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MARCH MEETING MEETING: D.I.Y. (DO IT YOURSELF) NIGHT…AND WHEN YOU SHOULDN’T!
This month at Navigators of Pensacola, we will have 6 different specialized contractors (plumber, electrician, etc) that will give you some easy, do-it-yourself ideas on home repairs to help you save money and maximize profits on your own home, or your next rehab project.
They will also be sharing with you some instances in which it’s NOT a good idea to do the repairs yourself, and some of the potential pitfalls to working without the proper permits. This will be a fun and informative night for everyone!
It all starts TUESDAY, March 9th @ 6PM on the 2nd floor of the Pensacola Museum of Art, located at 407 South Jefferson in downtown Pensacola. Need a map? http://budurl.com/artmuseumpcola
As a SPECIAL BONUS, everyone in attendance will get a gift certificate worth over $100 in free home repair services. It’s just our way of saying thank you for making Navigators a part of your self-improvement experience. See you there!
Home Price Increase: 1st in 3 Years
Since late 2006 home prices had been falling, but in May 2009 they took a turn for the better with their first increase in 3 years. This trend has continued as quarterly gains were achieved again in January 2010, according to Clear Capital’s Home Data Index (HDI) Market Report, making it the eighth consecutive month of quarterly gains and the first national year-over-year price increase since 2006, pushing the yearly home price increase to 2.3%.
“It’s great to see the year-over-year positive gain in national home prices continue into 2010 the pricing stability we saw the last half of 2009,” said Dr. Alex Villacorta, Senior Statistician, Clear Capital. “The stabilization in prices is significant in that it has occurred despite near record levels of unemployment and REO saturation.”
With this recent rise in home prices, it is becoming increasingly clear that the end of the “buyer’s market” of the past few years is closer than ever before. The doors are closing on this opportunity of a lifetime and, if you’ve been hesitant to jump into the market, it’s time to get off the fence and pull the trigger (pardon the abundance of clichés). Carpe Diem homebuyers!
Forget Resolutions; It’s Time for a New Year’s Covenant!
Yes, it’s that time of the year once again. With the changing of the calendar, and a fresh 365 out in front of us, there are a few tr
aditions that we all must endure. For the next few weeks you will have to scribble out 2009 more times than you can count. The NCAA and its high-paying sponsors will force feed you a full course of meaningless college bowl games. You will be subjected to endless dieting & health club commercials with promises to help you shed those holiday pounds. And of course, it wouldn’t be a new year in America without January’s most overused and hackneyed phrase; The New Year’s Resolution.
Don’t get me wrong. I think that goals are one of the most important and integral steps in achieving positive change in a person’s life. I’m sure that there was also a time in our history when the word “resolution” actually meant something to people. After all, Webster’s Dictionary defines the term as, “the act of determining upon an action or course of action” and the root word resolve is defined as a “firmness of purpose.” Sounds pretty impressive, doesn’t it?
However, somewhere along the way, this powerful term of solemn commitment and dogged determination became more of a weak suggestion or impotent recommendation (remember those two dozen U.N. Resolutions passed against Iraq?). Perhaps it took place around the same time that “until death do us part” became “until something better or more exciting comes along.” Or maybe it was sometime after we witnessed yet another political campaign promise “change”, only to quickly turn back to business as usual as soon as their feet hit the beltway. Wit
h so many promises broken, and so few people who say what they mean and mean what they say, is it any surprise that we find it so easy to break these annual pledges to ourselves?
So this year, as we begin a new decade in each of our lives, let’s go ahead and strike the word “resolution” from our vocabulary and truly start anew. I propose that we choose a different term to describe our new year’s commitment to modify our behavior. Except this time, I think we should choose one that packs a little punch, and includes a true commitment to lifelong change. I think it’s time for all of us to make our very first New Year’s Covenant.
The term “covenant” is actually not a new concept at all, but rather the revival of an age-old one. In ancient times, when men made a covenant, they would cut the flesh of animals and walk in a figure 8 pattern between the torn pieces of flesh. This action signified a 
bond “unto death” and the commitment had two components. First, the covenantor was submitting himself or herself to a literal death as punishment for breaking the covenant, thus suffering the same fate as the sacrificed animals. Second, the act signified a death to one’s selfish agenda and ego-centrism. From the time of the covenant commitment, life became less about the individual’s comfort, and more about a commitment to the vow which they have made.
Somewhere along the way, resolution became something you try. A covenant is something you’re willing to die for. It’s that type of tenacity and unflinching determination that brings about true and lasting change in our lives. No challenge, setback, or misstep will keep you from fulfilling your covenant promise. If you fall, you get back up. If you fail, you give it another go. If people tell you that you can’t, you just smile politely and walk away telling yourself, “Yes, I can. Yes, I can!” That type of true, passionate resolve will ensure that you see your goals accomplished and your dreams become reality in 2010…and many more years to come!
Author’s Note: One of my New Year’s covenants is to post informative & inspiring content on this blog more often. Take a minute and let me know one of your new year’s covenants in the comment section below. God bless, and have a happy new year!
Does the Grass Look Greener?
“If the grass looks greener on the other side of the fence, you can rest assured that the water bill is higher there too.” –Maya Angelou
This is probably one of the best quotes I’ve read in a long time, and it’s so apropos when it comes to entrepreneurship. As a real estate agent, I have witnessed this “grass is always greener” mentality for many years. I have witnessed countless mortgage brokers, title agents, and real estate agents hop from company to company looking for that “right fit”. When business doesn’t take off for them like a rocket at the new company, their instinct is to immediately start looking for a new place to go. After all, it has to be the company, right? It couldn’t possibly be a problem with their work ethic, marketing plan, or implementation, could it?
I have seen this same phenomenon at work with friends and family members who are always involved with the latest network marketing or MLM craze. From Amway to Mary Kay, Noni Juice to Creative Memories, there is always a new get rich quick scheme that is going to solve all of their financial problems. When the “pie-in-the-sky” promise doesn’t immediately come to fruition, they fall hook line and sinker for the next “opportunity” that comes along. I am always amused when I get the same pitch as I’ve heard so many times before about how this new endeavor is “different” and it is a “ground floor” opportunity. Boy, if I had a nickel for every time I….Oh well, I digress.
Now don’t get me wrong, I am in no way criticizing the MLM companies. I don’t doubt their success stories for a second. In fact, I embrace their success stories and wish more people would learn from them. I can guarantee you that those who have achieved great success in any business, whether real estate, network marketing, or something completely different, did so by focusing their attention 100% on the task at hand. Successful people purpose in their hearts to do whatever it takes to achieve their goals. Their gaze is so fixed on the reward in front of them that they don’t have time to even look at the grass on the other side of the fence, much less determine whether or not it’s greener.
The point of Maya Angelou’s statement is this; If the grass is greener on the other side of the fence, there is good reason for it. The individual on the other side of the fence didn’t just get lucky, but rather made a sacrifice to do the things that other, less successful people were unwilling to do. It may have come in the form of a higher water bill, the expense and labor of applying fertilizer, or perhaps researching books and online articles on creating the perfect lawn. Whatever the difference was, it was not simply the location alone that made the grass greener. It was better decisions, harder work, and an unwavering attention to detail.
Whenever you find yourself tempted to start looking for the next big opportunity, ask yourself if you’ve really given everything to the last big opportunity. You may find that with a few small changes and a fresh commitment to doing the right things, you may just find success (and a greener lawn) right where you are.
Home Buyer Tax Credit Extended…& E X P A N D E D!
Well, the Washington D.C. faithful finally did it! After months of build up & endless speculation, the House of Representative has passed an extension of the home buyer tax credit by an overwhelming majority (403-12). In an attempt to stave off further job losses and boost an otherwise lackluster economy, the highly successful tax credit has been extended until June 30th and expanded to include 2nd time or “move-up” buyers as well.
Below is a quick run-down of the changes and improvements to the original bill signed back in February of this year:
1. First Time Homebuyers – First time home buyers (defined as those who have not had an ownership interest in a home for 3 years) still qualify for a credit in the amount of 10% of their purchase price, with a maximum of $8,000. However, the original deadline for closing has been pushed back from November 30th, 2009 to June 30th, 2010 as long as the house is under contract by April 30th, 2010. The income limits have also been raised to $125,000 for a single buyer (previously $75,000) and up to $225,000 for a married couple.
2. Current Homeowners – The tax credit has also been expanded to include “move-up” buyers, and provides a $6,500 credit for those who are selling their existing primary residence and moving to a new primary residence. The buyer must have lived in their current residence for at least 5 consecutive years out of the last 8 in order to qualify for the credit, and must be under contract on a new home between November 7th, 2009 and April 30th, 2010 (closing by June 30th). The income requirements are the same as 1st time homebuyers. According to Alec Phillips, an economist with Goldman Sachs, 70% of all current homeowners will be eligible for this new tax credit.
3. Additional Changes – A few other miscellaneous changes were made to the new plan as well. The credit can now only be used on primary residences purchased for less than $800,000 and only individuals above the age of 18 are eligible. In one of the strangest acts of fraud regarding the credit, a 4 year old child claimed the 1st time homebuyer tax credit back in October, prompting the change in age requirements.
There are some lingering questions as to whether the tax credit is worth the expense to tax payers or not. Some economists don’t believe that it will have that big of an effect on the overall housing market, however some estimates show it will cost the federal government up to $43,000 in lost revenue for every extra sale that the credit generates. With a ballooning federal deficit of nearly 1.4 trillion, some are concerned that the cost may be much greater than the benefit.
What’s my opinion? Well, the day that I’m voted in as President of the United States, I’ll start worrying about balancing the federal budget. Right now I’m simply an investor, trainer, and Realtor in Florida, and my current job is to make sure that all of my clients know about every possible benefit of homeownership. And to that end, the new homebuyer tax credit sure looks like a winner in my book.
For more information, check out this website provided by the Home Builders Association:
http://www.federalhousingtaxcredit.com/home.html
Questions about the credit or real estate in general? Send me an e-mail: matt@mattrobinson.org
Previous Related Posts:
http://mattrobinsonrealtor.blogspot.com/2009/05/big-big-news-for-1st-time-homebuyers.html
http://mattrobinsonrealtor.blogspot.com/2009/03/who-else-wants-8000-for-new-home.html
Short Sales - Why Banks Accept Them
I am often asked by newbie investors why banks are so willing to accept short sales, taking far less on the property than they are owed. It’s difficult for most people to wrap their head around why a bank, or any lender for that matter, would accept 40%, 30%, or many times even less as full payoff for a property. Well, there are actually a number of reasons why, and below I go through a few of those reasons in detail. I hope it helps!
1.) They’re not in the real estate business - What commodity 
do banking institutions supply to their customers? What is the product that they “sell” to others? That’s right, it’s MONEY. They have created this amazing system which, like a lamb being led to the slaughter, most of us willingly leap headlong into. We let them rent our money from us for 1-2% (money markey account), and then we rent it back from them for 5-6% to buy our home, 9-10% to buy our car, and 15-18% for our credit card expenditures.
And, after creating this ingenious system, the one thing that banks hate worse than anything in this world is whatever prevents them from implementing that system of selling (or renting) your money. This includes being saddled with real estate that they can’t sale, which is the reason why they hire real estate agents to list & sell their REO properties as soon as possible. They ARE NOT in the real estate business and they don’t want to be…PERIOD!
2. The cost of foreclosure - The 2nd reason why banks will oftentimes accept a short payoff is because of the exhorbitant cost of going through an 
entire foreclosure. The costs include, but are certainly not limited to, attorney’s & recording fees, missed payments, force placed insurance, back taxes, yard maintenance, and the list goes on and on. It can cost the bank anywhere from $40,000-$50,000 (OR MORE) to foreclose on a house.
***UPDATE FROM LAST MEETING*** A recent study released by Connecticut-based Clayton Holdings Inc. showed that lenders (from May to October 2008) lost an average of 56 percent on homes sold after foreclosure versus only 37 percent through short sales. Can you say, “Let’s Make a Deal!”
3. Loan Limitations - In my research I’ve heard a couple of different numbers, but when banks take back a home in foreclosure, they are not allowed to loan between 6-10 times the amount of the loan that they took back. Therefore, if they foreclose on a $100,000 loan, they are now unable to lend up to $1,000,000 of their money.
What was it again that banks do to make a profit and satisfy their shareholders? That’s right, they rent out your money. And if there is something preventing them from renting that money, they will do everything in their power to get that dead weight off of their balance sheets. That’s where you step in as the short sale investor. They have a problem, and you are offering a solution.
4. The Power of Wall Street - On Wall Street, having REO prope
rties on your books is like the kiss of death. To you or I, owning a house is an asset. However on a banks balance sheet, owning foreclosed property (REO) is considered a liability, and it doesn’t bode well for their stock price. These “non-performing” or ”toxic loans”, as they are affectionately called, are driving away investors by the droves, and causing the stock prices of the financial services industry to plummet.
As you can see, there are a number of reasons why a bank would be interested in selling you a house for much less than is owed on it. Never shy away from a property that is upside down or over-leveraged. Instead, learn how to become “short sale savvy” so you can profit from this highly profitable business. Take a minute and give me your thoughts by commenting below…
Who Else Wants $8,000 to Buy a New Home?
As part of last year’s Housing & Economic Recovery Act, Congress created a $7,500 First-Time Homebuyer** Income Tax Credit. It went into effect April 8, 2008 and was set to expire July 1, 2009. (For more, check out my October Real Estate Break video newsletter @ http://www.youtube.com/watch?v=8Y33jlKZW50) It’s primary goal was to remove some of the excess housing inventory in order to stabilize the real estate m
arket. Seeing as 1st time homebuyers make up over 40% of all home purchases, this seemed like a plan that was too good to fail.
However, one of the criticisms of the original “tax credit” was that a homebuyer who received it had to repay the IRS over a period of 15 years, effectively making it nothing more than an interest free loan. The last entity that most people want to owe money to is the Federal Government, and so very few people were taking advantage of the credit. And so, as is the case with most government programs and ideas, they needed a couple of attempts to get it right. Thus the 2nd phase of stimulus was born, affectionately referred to as the “American Recovery & Reinvestment Act.”
The new & improved 1st Time Homebuyer tax credit became effective on January 1st, 2009 and extended the credit to include purchases made prior to December 1st, 2009. The other improvements to the plan include:
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The buyer no longer must repay the credit, as long as the home is not sold within 36 months of purchase.
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The tax credit maximum has been raised from $7,500 to $8,000 (or 10% of the home’s purchase price, whichever is less)
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Purchasers can now use state/local revenue bond financing along with the credit.
For a more complete overview of the 1st time homebuyer tax credit, the American Recovery & Reinvestment Act, and how they can both be used by investors to sell homes faster, check out the audio recordings section of our website (You must be a member to access this area of the site).
See you at next month’s meeting,
Matt & Woody
**A “First-Time Homebuyer” is defined as an individual who has not had an ownership interest in any property in the past 3 years.