:


http://www.dailyherald.com/article/20111212/business/111219962/


This story indicates that some sales "were counted twice" and adds that it has something to do with the reporting of the Census Bureau.

Sorry, but this story raises more questions than it answers. What on earth does the Census Bureau "reporting" have to do with actual home sales? How did it take four years for this to come out?

Those questions, of course, are in addition to the ones I have been raising for more than two years. I'd still like to know why the NAR continues to release negative home sales statistics at all. My understanding is that this organization represents thousands of realty agents who are in turn representing millions of people who have been looking to sell their home(s) during this market downturn.

Putting out information such as "worse than a year ago" has no bearing on someone's decision whether or not to purchase a home today. That has been bad enough. Now, we're supposed to look the other way when it is revealed that these statistics were not correct, and in fact should have been even worse.

Ouch.

How A Hospital Can Help Chicago Home Sales

This "business" story about a hospital expansion and the jobs it will create is the type of news story which should attract the attention of savvy residential real estate agents as well as potential home sellers.


http://www.chicagotribune.com/business/breaking/chi-northwestern-memorial-hospital-to-create-jobs-20111201,0,3102625.story


Agents in the Chicago area should have their database to the point of being able to identify current and potential clients who could be interested in knowing about these potentially available jobs, and letting them know. For that matter, their entire database could be notified. People certainly remember where a solid employment lead comes from.

If I were considering or already trying to sell a home near that hospital that could fit the price range of construction workers and the other positions about to be created, I would get my agent working on making it known to the H.R. Department of that hospital within 24 hours.

Here's hoping that these ideas will be used for better marketing of real estate, instead of merely pumping out negative home price and sale statistics every couple of weeks.

Nashville Spins

Here are still more examples of how much advertising and marketing contributes more to the decline of the real estate market than people realize.

Sorry to sound like a broken record, but the realty associations continue to put out statistics which do not have a positive impact. As sports fans can tell you, people can use certain statistics to make arguments for either side.

Nashville TN provides us with still another example. The Greater Nashville Assn. of Realtors released their latest monthly market statistics earlier this week. Keep in mind that the realty agents in the area are the ones who combine to financially support the Association. Yet, these statistics show a drop in home sales in the area for the 2nd month in a row.

The question should be asked. Why did the Association issue this information? The member agents don't benefit by current and potential sellers seeing that they have even less of a chance. I don't buy the argument that it encourages potential buyers to take advantage of all of the bargains out there. Instead, potential buyers from out of the area could think that the region has become less desireable.

The Nashville Tennesseean, the major newspaper there, added to the negative spin of this information:

http://www.tennessean.com/article/20111109/BUSINESS02/311090133/2047/BUSINESS

Yet, the local business publication took the SAME information, and put a slightly more positive spin on it:

http://nashvillepost.com/news/2011/11/9/october_marks_four_months_of_home_sales_growth

I'm sure that the Association intended their statistics to always have a positive spin such as the Post gave it. Come to think of it, the Post's article isn't totally positive either. It does show how two separate entities approached the same statistical information. Whether it should have been available to them or not.

Yet, these two articles are not advertising or marketing pieces. That's my other discovery this week.

It so happens that I use a mailbox store to receive a lot of my mail and also to receive packages during the day since I prefer not to have mail or packages left outside of my home. Of course, the junk mail also goes there, which is a good thing.

Earlier this week, I received a mailer from a local mortgage broker. Since I'm in contact with 200 to 300 mortgage offices and banks most every week, I was curious to see their angle. To my amazement, this lender's "letter" told me that they could get me a better deal for my home located at (address), even quoting an estimated amount of my mortgage.

What this mortgage broker didn't know is that the address in that mailer was for the mailbox place. There is no house at that address!

Of course, my industry colleagues are getting a good laugh about this as I spread the word about this lender's carelessness. However, if I were not an advertising and marketing professional in the business, I might well have considered that mailer as one more shady operator and a reason not to deal with mortgage brokers. Especially if I had recently read about how my local realty association promotes that fewer and fewer homes are selling in my area.

These realty agents and lenders seem to have nothing to talk about except for how awful the market is. Yet, next month is supposed to see the start of the Home Affordable Refinance Program. It could be huge break for the millions of home owners who are thousands of dollars underwater on their current mortgage, yet have made the payments and stayed faithful.

I know because it could impact me personally. I'm already on 2 "waiting lists" to be contacted the minute the plan becomes available to me. I might add that neither of those lenders are my previous mortgage broker, since he didn't contact me about this yet. From my conversations with banks and brokers each week, I know that some are planning to administer this program, while some aren't certain and some say they will not.

This HARP plan could save me and thousands of home owners thousands of dollars, and could very well keep numerous home owners from heading toward foreclosure over the years. This could be the most positive development in real estate in three years.

Yet, I'm one of the few writing about it, while realty associations continue to pump out the "nobody is buying" statistics and lenders continue to think that every address is a home with a mortgage.

Here's hoping that advertising, marketing, and news releases will appeal to 100% of the people next time around.

It Doesn't Snow In October

Even in the Chicago area, it doesn't snow in October. Looks like I need to point that out to some realty offices in the area.

It so happened that I was doing some market research on some residential properties in a specific northern suburb of Chicago this afternoon. As part of that, I went onto Realtor.com to check on the status of a couple of listings. This is October 13th, and to the best of my memory, there hasn't been any measureable snow in the Chicago area since late March.

Yet, there I was checking listings within one zip code and within $150,000 on a price range. I'm sure many of you are familiar with Realtor.com and its listings, which include a thumbnail primary photo to attract attention.

To my amazement, I saw four, that is FOUR, primary photos which had snow on the ground on the photo which is supposed to make me want to click on the listing. What makes this even worse, if that is possible, is that these four listings were from three separate realty offices.

Yes, it wasn't as though there was one careless and incompetent agent or office making the other agents in the area look bad.

Instead of an outdated photo, they might as well have posted "Been on the market so long there is no urgency - Wait for still another price reduction!" instead. Sorry, but that's how it looks.

Suppose I was looking to purchase in that area. My first impression before clicking on ANY of the listings would have been that these listings are stale, there has been no interest, and even the local agents have given up on updating the information. Since it is not one agent or office being careless, it makes the "good" advertisements look like part of a lackluster effort to make the area's homes look like hot items.

Over the past couple of years while the real estate market has been in dire straits, I have preached over and over about the need for more effective marketing by agents and sellers. Yes, the sellers too.

You see, I'm not only putting the blame on careless and thoughtless realty agents for not so much as taking a few minutes to swap out photos and keep the information fresh. I can't believe a truly motivated seller isn't checking his/her/their ads online (especially on the busy Realtor.com site!) every couple of weeks if not more often.

A motivated seller should be watching other similar local listings to see if and when there are price reductions, new listings, and what advertising strategies are being presented. And since the agent is supposed to working for them to sell, the sellers should be alerting their agent to anything and everything that could be improved.

This is why I would be completely discouraged from buying in this zip code. Seeing FOUR photos with snow on them the next October tells me that the sellers AND the agents have given up hope. And chances are those are nice and attractive properties.

Those agents keeping the snow photos up there should be glad they aren't my agent. (Although that's not going to happen after seeing this.) I would be asking him/her how they expect me to pay them thousands of dollars to represent me when they don't have time to update an important photo.

Frankly, some of these realty agents are pulling a "snow" job on their clients, and on the neighborhoods they work.

Why Are Our Houses Worth More Than Last Year?

Within the past couple of days I have had several acquaintances tell me that they have received their property tax bills and are obviously both shocked and dismayed at the amounts. It seems that their property tax bills have risen.

I thought that the property tax is based on a percentage of the value of the property. It seems that the majority of properties around the country are being appraised at less than their original value, and in some cases for many thousands of dollars less.

This means it is time to ask the government how they have come up with an increase in property values. Actually, it is time to demand that government officials tell us. Here is why.

Once we receive a Government written notification that it considers our property to have increased in value over the past year, we should immediately going to the bank or mortgage banker which owns our mortgage and provide them with this U.S. Government information. After all, state government officials are a part of the same U.S. Government which bailed out several large banks after the earlier mortgage fraud and abuse. So the banks had better listen.

Since our Government claims each property is worth more than last year, this should reflect on housing prices and for the ability for almost everyone to be able to refinance their current mortgage and take advantage of these low rates. How dare these appraisers continue to act as though thousands of homes have lost value, when the U.S. Government is documenting that they have actually increased?

This is the time to take action to enable those who have faithfully paid their mortgage but have been stuck to have more options instead of punishing these people because of those who did not and cannot make their payments.

On the other hand, there could be some licensed and professional appraisers who disagree with the Government’s assessment of current property values, especially since their jobs may be on the line and their abilities questioned. If they can prove otherwise, these appraisers should be working with home owners to challenge the U.S. and state Government determinations about local property values increasing. In that event, thousands of current homeowners would see a significant reduction in their property taxes and finally have a benefit from the status of the current real estate market.

I’m waiting, but I should not be alone in doing so. Who is right about property values?

Location vs. Price

A suburban Chicago seller has only one other property competing against it. Is this a good thing or a bad thing? From an advertising and marketing standpoint, I would say some of both. The idea is to find the “good” and use that as the marketing approach.

First, let me point out that I found out about this from a local newspaper story and am not familiar with the home or its seller, nor is the listing agent a current or past client of mine.

It seems that until the past few days, there was only one million dollar home officially on the market in Lombard, a western suburb of Chicago. Now there is another. This made the newspaper because the selling family is a former lottery winner who had this home built from the winnings, and now has listed the 14 room, 4,000+ square foot home at $1.1 million.

From what I have seen, the home appears to have all of the amenities of a million dollar home. Meanwhile, the other million dollar home currently listed in Lombard (as of this writing) is much larger and is listed for more than double the price (around $2.5 million). It means that this home stands alone for being listed in this price range within this suburb.

Rather than focus on the amenities, the advertising and marketing for this listing should be focused on why a potential buyer in this price range should relocate to Lombard, whether from nearby or from a distance.

There are people with enough money to purchase a home in this price range who would probably enjoy being the “big fish in the little pond”. Unfortunately for me, I’m not an expert on living in million dollar plus homes, but find it safe to say that being in a neighborhood of them leads to some decisions being made by other homeowners and the community. Being the only one of this type would likely afford some flexibility that an owner of such a property may not be able to have in other nearby communities. The story states that the home is on one of the largest lots in the community as well.

Lombard happens to be within a half hour of other suburbs which are more affluent and have sections with million dollar homes and estates. Thus, there are factors within the general area that have proven to attract such high caliber buyers.

If I was the agent and seller, I would be researching the current reasons why buyers and residents of million dollar homes within a reasonable distance of Lombard have moved in or remained in the area. The next step is to find the benefits of Lombard in comparison. Maybe it is at least part of the school system, proximity to upscale shopping, and so forth. The most positive result(s) should be the grabber for marketing this home. A “Million dollar living even closer to xyz” type of headline. Or “The biggest lot in town is ready”.

If I was a potential buyer of a million dollar home in the suburbs of Chicago, I just might want to be made aware of a unique property in this price range, even if the location is all which is unique. If I’m interested in the specific area where the house is located, then there is likely no competition. It becomes this house, or waiting for something else to come on the market.

Of course, this property has the endless rooms, full finished basement, a movie theatre, and much more that comes with a recently built million dollar property. These are features that can be found in other communities, but is not the biggest part of the story in Lombard.

Granted, it’s still going to be a challenge to find a buyer for a house in this price range. But if marketed with a unique approach for a unique property, there is more hope.

Solving New Hampshire and Maine

The demographic makeup of the populations of both New Hampshire and Maine appears to be getting older rather than younger according to recent studies. How might this effect the real estate market?

At a recent meeting of the Business & Industry Association of New Hampshire, Peter Francese, Director of Demographic Forecasts for the New England Economic Partnership, presented the latest trends in population swing. His statistics show that households with residents aged 65+ are expected to almost double in New Hampshire within the next 10 years, making NH the second “fastest aging” state, behind neighboring Maine, in this category. The same study projects a drop of about 30,000 NH households among the 35 – 44 age group.

This information is, or should be considered, significant information for the real estate community. Instead, so far it is lumped in with other negative statistics, and without going for solutions. It’s time for some aggressive planning and thinking in response to this.

From my viewpoint, this is potentially devastating to New Hampshire and Maine. Putting this information out there that the middle age groups are leaving these states is harmful to everyone there who owns a family style home, whether they are looking to sell right now or not. A 4-bedroom home on the same block as a school won’t sell to a retired couple in their 70’s needing to be near a care facility.

Frankly, the next study to be done should be one to determine how this came to be. Seniors have been moving to Florida, Arizona, California, and other year-round sunny and warm climates for many years. Were it not for this study, I would not have had any idea that Maine and New Hampshire are places where senior living is on the rise.

Granted, I’m not looking at senior housing, but from constantly seeing real estate advertising and marketing around the country day after day, I can tell you that I don’t recall seeing anything targeting the senior market for these areas. This tells me that people entering their 60’s or 70’s have not been made aware of this either. Instead, the years of seeing and hearing about how many people retire and move (or take over their second home) in FL, CA, AZ, and others, will keep the senior mindset in that direction.

Maine and New Hampshire’s Chambers of Commerce, developers, and real estate companies would have to spend and produce a ton of publicity to attract the attention of seniors in the Midwest and the north thinking about retiring and moving to an area with good senior care and facilities in a big hurry. Otherwise, as the seniors currently occupying these homes pass on, it’s going to be difficult to find potential buyers.

Francese’s comments to the Economic Partnership included his saying that these states need more families to move there or stay there.

This puts the challenge in the hands of the real estate professionals in those states as much as the builders and developers. And it’s not an easy challenge, especially after reading the CoreLogic report earlier this month that showed an increase in the number of “under water” homes in New Hampshire for the 2nd quarter of 2011 to more than 40,000. That amounts to about 19% of all mortgaged properties in the state.

My first step would be to look closely at the schools and the attractions in New Hampshire and Maine. Find the achievement statistics and use publicity and social marketing to promote success for students attending schools in as many areas as the statistics will make favorable. Determine which attractions, activities, and shopping areas have the most appeal to the 25 to 54 age group. Research which businesses in these areas have the most employees within that age range and promote their successes.

Instead of sitting back and letting the demographics change and further damage the economy in these areas, take action to change the trend. If those involved continue to sit back and let this happen, the area may eventually be known as “Old Hampshire”.

Build It So That They Will Come

The battle to solve the real estate market crisis continues with one of the few interesting ideas I have seen. This story is from the Milwaukee Journal. It’s about a builder who is building homes in the range of just 1,000 square feet, albeit with a garage, which would result in owning a home with cruise ship or dorm room style living. The builder’s idea is to price them at less than $100,000 new.


http://www.jsonline.com/business/128857588.html


Granted, the story is a newspaper story and not from a realty association or by anyone directly connected with the real estate industry. Yet, this is (or should be) a positive spin on a solution. I’d like to believe there are plenty of people out there who don’t want or need a lot of space and would welcome the chance to be a home owner within that price range. It might make the difference of a family or individual being able to afford a mortgage instead of renting.

Some of these homes would have multiple bedrooms, supposedly at 6 x 9 which could sleep 2 in each room.

However, this story wraps up with less than positive vibes. It goes on to say that the builder is only building two, which will go in one neighborhood in the Milwaukee area, and how the builder wants to see “if” there would be a positive response. (The opening already took place, and I do not have an indication as to whether or not it was successful.)

Even if the unveiling of these homes was successful, it is yet another instance of the “less than positive” marketing that continues throughout the real estate community. If I were marketing for Miracle homes, I would have been certain to point out that these “are the only the first two homes for this neighborhood”, and how “further expansion plans” are now in the works.

You have to act like you have a winner on your hands. That’s the first rule of promotion of a unique idea that fits a need. This isn’t just to pick on Miracle Homes, as this is the common problem with real estate marketing. Taking the “if anybody buys it, we will come” approach tells the public that you aren’t certain either. In a market where so much is uncertain in real estate.

The “wait and see if” attitude brought out in this story is way too typical, although it’s not the fault of the writer of the story. He was given the information and the interview. Sounds like the builder has been listening to too many realty agents or reading the negative statistics the agents and associations keep putting out there.

My point is that this is another version of the “Homes didn’t sell in this area last year after the tax credit ended, so they didn’t sell well again this year and we don’t know if they will next year” stuff the realty professionals have been dumping on us for a couple of years.

But in this case, it’s a solid idea. Builders across the country should be reading this story and feeling like they could expand upon the theory in most markets around the country and create a buzz. Realty agents should be lined up with potential buyers waiting to tour these smaller homes and asking about pre-ordering for their clients. Renters within 20 miles of these “first” homes should also be lining up to compare with their current apartment or unit and see if they could save money while being able to own. You have to start somewhere.

If you don’t use the opportunity to “build up” a buzz about a new property, there won’t be any reason to build up more new properties. And the market will be stuck the way it is.

Let's Appraise The Real Estate Market

Just within the past two weeks I have had some mortgage lenders from different parts of the country tell me that they are not able to close loans or refinances because of low appraisals, even after miles of paperwork had been executed. Yet, none of them could explain it in detail.

Certainly, I’m not here to attack real estate appraisers. They have a job to do, and I don’t know the first thing about how to do the hard work they do. However, it looks like they (appraisers) are just as caught up in this mess of a real estate market as the realty agents, hopeful sellers, and frustrated buyers.

My displeasure with how the realty associations and many agents continue to toss out negative statistics by comparing home sales figures is well documented over the past two years. Many of the banks contributed to the fallout on the mortgage side. And so it goes.

Sure, the appraisers have to go buy comps and other local market information. But wait a minute. A home sold via foreclosure is, or maybe I make that “should be”, considered a special circumstance and not a determining factor.

Suppose there is a development of 10 homes which sold more than two years ago for an average of $300,000. Then suppose two of those homes went into foreclosure and sold for an average of $200,000 within the past six months. I would prefer to think that since the only two homes in that development which sold were due to foreclosure, that it would NOT mean that the other eight homes are no longer valued at $300,000. Yet, that’s what’s happening.

Yet, it’s not only the appraisers taking this path, although it appears that this is what is causing purchases and refinances to be blocked. The realty agents and associations are going along with this trend. And many potential buyers and sellers, along with mortgage lenders and those related to a transaction, are being, well, screwed, because of it.

Here is my solution. Stop the madness. Why can’t the National Assn. of Realtors create a separate category for “Non-foreclosed homes”?

Using the ten home development as an example, comps would show that the eight “Non-foreclosed homes” are valued at an average of $300,000. The fact that two homes sold for a lot less due to special circumstances should not impact the value of the others.

Even if the “special circumstance” properties were factored in for “weighted” statistics, the impact would not be as draining for all concerned. If the $300,000 homes development was only reduced to a value of $280,000 due to “special circumstances”, it would most likely open up for more loans than appraisers coming in closer to $200,000 (based on current comps) and the realty professionals going along with that.

Let me put this another way. Suppose another national electronics retailer is about to go under and has a “Going Out of Business” sale including laptops. Let’s say they have an inventory of 5,000 laptops which retail for $800 each. And, due to court order, they sell them all for $450 as a final sale.

Would that mean that every comparable laptop for sale via other retailers still in business would now be priced at $450 permanently? After all, 5,000 people bought that brand and model for $450!!

A foreclosure is a court order. The property owner(s) could not or did not pay their money, and lost the property, and it was sold in this manner.

How are these situations different?

Instead of coming up with more negative statistics to show why people aren’t buying and selling homes in most cities, it would be nice to have the people who shape the industry working on some serious and immediate solutions to this crisis. Before it's too late and thousands more hard working people lose their homes, too.

Statistics Don't Sell Homes

Why are real estate agents giving potential home buyers so many reasons NOT to buy? The practice of bombarding the public with negative statistics about the real estate market instead of only focusing on positive ones is a bigger part of the problem than most people think.

Sure, not as big as the banks have caused by way of the mortgage crisis, but still up there on the list of reasons.

Suppose you are looking for a property, or looking to sell one right now. Let me ask you this. If you are looking to buy, is it because of a statisical comparison with past years?

(I didn't think so!)

If you are trying to sell, is it because of statistics from previous years?

(I didn't think so!)

As I review news stories and releases from around the country most every day, I am still amazed at the number of stories out there like this one from Tulsa:


http://www.tulsaworld.com/business/article.aspx?subjectid=32&articleid=20110813_32_E1_Metroa254755&rss_lnk=5


If this story focused on the fact that 913 homes sold during July in the Tulsa area and that more than 5,400 have sold there during 2011 (through July), I'd be impressed. Tulsa is not an area that has been in the business news, positively or negatively, lately. But homes are selling there.

Those are statistics the realty association should be putting out there. Maybe compare it with other cities with a similar population and demographic, and put the names of those cities in the "story" which haven't sold at that pace so far this year.

But, no. Still another realty association that finds the need to compare these sales statistics with recent years. And proceed to tell potential buyers how the market is suffering. They keep bringing up last year's tax credit as a reason for more sales during early 2010. Well, there is no more tax credit. Just how does this "help" the market today?

Obviously, it doesn't. At least it's obvious to me and to thousands of others who are trying to sell their property and move on. Again, I'll bet the reason for trying to sell now is not because of home sales statistics from 1 to 5 years ago.

Give us statistics which encourage sales and which will entice more potential buyers and help those looking to sell. How many "sellers" were able to enter a "rent to buy" agreement for their homes?

If more families could rent a home and have most of their monthly rent go toward a future purchase, it would allow more opportunities for sellers. It would allow more opportunities for individuals and families who can afford the rent, want the home owner responsibility, and can't get approved for a mortgage to do so. It would help to take some of the lowest priced homes off the market.

There are some very motivated and some very desperate sellers out there in most markets. But as long as the realty associations and news organizatons continue to bombard us all with apples and oranges negative statistics, we'll all be stuck in this rut.

What happened last year or five years ago does not impact a buyer or seller decision this week. At least it shouldn't. But knowing the number of homes in your area which have sold within the past 60 days could.

Why Turning Foreclosures To Rentals Makes Sense

How about that? A politician with an idea that makes sense.

Actually, it's an idea I suggested in this very blog months ago, but maybe this publicity can make it come to life.


http://reed.senate.gov/press/release/reed-seeks-to-convert-foreclosed-homes-into-affordable-rental-units-provide-relief-to-victims-of-housing-crisis_--


If only this had been done a couple of years ago. The idea is to take foreclosed properties and turn them into rental units. This would have given many consumers who can't afford, can't get, or don't want a mortgage the ability to live in a house instead of a cramped apartment. Maybe they'd want to buy a home down the road. Even if they don't, they would be providing monthly revenue for the bank that owns the home, instead of sitting empty.

Multiply that scene by thousands, and that probably would have provided the banks with enough money so that our elected politicians wouldn't have been dumb enough to give these banks "bailout money". Only to have some of the banks hand that money to executives for bonus money and let the housing market continue to go down the tubes. And, of course, cause the government to cut back on everything else that bank money should have gone for.

Turning foreclosures into rental properties would also take thousands of listings off the market, and leave the buyers to go after properties offered by motivated sellers. At higher prices, of course. Taking foreclosures off the market would eliminate the majority of the vastly discounted property prices and therefore increase property values once again.

For a change, something a politician wants to do makes sense, and would actually benefit consumers. If only the others could understand that, this time.

Home Sales vs. Home Prices

The negative statistics about the current state of real estate continue day after day. Instead of any positive ones. Yet, over the past few days, I have been seeing more and more stories about the drops in home sales prices be presented in a positive light.

As much as I have been preaching the need for positive stories dealing with real estate, I also preach that these should be legit stories. Yes, home prices are generally dropping even further in much of the country. However, that doesn't mean it is a positive.

The point is being made that more recent drops in average home prices are not as much due to foreclosures and short sales as they have been over the past couple of years. This is being treated as a positive. I'm not certain that's the case.

That fewer homes seem to be getting foreclosed upon is certainly a positive. But that is not enough to group this fact with others relative to home sales.

Home prices being much lower than 5 years ago is not a positive for a large group of home owners around the country, perhaps the majority.

Even though foreclosures are down now, there are still a ton of homes around the country for sale at foreclosure or short sale prices. Those are in addition to distressed properties practically abandoned by builders and developers. The mere availability of this many properties at lower prices serves only to bring down the value of the homes surrounding it. And that is not a positive for more people than the number who can buy under current market conditions.

Too many home owners are right now stuck paying more than the property is now considered to be worth, and are under water with their mortgage. They cannot sell "for less". If they take a loss and have to write an additional check at the time of sale, there is no money for a down payment and to finance a new purchase. So there is no choice but to wait until or unless the local market returns to the point where they could get a price high enough to justify selling it.

Meanwhile, many who would like to take advantage of the buyers' market out there cannot. The availability of mortgages has gone full spectrum, from having been too easy several years ago to being way too difficult now. And that's for those who can even afford a sufficient down payment.

The same banks which contributed to this crisis are now cutting back instead of getting in there and actually (gulp) helping their customer bases. They are loaning on fewer properties, cutting back or eliminating options such as reverse mortgages, and sitting on defaulted properties they technically own due to foreclosures.

As a result, the banks are really a big factor in keeping home prices down, just as they are in keeping home sales down from where they could be. With no end in sight.

If only the news media would keep all of this in mind when reporting the "positive" news about the current status of real estate.

While HUD Has "no comment"?

After commenting earlier this month about the reduction of reverse mortgages, this article points out even more evidence of my point that seniors are looking at even fewer financial options in an effort to not outlive their savings:


http://www.chicagotribune.com/classified/realestate/ct-mre-0626-podmolik-homefront-20110624,0,6324717.column


The truly disturbing part of this article actually comes at the end, where the writer points out that HUD "had no comment". To me, this is an even bigger story than a large bank putting the stop on future reverse mortgages.

HUD is a government agency. The same government which appears to have practically wasted millions of dollars with its bank bailout program a couple years back. All that seems to have done is to bail out the coffers of some of the executives who may have helped to create this mess.

Having a government agency with "no comment" about this situation and its possible to probable negative impact on seniors is not a good sign.

Add this to the growing list of matters your local politicians should be discussing, but are not doing anything about.

Not that reverse mortgages are mass appeal or even ideal for every senior citizen. Without them, it is one less option for seniors. Here's hoping these seniors remember this when those same local politicans, who are now not helping them, come up for re-election.

An Orange Crush From China?

It appears that some of the smarter realty agents are also aware of what I pointed out months ago when it comes to seeking places that buyers might come from. A couple months back I pointed out the increase in cash buyers from Canada who knew to take advantage of certain Canadian tax laws in order to purchase properties in certain U.S. markets.

Now comes word of a noteworth increase in home purchases in the Orange County California area, specifically from buyers coming over from China.


http://www.ocbj.com/news/2011/jun/19/chinese-buyers-spur-luxury-home-sales/


Those agents who have been on top of this trend stand to do quite well for themselves by figuring this out at the right time. There is definitely money to be made, and buyers and sellers to satisfy, instead of continuing to knock on the same doors week after week.

All this going on while some agents continue to dwell in negative statistics about the market instead of seeking opportunities from wherever they can find them.

The next opportunity for aggressive realty agents might be seniors. With the uncertainty about Social Security these days, many more seniors are even more alarmed about outliving their funds along with their property losing value.

Meanwhile, some of the banks continue to bungle their finances and add to the chaos destroying the real estate market. This week Wells Fargo has announced it is discontinuing adding reverse mortgages:


https://www.wellsfargo.com/press/2011/20110616_Mortgage


This means even fewer options for seniors. While several mortgage brokers continue to offer reverse mortgages, they tend to be less aggressive about marketing them. I'm afraid that many seniors will read or hear the Wells Fargo announcement and give up on considering this option. The result will be less activity on the mortgage side.

Combine that possibility with the number of buyers from China paying cash instead of going the mortgage route, and it increases the financial bind that banks and lenders are finding themselves in, along with the many who seriously need to sell their homes.

If you are among those who need to sell, remember to look for sources and places your buyer could come from. Chances are the buyer you need is not local or you would have known about it by now. There is a whole world of potential out there.

Try The International Angle

Desparate times call for desparate measures, to borrow the cliche. This real estate market is certainly as desparate as many of us have seen in our lifetimes.

Sellers shouldn't give up hope, even if their agents have. I have commented several times over the past couple of years about looking to identify the logical potential buyer for your property. Face it, if your property has been listed for weeks (or longer), chances are the one buyer you need is not local, or has not been approached with an enticing reason to act.

While doing some research for one of my clients, I came upon an interesting piece from this past weekend. It contains suggestions for Canadians about steps to take in order to purchase U.S. real estate, and explains some of the factors to consider.

Upon first reading, the article seems complicated. Then again, I don't know Canadian tax laws and how their financial dealings within the U.S. work in comparison to this country.

This brings me to an important point. Properties are not selling. Yet, too many realty agents are staying within their territory, comfort zone, and the same approach no matter what. Sellers should expect more, or start doing their own research and homework to help their property sell.

Instead of reading the constant flow of negative sales statistics and passing out business cards at the local flower show, agents should be at the library or online researching the answers to questions they have about the Canadian tax laws raised in this story. I would do that in an attempt to find out which price range(s) would be most appealing to Canadians. If I had to, I would contact a financial planner or expert I know and have him or her help me with answers.

And I would do this by this Friday, with the idea of identifying a price range and ways to make properties appeal to Canadian buyers both financially and logistically.

Why by Friday? Because I would want to place an advertisement for the coming weekend's publication, perhaps the Globe & Mail which ran this story. They would be publishing stories geared toward their target audience, which tells me they are reaching at least some affluent investors who would find the story interesting.

If those same people saw an advertisement the following week (while the original story is still fresh in their minds) it would likely draw some responses.

Presto. I could gain some Canadian buyers ready to move on one or more properties to their liking, and demonstrate the financial advantages to them. And then collect buyer commissions in the near future, while developing a network for the future.

If I had a large property to sell, I would probably do this personally, and then tell my realty agent I have a buyer but I'd want a commission reduction because I got that buyer on my own. Even if I don't get that consideration, I would have helped to get my property sold while others are still sitting around on the market.

Although I don't normally give away my commission generating ideas this easily, for the sake of example, here is the article I'm referring to:


http://www.theglobeandmail.com/globe-investor/personal-finance/the-ins-and-outs-of-buying-us-real-estate/article2022807/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Report%20On%20Business&utm_content=2022807


Keep thinking about who COULD buy your property, instead of retreading who can't or won't.

One Sale Does Not Change The Market

I'd like to think it was a reporter's attempt to make a story look like an important news story. No matter how large the amount of the transaction, this multi-million dollar mansion purchase is not a "market changer":


http://www.santafenewmexican.com/Local%20News/HIGH-END-Real-estate--10-5M-sale-could-signal-recovery


This story won't put a halt to other sales. But it also does not signal any trend. It is one transaction. In any real estate market, there are a limited number of multi-million dollar residential real estate transactions.

However, the story does cast a slightly negative light on the local market, and that is not good when it comes to the marketing of real estate. This story goes as far as to point out that this single transaction has a lot to do with the reported 18% increase in home sale prices for the quarter. Even though the property actually sold for less than it could have in better markets.

In other words, another potentially positive local real estate statistic shot down in flames. In this instance, it was by a reporter and not by a realty association, which seems to be the case in so many other cities.

As I have been saying for all these months, we need to change the "reporting" in order to change the mindset for marketing available properties.

I would like to think the reporter meant to say "Someone out there is willing to invest big bucks in the local real estate market" in a positive slant. Yet, adding in that this transaction was the reason for a home price increase and making it appear to be starting a trend took away any intended positive message.

The Rent vs. Buying Debate Continues

This is about to sound like I'm contradicting some past columns, but I don't think so.

Trulia.com web site has introduced statistical research designed to show that in many large cities it is "better" to buy a home than to rent.


http://info.trulia.com/index.php?s=43&item=123


Obviously, I'm in favor of ways to get homes to start selling at a much higher pace around the country. Yet, I don't think this is a way to accomplish this. For as much as I use statistics to make a point, to enhance my enjoyment of sports, and for a variety of reasons, I also understand that there are instances where statistics need to be better qualified to make the intended point(s).

In this case, the "decision" of whether to buy or rent is not based on statistical reasoning. The plane is not equal.

Fewer and fewer potential home buyers can qualify for a mortgage these days. Even fewer have sufficient funds for enough of a down payment to purchase and then secure a mortgage. Each time either or both of those situations occur, it takes away the "rent or buy" as an actual option. If they can't afford to buy, then renting becomes the only option.

Many people already know that the current real estate market is a buyers' paradise. Yet, as our elementary school teachers would have told us in this sentence, the same market does not contain a paradise of buyers.

What the statistics in the article fail to point out is that the majority of the people are not making the choice they are basing their information on.

One of my suggested results actually reduces the distinction between renting and buying, and it would open up both avenues for years to come.

I'll say it again. Make "Rent To Buy" a major part of our vocabulary. This is a drastic measure, but the state of real estate calls for it.

Make homes currently in status as bank foreclosures available for rental only via annual (or longer) leases. The monthly "rent" payment could be used toward a purchase after 5 years if the renter so chooses. After 5 years, the bank would have been collecting the "rent" money and would know the reliability of the tenant. This, instead of sitting on an empty home not generating any revenue at all.

If investors can't buy foreclosure properties at bargain prices, it instantly raises average home prices back toward the level of "real" sellers, instead of foreclosures pulling down the prices for everybody.

And those who currently cannot get a mortgage and/or afford a down payment have instant options.

Meanwhile, apartment buildings would then need more competitive rates for shorter term leases, which would likely help the rental market.

My reason for suggesting the 5 year period before the tenant could then "buy" the home is significant. Again, those consumers who have no other options (or a choice) would be able to establish some equity without the hassle of a down payment and initial mortgage. Yet, those who do have the funds for a down payment and the credit background for a mortgage could then buy now at lower prices. It is possible that 5 years from now, those who buy now could be able to turn that profit by selling high.

This situation can be created, and for everybody's benefit. But as of now, the 'rent' vs. 'buy' consideration is still not a choice. At least 80% of the time.

Finding The Best Candidate To Buy Your House

Looking to sell a home? Know your audience!

http://community.nasdaq.com/News/2011-04/allcash-home-sales-set-record.aspx?storyid=71985

This article from NASDAQ sums up the current real estate market as well as any other I have seen over the past 2 years. Yet, I’m not showing the link because I think this is a well done article. It is shown to make an important point.

The number of first-time home buyers has declined significantly, even compared with just one year ago when the market was already in decline. As this story relates, the trend for “investors” to pay cash for lower priced properties is still on the rise. While the tighter mortgage restrictions continue to make it a challenge for more and more people to get a mortgage, the number of first-time home buyers likely won’t be rising for some time.

Those who are currently home owners and would like to upgrade or downsize to a different home are often stuck with a mortgage they can’t get out of. If they take a loss to sell, they may not be able to afford what they want instead. And on it goes.

There is an important message in the NASDAQ story. Know your audience. If you are trying to sell your home, chances are you are doing everything you can to make it “family friendly” upon showings, and probably within your agent’s outside advertising. The above referenced article should make it clear that “family friendly” is not your audience.

Now, this doesn’t mean that you don’t need the new curtains or to keep the place looking good as new. But it does mean that you need to focus on the value of your home to an investor. That is who is buying, and, as statistics show, without the agony of waiting on getting a mortgage.

The priority should be on showing your potential buyer the ways your property for sale could make he/she/them money within the next 5 years. Although I have seen only a few examples of this of late, they are too few and far between.

One 3-bedroom home that I know of for sale has a lower level “family room”. It is not a basement, has window decorations and is a separate wing on that level. It so happens that the other homes in the development are all either 2 or 3 bedrooms. A few of the other units (both 2 and 3 beds) are also for sale, and now at well below the original new construction prices. Yet, only the advertising for this home points out that it is ready as a 4-bedroom home. At most, the current or new owner could put up a partition “door” and add more privacy, giving them a 4-bedroom home for under $100 (for the partition).

An investor with cash is more likely to see the value of getting a 4-bedroom house at 3-bedroom home pricing, knowing that he/she/they will eventually have a higher profit capability.

Again, based on current trends, being ready to show a cash investor how to get a 4^th bedroom in this home is a more likely “sale” than a first-time buyer with a big family knocking on your door to see it and then trying to get a mortgage.

Before I hear from realty agents out there, I am well aware there is a way this needs to be done. This property needs to be listed as a 3-bedroom home. Understood. But within the description and the “sales pitch” it should be clear that the easy opportunity exists to create a 4^th bedroom which would be larger than one of the upstairs bedrooms, without any room additions needed. That is targeting cash investors, and that is, at the moment, targeting who is buying.

Many homes for sale have at least one capability to increase in value with certain additions or improvements that cash investors would be interested in. A cash investor may not care about new curtains and new carpeting, which they could get for a few hundred dollars down the road when they are ready to sell. That same investor may instead notice if the property is zoned for an additional level, a pool, more parking, or whatever it may be.

Sellers should also monitor local business news. Watch for stories such as major retailers looking to open in specific cities or communities, new train or bus stations or routes, and new schools to be planned. A family, married couple, or individual probably doesn’t care about what will be built by 2016 nearby, but a savvy cash investor does. They can buy a property, hold on to it (without a mortgage to bog them down), maintain it, and be ready to put it on the market in time to be convenient to the new train station or whatever is being constructed.

Advertise the home without the “move in condition”, “near schools”, “breakfast nook”, and other sales points which target home buyers looking at 30 days from now. They either aren’t buying right now, can’t get a mortgage, or both. Advertise with any and every sales point that would cause a cash investor to see something that will be of value in 3 to 7 years. Know your audience.

Live In A Billboard?

The 'turn your house into a billboard' concept actually has some merit from a marketing standpoint.

If you haven't heard, an advertising company is looking at painting selected houses as advertising billboards for their clients, and paying each participating homeowner's mortgage for the length of the contract.

http://money.cnn.com/2011/04/05/technology/adzookie/index.htm">http://money.cnn.com/2011/04/05/technology/adzookie/index.htm>

Participants must own and live in the home, and there are some other qualifying points. But in this time of urgency in the real estate community, the thing to do is look at how this could help home sales.

I'm sure some of you are thinking "no way!" and how a home that is a billboard could make a neighborhood less attractive to potential buyers. That could be, but there are a number of positives to consider.

A homeowner having their mortgage paid for several months benefits with the opportunity to sock away a few thousand dollars. That money could be used for a home improvement, toward a down payment of a larger or smaller home in the near future, or to help pay off other debts.

Selfishly, the homeowner doesn't have to deal with an advertisement on the outside. Using my own warped logic over the years, I reason that I spend far more time looking at the inside of my home than the outside. Other people see the outside way more than I do.

Suppose you are a potential home buyer in a community where a home's exterior has been painted to become an advertisement. You would know that the "ad" home will be painted back to its original color(s) within a few months, and in fact will look BETTER at that time because of the fresh paint job. Chances are the seller(s) you approach will be more willing to reduce even further when you act like the "ad" home is a distraction to the neighborhood. Acting that way could get you an even better deal, saving you thousands of dollars, and getting a home sold within that community.

Even if people are annoyed at the "ad" home, they will be talking about it, and probably watching to see when it will be painted back. In today's real estate market, this would be a classic example of the "Any publicity is good publicity" theory of marketing.

With advertising being so omnipresent and scattered these days, having a house being an advertisement might not be any more annoying than large billboards that practically touch an expressway, advertisements in public bathrooms, on trains, buses, and everywhere else we look every day.

Let me add that I know nothing about the company planning this, am not compensated, and have no involvement in this project.

There could be positive benefits for people if this works. The real estate community needs every positive it can get. I can't paint that any clearer!

Can They Market Homes Better Than This?

I'm all for charitable donations and supporting a worthwhile cause. Meanwhile, the real estate market remains in a crisis, still lacking even one desparate measure in desparate times. I'm among those trying to come up with ideas and concepts to spur activity in the marketplace. I'm sure the charity mentioned in this story is worthwhile. Certainly the cause is.

http://www.stltoday.com/suburban-journals/metro/news/article_c996ae02-e223-5e29-9f70-0fa79adf73ea.html

The above story is about how a St. Louis area home builder will make a $1,000 donation to a specific charity for every home sold in a certain development. Fine and dandy - if you know of anyone who would purchase a home in order to have a charitable donation made. If someone is choosing between one of their homes and one or more others, would a charity donation sway their purchase?

I'm not wanting to sound mean. The intent is good. But the idea is to get buyers into homes. This "news story" really isn't good publicity. I'm disappointed that the reporter merely made this the P R piece the builder wants it to be.

Yes, I have a better idea for this very situation. Again, the idea is to get buyers into homes. How about these builders DONATE one of their homes to this charity? Let the charity "sell" the home to the highest bidder above a low reserve. This way, the "buyer" would likely get a better than ever price on a new home, AND it might be structured to be a huge tax deduction. (I'm not sure how the legal aspect would work, but I would like to believe some creative accounting could make this happen.) In addition to selling a home in this development, the builder would generate significant publicity from doing this and call attention to the entire development.

Buyers missing out on the "charity house" are likely to have come and taken a look. Maybe some would consider buying into the development, which would not have been a possibility otherwise. Perhaps other builders would look to do the same, whether for this charity or for another. One more idea out there to put buyers into homes.

Were Home Sales Statistics Truthful?

It's bad enough how many realty associations and industry organizations are adding fuel to the fire with the barrage of negative home sales statistics in this marketplace.

Now comes word that this might become a credibility issue as well. A Southern California based real estate data firm, CoreLogic, has issued a report claiming that the National Association of Realtors appears to have overstated sales of existing homes by as much as 20% over the past five years.

This puts a double whammy on the recent statistics. Many realty associations have been releasing data showing the drops in home sales with comparative statistics. These, of course, put the various local markets in a bad light. So if it indeed turns out that the earlier statistics (1 year ago, 2 years ago, etc.) were actually inflated, it means that home sales have been sluggish for even longer than these associations would have the public believe.

Now this is close to becoming a credibility issue totally separate from such a struggling market. The NAR shouldn't have to utilize its resources for crisis management while the very market it serves is in a crisis.

It has been too soon since the tragedy in Japan hit for us to realize how that is also another blow to the U.S. real estate market as well. Estimates are already coming that it will take upwards of five years to rebuild Japan. With the technology and innovations which have come from that country, I have to believe that international investors will be ready with funding to make sure it happens. That is funding which might otherwise be put into commercial properties and real estate related investing here in the U.S.

On the other side, think back to the early 90's and the California real estate boom. That "boom" was brought on in part due to overseas investors paying above and beyond the asking prices for upscale and high end homes in both Northern and Southern California. For many Japanese investors, high end homes in California were then a bargain compared with home prices in Japan at that time, even at inflated prices here in the States.

Now, especially with the incredible disaster facing Japan and the world, any such international activity in the United States is out of the question. Another blow to the U.S. market.

As much as I dislike using negative statistics in this marketplace (although I'm not representing a realty association in doing so), this is already showing up.

This past weekend, the Orange County Register (So. California) reported on the total sales for February 2011 as well as the first half of March for "luxury homes" (millions of dollars) in Newport Beach and Laguna Beach totaled: zero. After there were sales during January.

If only the focus could turn to how to get properties sold, instead of what the statistics should show.

The Industry Still In Denial

It was just another day of reviewing real estate news looking for something other than the usual real estate professionals releasing negative statistics. Until I came upon a story from Springfield IL.

Of course, the story contains several negative statistics released by the local Association of Realtors. What makes this story so incredible is how the Association President blames "the weather and high gas and food prices" for the drop in home sales.

See for yourself:


http://www.sj-r.com/top-stories/x1777816246/Weather-economy-cited-in-24-3-percent-home-sales-drop



It's time to blame the Assn. President for not giving this story a much needed positive twist. If I had read that during Feburary 165 home sales were completed in the Springfield IL area, I'd could have been impressed. That month included a severe blizzard, a substantial increase in gas prices, etc. Yet, during that time, an average of more than 3 homes were sold every day. Someone could have figured maybe there are reasons to buy in that area.

It can't be that so many agents are in such denial. At least, I hope not. This is perhaps the worst case of the "You wouldn't want to buy a home here, would you?" syndrome I have seen coming from industry members.

We should all be working on solving the current problem. It is getting more serious every day. Many of those who are not afraid to purchase and can afford to can't get a mortgage. Even more can't get rid of their current property to make their next purchase.

Yet, this guy wants us to believe that if there was not a snowstorm, if gas was still at $2.40 a gallon, and the food crop was better this winter, more homes would have sold.

Not exactly a solution.

Here is it a month later. The snow is all gone. I'm still putting gas in my car, and still eating my regular meals every day. But my house still hasn't sold after more than a year on the market.

I suppose that's because of the St. Patrick's Day parades? Guess we'll find out next month.

Would Outside Incentives Help The Purchase Market?

Some realty firms and builders have stepped up efforts with offers of an incentive, often worth thousands of dollars, to buyers upon closing. The trend seems to be leaning toward the incentive being something not specific to the property.

Offering or giving an incentive to a buyer is nothing new. In the past, it might be new furniture, a big screen TV, or some sort of a services discount or gift (i.e. free maid service for 3 months).

One big difference with incentives now is that many more are offered to buyers, whereas in the past it was often incentives to realty agents who brought the successful buyer. Even though it was about 20 years ago, I still remember a time I was doing a marketing presentation at a realty association meeting in the Los Angeles area. While waiting, several agents were pitching new listings they had to the other agents in order to draw attention in a then hot market.

The owner of a realty office with about 12 agents got up, pitched one of his listings, and then promised "an additional $5,000 in commission on a sale from any of you who get me an offer by 5:00 PM today". Now that was "creative selling" at its best!

Of course, at that time, his purpose was to attract attention to his listing and make other agents remember it ahead of hundreds currently available within the same area. And attract attention he did. Yet, the eventual buyer of that home had no clue. The "incentive" was used effectively where it needed to be.

Recently, I have seen sellers, realty companies, and builders offering some interesting incentives to the actual buyer. These range from a pick-up truck to installing hardwood floors. Some are specific to the property, others are geared toward the buyers.

A realty company in Birmingham AL offered a 4-year tuition to the University of Alabama Birmingham Medical School (over $22,000) with the purchase of a unit in an upscale development. The Birmingham News reported there were no takers. (On a separate note, that incentive was stopped. That was dumb to stop it. They should have continued it since not many other incentives are valued at more than $20,000, and if they got a "taker" the local and national publicity it would have generated would be worth far more than the amounts paid out!)

I also saw a news story about a seller who allowed the asking price to be reduced by $2,500 per week for several weeks.

In an active real estate market, such methods make sense when the idea is to make "your" property stand out. Agents and builders want buyers to consider their property ahead of others they are looking at. Of course, this assumes there are plenty of active buyers out there.

That's the difference. Right now, thousands of dollars worth of incentives don't matter nearly as much when people who want to buy can't get a mortgage and/or can't sell their current property to guarantee a move. Unless they are the right incentives.

For many, the "right" incentive would be a buyer for their current property so that it can lead to the next sale, or being able to get better financing for a first-time buyer.

Somehow, there has to be a way for "regular" sellers to compete against the foreclosures and short sales. But first, we need for buyers to compete. Period. The fact that there continues to be so many foreclosures and short sales on the market tells me that there people are not buying, even at lower prices.

Until people and investors can start buying a serious number of properties, a big screen TV or a pick-up truck won't make a difference.

Those Negative Home Sale Statistics

You would think that Realtors would know not to make things any more embarassing when it comes to their take on the current state of home sales.

Now comes word from Minneapolis that home sales in the Minneapolis area declined more than 30% when compared with one year ago for the last week in February. This "report" points out how that week's drop was more than double the 12% decline of the previous week. Put that "report" together and it spells an alarming and disturbing trend for anyone trying to or thinking of trying to sell a house or condo in that area.

This "report" tries to make the excuse that sales were higher a year ago because of the real estate tax credit which was available to first-time buyers and sellers under certain conditions at the time. That tax credit is no longer available. Therefore, by making this excuse, this "report" is really pointing out how the market conditions are really less favorable compared with one year ago since that tax credit is no longer available to anyone. Such a "reminder" to the concerned consumers reading that certainly doesn't help the situation either.

Yet, I am sorry to report that there is one more disturbing element to this "report", as if the negative news to current and potential sellers isn't already enough.

It seems that this "report" that contains all this discouraging information didn't even need to be released to the media to spread the word about how miserable the market is.

Let me put it another way. It SHOULD NOT have ever been released. It could have been prevented.

The source of this information is the Minneapolis Area Association of Realtors. You read that right. The dues money that agents and realty offices throughout the Twin Cities area is going, in part, to have information such as this released to the public.

Why there is this need for realty associations around the country to continue to pump out even one negative statistic is beyond me. I would understand if this information was coming from outside public companies, investment bankers, commercial property brokers, or banks which do not handle mortgages by way of news releases. Entities such as those are looking for large investor monies and would take the chance to bash something competing for investment dollars.

"People aren't buying real estate to make money, but if you invest with us, you could earn x% within 10 years", could be used to entice wealthy consumers to invest in long term bonds or certificates which assure a payoff at some point.

Instead, the industry continues to shoot itself in the foot. Worse yet, they are helping to take down thousands of current and potential home sellers in the process.

Having said that, I have other news to report specific to the Minneapolis area. During the last week of February 2011, just 2 weeks ago, 608 initial purchase agreements for houses or condos were signed. That means that, while some people are questioning the real estate market at the moment, about 600 properties were sold within one week's time in and around that major city! And that's without a tax credit or any other significant incentive.

In fact, I was able to verify that statistic with the Minneapolis Association of Realtors. It again shows that if you dig hard enough, you can find some good news for consumers.

More Ways For Banks To Send The Wrong Message

The majority of us can certainly understand the need to tighten up the mortgage industry after the fallout from too many subprime and high risk loans which failed a few years back. However, the punishment still doesn't fit the crime.

Getting a mortgage continues to become even more of a challenge these days, with upcoming additions to the process potentially raising costs for consumers and for mortgage brokers starting in April. At this point in the real estate crisis, issuing mortgages is no longer the problem.

New research starts out as a positive statistic, to indicate that more investors are paying cash for properties as they take advantage of the good deals out there for buyers. New research of the Southeast Florida market (from Palm Beach to Miami) shows that more than 54% of houses and condos sold there during the 4th quarter of 2010 were paid for in cash. (This research was provided by Zillow.com.) That comes to more than 7,500 sold properties PAID FOR WITH CASH!

The purpose of these statistics is to show that homes are selling and the deals for buyers are good. And that could be. In 2006, about 13% of homes were purchased with cash. From a little more than one in ten to more than half - in under 5 years. Of course, in 2006 there were plenty more mortgage programs more easily available.

What does today's trend have to do with the banks? Plenty.

Face it, the majority of the 7,500+ homes paid for with cash were bought by investors. I'm sure a percentage of them bought more than one property at these low prices.

Yet, these investors paid in full instead of going for mortgages. If you have the cash, you'll get a mortgage. But in just this one slice of the country, there were about 7,000 possible mortgage transactions that did NOT happen. It's time to look at why.

My guess is this is because of how little the banks have to offer in return for cash today, even when compared with 2006 when mortgages were the vast majority. A savvy investor wouldn't put up the entire $200,000 for a condo when they could get a decent return on a long-term CD instead. So they would get a mortgage, enjoy the tax advantage, and pay it off as scheduled, while investing the remainder of their funds someplace else.

It could have been CD's, Money Market, or other bank programs that paid more than the paltry amount they pay now. No reason for investors to look in that direction today.

If getting a mortgage wasn't such a hassle, a savvy investor could make a $40,000 down payment on 3 separate properties valued at $200,000 each, and have working capital left over to pay the mortgages for months to come. Then, they could invest their "working capital" into short and long-term CD's to grow their money toward future property payments, or use a home equity loan on one property to help pay down the others.

But now, these investors are passing by the mortgage opportunity and putting their trust into turning a profit as the market turns for the better. Heck, if an investor were to sell later this year and only make $5,000 more on a $200,000 property, they would likely do better than with a 6-month CD.

Some consumers watch for trends by investors. Now they can see that a bigger percentage of people buying property are NOT getting a mortgage, even when they could. Not exactly an incentive for the typical consumer to want to take out a mortgage to buy another property.

Oh, I also have a hunch that the 7,500+ sellers who received cash from the buyer probably didn't use their money to start a savings account and watch it grow.

Hopefully the banks will do what it takes to bring back the home mortgage as a viable option, before it's too late.