Assist2Sell

Love him or hate him, the Donald has had some success in Real Estate. He made an appearance on Larry King and spoke about the foreclosure mess. Here is a link to the video Donald Trump On Real Estate - Larry King Live Clip The clip is a little over a minute and worth a watch. Thanks for the Heads up Chris McPheeters in Bend, Or.

A Different Approach to Revitalizing the Housing Market

By Lyle Martin

 While U.S. Federal Reserve rate cuts and the economic stimulus package are helpful, they aren't enough to bring the economy back from the brink of recession.  I'm encouraged by some mortgage lenders' decision to temporarily suspend the foreclosure process through "Project Lifeline," but some drastic steps need to be taken to help a housing market that is obviously in trouble. 

Few would disagree that the explosive growth in the housing market (prices and inventory) over the past several years was stimulated by lenders providing easy financing.  As is typical with most major purchases, as financing becomes more affordable, an increase in demand will follow. 

While it is easy to blame "subprime" lenders, that serves no useful purpose.  In essence, they were simply satisfying a demand.  When a homeowner gets in over their head, shouldn't they be held responsible?  Shouldn't they have taken the time to understand what they were signing? 

In reality, they are no more to blame than those of us who got caught up in the "dot com" stock speculating.  Who wasn't tempted to jump on board what appeared to be a never ending booming stock market?  Watching home prices soar and the potential for homeownership start to escape the reach of the average consumer, who can blame people for jumping onboard before they were left behind? 

Just like the stock market appeared to have no ceiling, the housing "bubble" appeared immune to bursting.  Hindsight is 20/20 but just like the experts were unable to predict the crash of the housing market-and yes it is a crash-no one is able to predict the recovery.  Of course there will be a recovery.  Will it be in six months, two years or 10 years?  I can tell you that I don't believe our fragile economy can afford to wait for the market to self correct.  The market was driven up by some creative artificial influences and it is going to take some of that same creativity to get it back on track.

1. Roll Back Home Prices
Today's artificially inflated home prices need to be adjusted back down to a value more in line with the value of the dollar, adjusted for inflation.  This means rolling back prices to where they were at before "funny money" flooded the market.  Since home appreciation is not consistent in every area of the country, roll back will not be consistent.  In some markets, very little price appreciation was experienced.  Those areas don't need to undergo a big adjustment.  Other areas are even seeing normal appreciation.  Some areas, like most of Florida, California, Arizona and Nevada, need major adjustments.  They need to look at rolling back to pre-2003 prices, maybe even earlier.

Tough but necessary medicine.  Lenders are already accepting this reality as they write off billions in loan losses and sell off foreclosed homes or negotiate short sales.  Rather than have homeowners walk away from their homes, why not invite a compromise?  Forgive a significant amount of the loan balance-essentially re-setting the loan more in alignment with the new value of the home-and let them keep the home.

2. Promote Responsible Homeownership
Give people willing to take on the responsibilities associated with homeownership some extra help.  Yes, I said the responsibilities of homeownership.  Let's not make it so easy for first time homebuyers.  Their first home may not be their dream home but whatever happened to delayed gratification?  We need to encourage first time homebuyers to start small and work their way up. 

The government can play an important role by creating a new type of tax free savings account for first time homebuyers who want to save money for a down payment and closing costs.  Money put into the account should be exempt from income tax.  For example, if $10,000 is set aside in the account over a period of time, then the $10,000 (and all accrued interest) is not subject to income tax.  Watch how fast people save up a down payment.  Financial institutions will benefit from this influx of new savings, creating another source for mortgages besides Wall Street.  Homebuyers will appreciate their investment more when some of their hard-earned dollars are put in as part of the purchase.  

3. Extend Relief to Other Related Industries 

We also need to help the housing-related industries that are indirectly feeling the impact of the current housing market.  Builders, landscapers, home improvement businesses, etc.  Offer existing homeowners tax incentives for improving their homes.  There is a lot of work that is needed on a lot of homes.  New roofs; newer, more energy efficient heating and cooling systems; energy efficient windows; insulation, etc.  This can help businesses as well as the environment.

4. Don't Forget Rentals

Investing in rental real estate helps provide housing for those not interested or perhaps unable to purchase their own home.  Increase tax benefits for improving existing properties and eliminate passive income limitations.  Reintroduce the tax saving incentive of accelerated depreciation.  Shorten the depreciable lifetime on properties.  Loosen up the 1031 exchange rules to allow more time to move between investments. 

5. Emphasize Responsible Spending

In addition to not saving, many are struggling just to make minimum payments on their credit cards.  Consumers need help getting a better handle on their debt.  First, remove the temptation.  Restrict the deductibility of home equity loans used for consumer debt. The deductibility of home equity loans was just too tempting for people.  They borrowed against their hard earned equity to finance cars and home entertainment systems.  Financing cars for 30 years has got to stop.  Restore usury rates.  The rates people are paying on consumer debt are unconscionable.  When payday loan stores outnumber McDonald's, you know a crisis is looming.

We need to teach people more about real world financial issues.  Start in high school, maybe earlier.  Kids need to understand that CDs don't just play music.  To help people get unburied, restore for a limited time period, the tax deduction on existing consumer interest (such as credit card and auto loan interest). 

6. Encourage True Savings

Motivate people to save.  Look what happened in 1974 when Congress enacted the Employee Retirement Income Security Act (ERISA).  This Act created the Individual Retirement Account (IRA).  It started out simple and was overwhelmingly successful.  For many, it resulted in their first savings account ever!  Trillions of dollars in assets have been accumulated and IRAs represent the largest component of the U.S. retirement market.  With private sector businesses unable to provide the retirement programs, along with the challenges faced by Social Security, more attention needs to be paid to improving this system.  Boost contributions to IRAs by restoring tax deductible contributions to IRAs for everyone.

These are just a few ideas, and while some people smarter than me may find flaws, I believe this is the direction we need to explore.  

The consequences of continuing on the same course can only be the same results.  I've heard one definition of insanity is doing the same thing and expecting different results.  The Fed lowering interest rates time and again is not going to fix this problem.  You could lower the Fed rate to zero and people still would not be able to afford to buy a home or make payments on the home they already own.  Sending small checks to millions of people failed before.  Why do we think it will work now?  These challenging times demand real solutions.  Not Band-Aids.

Real estate veteran Lyle Martin is one of the original founders of Assist-2-Sell Inc., a full-service discount real estate company that was started in 1987.  Today, more than 550 Assist-2-Sell franchises offer full brokerage services to homebuyers and home sellers throughout the United States and Canada.  Find an office at http://www.assist2sell.com.  Contact Lyle at (775) 688-6060 or mailto:lyle@assist2sell.com.    

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Some soldiers in Iraq and Afghanistan had a happier holiday thanks to the local Assist-2-Sell office.  Doug Howell, Diana Hacker and Jean Howell, owners of Assist-2-Sell Buyer Seller Team, asked O'Fallon residents to support American troops by helping to create holiday care packages. More than 100 households responded by donating hundreds of items, including snacks, toiletries, games, music CDs, movie DVDs and more. The care packages were sent to soldiers in Iraq and Afghanistan in time for Christmas.

"We wanted do something to say ‘thank you' to the men and women who are serving our country, and the holidays seemed like a good time to let them know we were thinking about them," said Doug Howell.

Added Diana Hacker, "We were really happy to see so many people from our community come together to show their support for our troops."

If you would like to join Assist-2-Sell and show your support for American troops, visit www.anysoldier.com. This Web site is an easy way to send care packages to soldiers who are overseas.

Assist-2-Sell Buyer Seller Team is owned and operated by Doug Howell, Diana Hacker and Jean Howell. They opened the O'Fallon, Mo., office in July 2002. Assist-2-Sell, North America's Leading Discount Real Estate Company^SM, provides home sellers with full brokerage services for a low, flat fee, saving consumers more than $800 million in commission.[1] Homebuyers also have access to a full range of services, including Assist-2-Sell's exclusive listings databases. All brokers and agents are fully licensed and REALTORS®. On the Net: www.buyersellerteam.com.

[1] Savings based on statistics since January 1, 2000, for all Assist-2-Sell offices in North America compared to paying six percent commission. Six percent used for comparison purposes only. Commissions may be negotiable and are not fixed by law.

Elisa Mullins, owner/broker of Assist-2-Sell Premier Realty in Brentwood, Mo., was recently interviewed for an article about buying a home in today's market.

February 1, 2008
San Jose Mercury News
Cover - Mortgage math for today's market
Pinpoint the right type of loan for you
By Charles Scutt Content That Works Features

Thinking about buying a new home but suffering from pre-borrowing anxiety? Despite the subprime mortgage meltdown, tighter lending restrictions and widening foreclosure fears, the American dream of home ownership still is attainable so long as you know what to expect in the current mortgage loan climate.

The good news, according to Michael LaCour-Little, a finance professor at California State University-Fullerton, is that most borrowers those with good credit and some down payment or significant housing equity should not have difficulty obtaining financing today. It's the no-money-down loans to borrowers with weak credit that will be very hard to come by.

Elisa Mullins, a broker and owner of Assist-2-Sell Premier Realty in St. Louis, Mo., says that the average borrower can weather the current financing storm, especially if she or he has good credit, which typically equates to a credit score of 680 or higher.

They have the opportunity to be in the driver's seat and take a proactive approach toward their future to include buying into the American dream, Mullins says. The credit-worthiness of the borrower will secure favorable financing in today s market. That will open the buyer to a lot of different mortgage products that are not available to credit-risky borrowers.

Nevertheless, today's borrowers will have to prove that they can repay a loan without any problems, says Gavin Susman, COO of Sky Development, Inc. in Florida. They will have to abide by Fannie Mae s guidelines for debt-to-income ratios utilizing documented income. Gone are the days where you could get away with providing a letter from your employer stating how much you make.

Instead, you'll need to provide pay stubs with W-2 forms or tax returns, Susman says. If your income is not documented and you have bad credit, you will not be able to secure any mortgage unless you are financing no more than 70 percent of the value of the property, he says. Even then, you may have a hard time getting the loan.

Additionally, you can anticipate having to pay higher interest rates nowadays if you seek a non-conforming loan one exceeding $417,000 says LaCour-Little.

What's more, says Mullins, you should expect to have around 5 to 10 percent of the purchase price saved. If you cannot get the seller to credit the pre-paids and closing costs, then you will need to have an adequate down payment, the amount of which is contingent on your creditworthiness.

With lenders adding more restrictions, be prepared to pay more in borrowing fees as well, says Mullins. With fewer lenders out there today than in years past, it makes it more competitive among lenders. The fees will go up naturally as a result.

On a side note, while there may be fewer lenders, greater loan availability may be on the horizon, says LaCour-Little, thanks to the recent Federal Reserve cut in interest rates. However, even though the rate cut is likely to produce greater liquidity in the mortgage market, the rate cut itself is not likely to reduce most mortgage rates, since they tend to be tied to longer-term rates rather than the federal funds rate that the Federal Reserve controls, he says.

When mulling over your mortgage-loan options, it's important to scrutinize several key criteria, says Scott Christiansen, a senior mortgage professional with WestCal Mortgage Corp. in Southern California.

Consider your income today vs. income in the future, he says. Look at potential tax breaks, and spread out your investments the amount of money you put into your home vs. other investment vehicles. Work with a mortgage professional who comes recommended and whom you trust. Lastly, do your homework and take action. Times change, and so do financing programs, so what is available this week may not be next week.

Doing your homework inevitably involves checking your credit score and analyzing your credit report carefully, says LaCour-Little. If you do identify any problems, try to resolve them before applying for a loan.

Though they've gotten a lot of bad press lately, don t be too quick to dismiss adjustable-rate mortgage options, says Christiansen.

ARMs are still a great option for the informed borrower, he says. ARMs are designed to fit a borrower s time line and payment range. If you re going to live in a home for three to five years, look at a five- to seven-year ARM. If you plan on living in a home for 20 years, and you elect to go with a five- or seven-year ARM, then you run the risk of the rate being higher at the adjustment period. Many lenders and borrowers went about the last few years as if the housing market could do nothing but grow. There are always adjustments, corrections and changes, and all should be considered when selecting the best mortgage-financing solution.

If you get turned down by a lender, don't despair, says Mullins.

This is a sign of the times a good sign, she says. Lenders are finally putting in some safeguards to help buyers recognize when they should not be buying. Get the tools you need to clean up your credit and other personal situations before you decide to take on any debt you can t afford.

LaCour-Little says that approximately 20 to 30 percent of mortgage-loan applications are declined each year. It s not the end of the world, he says. Different lenders have different underwriting guidelines, so you may simply need to apply to another lender.

Ultimately, remember that banks make money lending money, says Christiansen. The days of a real estate investor coming in without a job, with terrible credit and almost no money in the bank and buying homes and apartments may very well be over. But smart money is still available to smart borrowers.

Assist-2-Sell Buyers & Sellers Edge Announces Top Producers for 2007

In 2007, Assist-2-Sell agent Allan E. Brown listed thirty-nine homes. Allan has been with the company for almost two years. Allan brings a variety of talents and expertise to the business. Allan's talents are unique to the real estate market. One of his specialties is to provide sellers with a DVD video of their listed property. This excites sellers and allows the video to be seen on multiple websites including Realtor.com, Homes.com, You-Tube, etc... Additionally, he achieved the NJAR Circle of Excellence award for 2007.

Robert Blackburn, who has been with Assist-2-Sell® for two years, sold sixteen homes and is also an NJAR Circle of Excellence award recipient for 2007. As a former military officer, Robert brings discipline and structure to the real estate environment. Robert enjoys working with buyers, successfully fulfilling their housing wishes and needs. His success has been documented with letters of testimony from very satisfied buyers.

About Assist-2-Sell Buyers & Sellers Edge
Based in Hamilton, NJ, Assist-2-Sell Buyers & Sellers Edge was opened by Michael J. Sinton in September 2005. As "North America's Leading Discount Real Estate CompanySM," Assist-2-Sell® provides home sellers with full brokerage services for a low flat fee, saving consumers nationwide more than $800 million in commission.[1] The company also offers a full range of services to homebuyers, including access to millions of listings through Assist-2-Sell's unique databases. Sinton and his agents are fully licensed and members of the National Association of Realtors®. For five straight years Entrepreneur Magazine has recognized Assist-2-Sell as one of the leading franchises and Assist-2-Sell Buyers & Sellers Edge has been honored as Assist-2-Sell's Top Ten Percent for October of 2007. Assist-2-Sell Buyers & Sellers Edge is individually owned and operated. On the Net: www.WeSellCentralNJ.com.

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