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Foreclosure Crisis Looms Large — Many Property Owners Getting Hurt!

Take even a cursory perusal of the financial headlines lately and you'll be inundated with tales of the so called "mortgage crisis" and of people loosing their properties to foreclosure. The situation is actually quite dire in many parts of the country, as this recent ranking of the top states for foreclosure filings (RealtyTrac, Aug. 2007) reveals:

1. Nevada
2. California
3. Florida
4. Georgia
5. Ohio
6. Michigan
7. Arizona
8. Colorado
9. Texas
10. Indiana
11. Tennessee
12. Massachusetts
13. Connecticut
14. Maryland
15. New Jersey
16. Illinois

As an active and successful real estate broker and author (who regularly counsels property owners facing foreclosure) I am naturally interested in these market trends and how they might affect my clients and customers. In order to gain a better understanding of market conditions I personally conducted an Internet survey targeted towards property owners from across the country who were facing foreclosure. In more than fifty responses to my survey, I was shocked at what I discovered.

I had assumed that the majority of respondents would be in the early stages of the process, trying to figure out how best to deal with a situation that was for them, looming on the horizon, but had not actually come yet. I figured that the responses would come from people about to miss their mortgage payments, who were trying to figure out how to minimize the damages of a situation they were about to face. In fact, all but one of the survey takers had already missed two payments and more than half had already missed four payments or more!

While it's true that fifty or so survey responses is a very small sample, it became apparent to me that most people were initially "hiding their head in the sand" rather than taking proactive steps to mitigate the negative effects of foreclosure, or possibly avoiding/stopping the process all together.

Understand that when it comes to the foreclosure process TIME IS YOUR WORST ENEMY! The worst thing that you can do is to do nothing! As soon as you even think that there might be a possibility that you'll not be able to meet your mortgage obligation, you should simultaneously take all of the following steps:

1. Call your lender and explain your situation - Do not hide from the lender! You do not want the lender to be against you, you want the lender to be working to help you.

2. Check into refinancing possibilities - See if you can refinance into a loan with more favorable terms that you'll be able to afford. This will not be possible if you are already missing payments, so take this step early.

3. Contact a real estate broker experienced in foreclosure loss mitigation and real estate short sales - Do not choose just any old broker! The broker should have formal foreclosure loss mitigation training and experience, and have extensive contacts with area lending institutions, attorneys, investors, and other brokers.

The bottom line to all of this is that time will not make the problem go away, but will only make the consequences of foreclosure worse. Avoiding or stopping foreclosure is a very realistic possibility if you face the problem early and take proactive steps to correct the problem. The process can be complicated, so do not hesitate to enlist the help of a professional real estate broker who is trained and experienced in foreclosure loss mitigation and real estate short sale techniques and procedures.

Finally, BEWARE OF SCAMMERS! Never agree to pay a so called "foreclosure rescue company" a large up-front fee! Don't do it — it's likely a scam (not 100% of the time, but 98% of the time). A genuine foreclosure assistance expert might reasonably ask for a nominal up-front servicing fee to offset such legitimate costs as document preparation, phone charges, postage, etc. Such fees should rarely exceed $100.00, or so. A reputable foreclosure expert will negotiate to have their compensation covered by the lender. Beware of anyone asking for $500, $1,000, $2,500, or more up-front in order to help you with your foreclosure. Don't do it!

John Michailidis is a recognized business consultant, attorney, success coach, and author of the WealthLoop^TM Series of books and training materials for aspiring entrepreneurs and investors.  Please use the contact form to get in touch with him regarding personal coaching and business consulting.  Download the FREE, 40-page, .pdf "Wealth Creation Manual."

Housing Downturn Portends Huge Opportunities for Astute Real Estate Investors (Vid)

If economist Dr. Christopher Thornberg is correct (as I suspect he is) huge opportunities lie ahead in the coming five years or so for real estate investors.  "What?", you might say after watching the video clips from his lecture, "He's predicting a cooling of the market — an outright downturn — so what makes this such a good time to invest in real estate?"

Smart investors know that money is made during times of change and market flux.  When things are flat, nobody makes money, but when things are changing, either running up or running down, that's when the money is made.  Just like the past few years was a boom for sellers, the next few years are primed to be a boom for "buyers".

Did you know that the famous "Merchandise Mart" in Chicago (a huge and sprawling commercial complex on the Chicago River in downtown Chicago) was purchased by the Kennedy family (John F. Kennedy's father) in the 1930's for pennies on the dollar compared to what the building had cost to build just a few years earlier?  That's a prime, if not extreme example of how money can be made in real estate during down times as well as up times.  If people were doing it during the height of the great depression, then you can do it in today's much more favorable market conditions.

The key is to understand exactly what is going on and to devise an investment strategy appropriate for current conditions.  Don't be a "one tool carpenter"!  What do I mean?  A one tool carpenter is the guy who uses a hammer no matter what the job calls for.  Need to cut some wood — he hammers it!  Need to drive a screw — this guy hammers it!  That's all wrong — use a saw to cut wood and a screwdriver to drive screws.  In the same way that a good carpenter has an assortment of tools designed to fit the job, A GOOD REAL ESTATE INVESTOR NEEDS TO HAVE AN ASSORTMENT OF INVESTMENT TECHNIQUES THAT MATCH MARKET CONDITIONS.

The techniques that would have made you money during the past five years are probably not the techniques that will make you money over the next five years.  Take the time to study today's market conditions and learn what investing approach is best under today's circumstances.  Rest assured, if you do your homework you will come to realize that there are huge opportunities out there for the smart real estate investor.

Watch the three clips below from Dr. Thornberg's lecture and post a comment of your thoughts to share with others — we want to know what you think!

 

 

 

 

 

 

 

John Michailidis is a recognized business consultant, attorney, success coach, and author of the WealthLoop^TM Series of books and training materials for aspiring entrepreneurs and investors.  Please use the contact form to get in touch with him regarding personal coaching and business consulting.  Download the FREE, 40-page, .pdf "Wealth Creation Manual."

 

For Real Estate Buyers and Sellers – These Are the Best of Times, and the Worst of Times

Have you been keeping track of the news lately?  On August 14, 2007, “Crain’s” reported Chicago area home sales down 19% in the second quarter.  A day earlier they reported, “Downtown [Chicago] new-home sales on pace to hit about 4,000 units this year. . .”  Sound good?  In 2005 there were 8,162 downtown units sold.

        The national outlook is even worse.  A recent report on eFinanceDirectory.com reported that, “Home foreclosure activity continues to soar nationwide over the past year, particularly in the states of Nevada, California, Arizona, and Florida.”  Think that’s their problem and it won’t affect us here?  A July 27, 2007, Chicago Sun Times article reported, “Nearly one in five sub-prime mortgages originated in Illinois in 2006 is projected to end in foreclosure.”  In plain English – there are going to be a whole lot of people in Illinois up shit’s creek without a paddle over the coming year.

        You can choose to sing “la-dee-da” as “Rome burns” or you can face the inevitable reality of what is about to happen.  Still not convinced?  Read this from an August 13, 2007, news story:

What about this one:

     My friends – the crap is about to hit the fan. Will you be prepared? For those who are not prepared, it will be an unholy bloodbath. For those who are prepared – it will be the greatest money-making opportunity of our lifetimes! As for me, I plan on getting rich. What about you? Are you going to keep your head in the sand and deny reality, or are you going to prepare yourself for the many opportunities that will ensue?

John Michailidis is a recognized business consultant, attorney, success coach, and author of the WealthLoop^TM Series of books and training materials for aspiring entrepreneurs and investors.  Please use the contact form to get in touch with him regarding personal coaching and business consulting.  Download the FREE, 40-page, .pdf "Wealth Creation Manual."

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