One of the most powerful things in your life is your vision (or lack thereof) and your perceived mission.
To help crystallize direction for your life and business develop a personal mission statement. Ask yourself what you alone you can do. Not what can you do, but what is it that won’t get done if you alone don’t or won’t do it.
Here’s a simple guide to developing your personal mission statement -
Definition of Mission - The special duty or function for which someone is sent as a messenger or representative; and the special task or purpose for which a person is apparently destined in life; a calling.
What is your personal mission statement? - Your personal mission statement focuses on the special purpose you want to achieve in your life and the special approach you will take to achieve it. It is the consequence of your mission being achieved. It is a description of how the world will be after you’ve traveled through it.
A clarifying question - “If we were meeting back here on ______________________, and you were looking back over the preceding ______________, what would have to have happened during those years for you to feel really good about yourself, your life, and the fulfillment of your personal vision?”
Answer this question to state your Personal Mission Statement- “My unique mission is…”
Once we have vision and mission clearly identified, it becomes very easy to make life changing decisions. Whenever I am faced with a fork in the road of life, The answers will simply fall into place when I simply weigh my options against my vision and mission and ask - “Is this in line with who I am?” and “Does this bring me closer to where I know I need to go?”
Tuesday, October 20, 2009
The First Step is Always the Same
When it comes to achieving your financial goals the first step is always same. No matter where you are on the financial spectrum everyone starts with the same first step. Whether you want to retire, start a business, go on a dream vacation, buy a second home, start a college fund for the kids, or whatever your financial goal it all starts with one simple step. Save money! It may be simple but that doesn’t necessarily translate into being easy. In order to have the tool you need to actively pursue your dreams you have to spend less than you make.
“We are all self-made. But only the successful will admit it.” Unknown
In the 1940 essay, The Common Denominator of Success Albert E.N. Gray tells of his journey to discover the secret to success. After pouring through numerous biographies, autobiographies, dissertations, and the lives of successful men, Mr. Gray discovered this powerful and vitally important common denominator. “The common denominator of success - the secret of success of every man who has ever been successful - lies in the fact that he formed the habit of doing things that failures don’t like to do.” (Albert E.N. Gray, 1940).
If you want to be financially successful you must separate yourself from the masses. You must be able to do the things that most others do not like to do. For us the first step is clear, you must live within your means, you must save money. The following chart from the Bureau of Economic Analysis, U.S. Department of Commerce shows us that the vast majority of Americans do not save money and/or those who do save very little.
Thus applying the common denominator of success you can see that the first step is critical because you will be doing something that most people fail to do. Think of it this way: Being Financially Independent => In the Minority <= People Who Save Money.
So why haven’t I been able to save money? Once we understand the importance of saving money and how it puts us on the track to wealth we change our attitude and become motivated. The problem is that motivation and attitude are not enough. In order to be successful you must transform your words, thoughts, and efforts. These three transformations are true for financial success and are definitely applicable for implementing the first step. In order to achieve your financial goals you must transform the words you use, you must transform how you think, and you must transform where you place your efforts. For some this may be a reminder and serve to refresh and refocus what you are already doing. For others this may be new and will require a little introspection to grasp how this works. Because it is so important to our future success we will explore these three transformations further. Remember it’s simple but not necessarily easy.
The first transformation required for success seems inconsequential but is possibly the most important of all transformations. Transforming your words. One of the most powerful things you can do is to change your vocabulary. Vocabulary is a big part of learning any new specialty. If you want to achieve success in a particular field you must learn the vocabulary. Doctors, Lawyers, and Wall Street Brokers all use their own language. Words affect our thoughts, thoughts affect our actions, and actions affect our success. We all know the subtle difference between “I need” and “I want” or “I can” or “I can’t”. The words you use set the stage, they program your life.
If you want to save money you have to change the words you use. For example, some of us like to justify our spending by saying “I deserve it” but what we should be asking is “Can I afford it?” meaning what will it cost me in terms of achieving my financial goals and dreams. You can treat yourself but only to the extent that you can afford it and it doesn’t detract from your financial goals. If you’re always saying that “I never have enough money” and “I can’t save a dime” then what is the most likely outcome. It truly is the little decisions that compound over time to add up to wealth or indebtedness. When you consciously understand the impact of the little decisions you begin to change the words you use and that changes the way you think.
Transforming your words is not enough you must also transform your thoughts. Thoughts shape your life. If you want to change something in your life you must change the way you think. Often times the reason we don’t save money is because we think it is about denying yourself. If you operate out of this paradigm you will find saving money to be an unrewarding activity. You’ll feel that you are constantly giving up things, denying yourself, and missing out. Through that paradigm it’s no wonder you don’t save money (i.e. spend less than you make.)
You must shift your paradigm and see saving money for what it really is. It’s about opening up opportunity, about giving yourself the one tool you need to actively pursue your dreams. Saving money isn’t about denying yourself it is about taking control and becoming actively engaged in building wealth and creating possibilities. You can’t retire, start a business, go on a dream vacation, buy a second home, start a college fund for the kids, or achieve any financial goal without saving. Still some people plan on a windfall or the winning the lottery to achieve these goals. They never realize the power to change and to achieve their financial goals is as simple as spending less than you make. Once you make the paradigm shift you begin to transform your thoughts you’ll look at saving money in a whole new way. No longer is it about denial. Instead it is about unlocking the life you’ve dreamed and reaching your financial goals. Shifting your paradigm to this new way of thinking revolutionizes the decisions you make about money and directly impacts your desire and ability to save money. With this knowledge in hand you’ll begin to transform your efforts.
”If you want something you’ve never had you have to do something you’ve never done.”
Transforming your efforts requires a change in the way you have approached things in the past. We must make decisions and choices that we have not been making (usually the ones we know we should make but don’t). Some have this part locked on but others know they could be putting forth more effort. But effort for effort’s sake is not the point. Misguided effort just compounds the problem. The key is to focus on what you can control. You could be putting forth tremendous effort but if your efforts are focused on things you can’t control you will get frustrated and withdraw.
This is especially true when it comes to the little things. For example, if you have made a commitment to saving and someone asks if you want to spend money on a new Rolex you’ll probably say no and stay committed to our goals. However if you’re hungry and you’re asked if you want to go out to eat you might easily say yes. Then while out to eat you figure what’s a few extra dollars for desert and/or drinks. Next thing you know your spending money on things you really don’t want. We must be consciously aware of the little things that sneak up and cause us to lose focus on what is truly important in our financial picture.
It’s important that you focus on the things you can control not on the things you can’t. Most of us spend time focusing our efforts on things we can’t control at the expense of things we can. For example, we hear about people concerned about the price of gas but for most of us, despite the hype, there is very little we can do to affect the price of gas. Despite complaining about gas it doesn’t stop some from driving to the mall and spending money on clothes they don’t really need. Often we think we don’t have enough money because we don’t make enough money. So we don’t coupon shop or recycle cans (things within our control) because that stuff seems insignificant. Instead, we focus on how much money we make (out of our control) which causes us to lose focus on the everyday little things we can do.
The key to transforming your efforts is to walk your talk or at least, in the beginning, stumble your mumble. Focus your efforts on things you can control and make decisions and choices about what you will do with your money based on what is truly important to you. There are lots of little decisions that add up over time and mean the difference between success and failure. You should endeavor to align your efforts with reality, to focus on the little things you can control and stop using the big things as a distraction or excuse.
The first step is the same for everyone no matter how much money you have. You have to save money, you have to spend less than you make. If you make a million dollars and spend $1.2 million then you are broke. Remember, the rich have the same problems as everyone else just with more zeros. In order to accomplish this simple yet sometimes difficult task we must transform our words, thoughts, and efforts. Our words, thoughts and efforts have immense power. Choose them carefully and begin to create a successful life and achieve your financial goals.
“We are all self-made. But only the successful will admit it.” Unknown
In the 1940 essay, The Common Denominator of Success Albert E.N. Gray tells of his journey to discover the secret to success. After pouring through numerous biographies, autobiographies, dissertations, and the lives of successful men, Mr. Gray discovered this powerful and vitally important common denominator. “The common denominator of success - the secret of success of every man who has ever been successful - lies in the fact that he formed the habit of doing things that failures don’t like to do.” (Albert E.N. Gray, 1940).
If you want to be financially successful you must separate yourself from the masses. You must be able to do the things that most others do not like to do. For us the first step is clear, you must live within your means, you must save money. The following chart from the Bureau of Economic Analysis, U.S. Department of Commerce shows us that the vast majority of Americans do not save money and/or those who do save very little.
Thus applying the common denominator of success you can see that the first step is critical because you will be doing something that most people fail to do. Think of it this way: Being Financially Independent => In the Minority <= People Who Save Money.
So why haven’t I been able to save money? Once we understand the importance of saving money and how it puts us on the track to wealth we change our attitude and become motivated. The problem is that motivation and attitude are not enough. In order to be successful you must transform your words, thoughts, and efforts. These three transformations are true for financial success and are definitely applicable for implementing the first step. In order to achieve your financial goals you must transform the words you use, you must transform how you think, and you must transform where you place your efforts. For some this may be a reminder and serve to refresh and refocus what you are already doing. For others this may be new and will require a little introspection to grasp how this works. Because it is so important to our future success we will explore these three transformations further. Remember it’s simple but not necessarily easy.
The first transformation required for success seems inconsequential but is possibly the most important of all transformations. Transforming your words. One of the most powerful things you can do is to change your vocabulary. Vocabulary is a big part of learning any new specialty. If you want to achieve success in a particular field you must learn the vocabulary. Doctors, Lawyers, and Wall Street Brokers all use their own language. Words affect our thoughts, thoughts affect our actions, and actions affect our success. We all know the subtle difference between “I need” and “I want” or “I can” or “I can’t”. The words you use set the stage, they program your life.
If you want to save money you have to change the words you use. For example, some of us like to justify our spending by saying “I deserve it” but what we should be asking is “Can I afford it?” meaning what will it cost me in terms of achieving my financial goals and dreams. You can treat yourself but only to the extent that you can afford it and it doesn’t detract from your financial goals. If you’re always saying that “I never have enough money” and “I can’t save a dime” then what is the most likely outcome. It truly is the little decisions that compound over time to add up to wealth or indebtedness. When you consciously understand the impact of the little decisions you begin to change the words you use and that changes the way you think.
Transforming your words is not enough you must also transform your thoughts. Thoughts shape your life. If you want to change something in your life you must change the way you think. Often times the reason we don’t save money is because we think it is about denying yourself. If you operate out of this paradigm you will find saving money to be an unrewarding activity. You’ll feel that you are constantly giving up things, denying yourself, and missing out. Through that paradigm it’s no wonder you don’t save money (i.e. spend less than you make.)
You must shift your paradigm and see saving money for what it really is. It’s about opening up opportunity, about giving yourself the one tool you need to actively pursue your dreams. Saving money isn’t about denying yourself it is about taking control and becoming actively engaged in building wealth and creating possibilities. You can’t retire, start a business, go on a dream vacation, buy a second home, start a college fund for the kids, or achieve any financial goal without saving. Still some people plan on a windfall or the winning the lottery to achieve these goals. They never realize the power to change and to achieve their financial goals is as simple as spending less than you make. Once you make the paradigm shift you begin to transform your thoughts you’ll look at saving money in a whole new way. No longer is it about denial. Instead it is about unlocking the life you’ve dreamed and reaching your financial goals. Shifting your paradigm to this new way of thinking revolutionizes the decisions you make about money and directly impacts your desire and ability to save money. With this knowledge in hand you’ll begin to transform your efforts.
”If you want something you’ve never had you have to do something you’ve never done.”
Transforming your efforts requires a change in the way you have approached things in the past. We must make decisions and choices that we have not been making (usually the ones we know we should make but don’t). Some have this part locked on but others know they could be putting forth more effort. But effort for effort’s sake is not the point. Misguided effort just compounds the problem. The key is to focus on what you can control. You could be putting forth tremendous effort but if your efforts are focused on things you can’t control you will get frustrated and withdraw.
This is especially true when it comes to the little things. For example, if you have made a commitment to saving and someone asks if you want to spend money on a new Rolex you’ll probably say no and stay committed to our goals. However if you’re hungry and you’re asked if you want to go out to eat you might easily say yes. Then while out to eat you figure what’s a few extra dollars for desert and/or drinks. Next thing you know your spending money on things you really don’t want. We must be consciously aware of the little things that sneak up and cause us to lose focus on what is truly important in our financial picture.
It’s important that you focus on the things you can control not on the things you can’t. Most of us spend time focusing our efforts on things we can’t control at the expense of things we can. For example, we hear about people concerned about the price of gas but for most of us, despite the hype, there is very little we can do to affect the price of gas. Despite complaining about gas it doesn’t stop some from driving to the mall and spending money on clothes they don’t really need. Often we think we don’t have enough money because we don’t make enough money. So we don’t coupon shop or recycle cans (things within our control) because that stuff seems insignificant. Instead, we focus on how much money we make (out of our control) which causes us to lose focus on the everyday little things we can do.
The key to transforming your efforts is to walk your talk or at least, in the beginning, stumble your mumble. Focus your efforts on things you can control and make decisions and choices about what you will do with your money based on what is truly important to you. There are lots of little decisions that add up over time and mean the difference between success and failure. You should endeavor to align your efforts with reality, to focus on the little things you can control and stop using the big things as a distraction or excuse.
The first step is the same for everyone no matter how much money you have. You have to save money, you have to spend less than you make. If you make a million dollars and spend $1.2 million then you are broke. Remember, the rich have the same problems as everyone else just with more zeros. In order to accomplish this simple yet sometimes difficult task we must transform our words, thoughts, and efforts. Our words, thoughts and efforts have immense power. Choose them carefully and begin to create a successful life and achieve your financial goals.
Friday, October 16, 2009
Double-digit mortgage rates on horizon?
At a recent real estate conference, I found myself standing next to Richard Williams, a Century 21 Realtor from the Atlanta area, who had founded something called Clickit Inc., which provides flat-fee pricing for sales and listings. I would say we chatted, but Williams is a born raconteur and I mostly just listened.
After a while, a young man from New York joined us and in the course of the shifting conversation, the Big Apple dude wistfully noted he was renting an apartment but considering buying a condo. Williams turned his attention to the young fellow. "Now is the time to buy," he exclaimed.
The reason for Williams' emphasis on buying now? Was it because housing prices had gotten so low that good deals were everywhere? Actually, no. Williams strongly suggested to the New Yorker he should make his investment sometime this year as expectations are that interest rates were bound to rise and wouldn't stop climbing until they hit double digits. That would make any future purchase considerably more expensive than it would today.
I, too, expect interest rates to start heading north again, but double digits seemed far out there -- not in terms of a time line, but psychologically.
Williams rationalized that at some point in the near future, the economy was going to elevate very dramatically, which would raise the specter of inflation. If that happened, the Federal Reserve would push up interest rates to keep inflation under control.
I didn't disagree with that scenario. However, I don't believe the economy, when it does turn around, will take off like a rocket, so the government's need to contain a budding inflationary climate would be moderate at best.
There are other factors to consider as well.
Interest rates have been kept low since the short recession at the turn of this century, and this was one of the causes of the housing bubble that lasted until 2007. Once the economy stabilizes, I figure the Fed might want to raise interest rates, thus slowly bringing them back to more sustainable levels, something like 3-4 percent.
Then there is the massive pumping of stimulus dollars into the economy.
Globally, the first major nation to experience economic recovery has been Australia, and there is already speculation interest rates will start to rise there. Now, tell me if this doesn't sound familiar: as the Wall Street Journal reported, Australia's recovery comes at a time "when huge amounts of government stimulus are still coursing through the Australian economy, raising fears of higher inflation in the years ahead if the central bank doesn't start raising rates fairly soon."
All those stimulus dollars have to come from somewhere. Sure, we could just print more money, but that would be hyperinflationary, so the federal government, instead, borrows it, which is less inflationary.
There are concerns about the budget deficit, which "looks like it is going to be huge," notes Celia Chen, a senior director at Moody's Economy.com. "If the budget deficit is too large, then the government is borrowing a lot and having to issue more Treasury bonds. That will cause the price of Treasuries to fall and if that happens, yields have to increase and interest rates will rise."
No matter, how one slices and dices the economic prestidigitations, pressure continues to build on the government to raise interest rates, probably next year.
"There is no doubt that interest rates are going to have to go up," says William Conerly, an economic consultant and author of "Businomics From the Headlines To Your Bottom Line: How To Profit in Any Economic Cycle."
At some point the Federal Reserve is going to have to worry about inflation, Conerly adds. "Certainly not in 2009, but in 2010 the Fed will probably start pushing up short-term interest rates. If the economy gains some steam in the second half of this year, the long-term markets will push rates up even before the Fed tightens, so we'll see Treasury yields rise even further between now and spring 2010."
As of the third quarter, the spread between mortgages and the 10-year Treasury was wider than normal, which will narrow, but that won't be enough to prevent the cost of borrowing from getting more expensive. Does that mean Richard Williams was on target in soothsaying interest rates and subsequently mortgage rates will be heading into the double-digit range, thus making home purchases considerably more expensive?
In summer 2009, mortgage rates had risen from below 5 percent earlier in the year to about 5.2 percent, and Conerly's predictions are that the 30-year fixed mortgage rate will climb to 7.7 percent at the end of 2010.
Chen's crystal ball shows a more conservative picture. "We have the fixed-rate climbing to 6.6 percent in 2010," she says. "We expect mortgage rates to rise to 6.9 percent in mid-2011 and we don't have those numbers going above 7 percent until the year 2012."
Chen expects a reasonable economic rebound but inflation remaining at bay. Still, she recognizes there are some risks ahead. "Those predicting a higher mortgage rate are worried about too much credit on the market and the Fed having to keep inflation from creeping back," she adds.
I bought my first home back in the 1970s. Apparently, sometime around then so did Conerly, because we both remember having to acquire homes at double-digit interest rates. Indeed, it wasn't until 1985 that interest rates fell below double digits. The concern about interest rates rising past what to some is the seemingly astronomical 6 percent mark brings considerable levity to Conerly's demeanor.
"I hear real estate brokers whining that interest rates, which have been at record lows, may go up to 6.5 percent," he says. What these brokers don't realize, he adds, "is that they are really living in the golden age of mortgage rates."
Steve Bergsman is a freelance writer in Arizona and author of several books, including "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade."
After a while, a young man from New York joined us and in the course of the shifting conversation, the Big Apple dude wistfully noted he was renting an apartment but considering buying a condo. Williams turned his attention to the young fellow. "Now is the time to buy," he exclaimed.
The reason for Williams' emphasis on buying now? Was it because housing prices had gotten so low that good deals were everywhere? Actually, no. Williams strongly suggested to the New Yorker he should make his investment sometime this year as expectations are that interest rates were bound to rise and wouldn't stop climbing until they hit double digits. That would make any future purchase considerably more expensive than it would today.
I, too, expect interest rates to start heading north again, but double digits seemed far out there -- not in terms of a time line, but psychologically.
Williams rationalized that at some point in the near future, the economy was going to elevate very dramatically, which would raise the specter of inflation. If that happened, the Federal Reserve would push up interest rates to keep inflation under control.
I didn't disagree with that scenario. However, I don't believe the economy, when it does turn around, will take off like a rocket, so the government's need to contain a budding inflationary climate would be moderate at best.
There are other factors to consider as well.
Interest rates have been kept low since the short recession at the turn of this century, and this was one of the causes of the housing bubble that lasted until 2007. Once the economy stabilizes, I figure the Fed might want to raise interest rates, thus slowly bringing them back to more sustainable levels, something like 3-4 percent.
Then there is the massive pumping of stimulus dollars into the economy.
Globally, the first major nation to experience economic recovery has been Australia, and there is already speculation interest rates will start to rise there. Now, tell me if this doesn't sound familiar: as the Wall Street Journal reported, Australia's recovery comes at a time "when huge amounts of government stimulus are still coursing through the Australian economy, raising fears of higher inflation in the years ahead if the central bank doesn't start raising rates fairly soon."
All those stimulus dollars have to come from somewhere. Sure, we could just print more money, but that would be hyperinflationary, so the federal government, instead, borrows it, which is less inflationary.
There are concerns about the budget deficit, which "looks like it is going to be huge," notes Celia Chen, a senior director at Moody's Economy.com. "If the budget deficit is too large, then the government is borrowing a lot and having to issue more Treasury bonds. That will cause the price of Treasuries to fall and if that happens, yields have to increase and interest rates will rise."
No matter, how one slices and dices the economic prestidigitations, pressure continues to build on the government to raise interest rates, probably next year.
"There is no doubt that interest rates are going to have to go up," says William Conerly, an economic consultant and author of "Businomics From the Headlines To Your Bottom Line: How To Profit in Any Economic Cycle."
At some point the Federal Reserve is going to have to worry about inflation, Conerly adds. "Certainly not in 2009, but in 2010 the Fed will probably start pushing up short-term interest rates. If the economy gains some steam in the second half of this year, the long-term markets will push rates up even before the Fed tightens, so we'll see Treasury yields rise even further between now and spring 2010."
As of the third quarter, the spread between mortgages and the 10-year Treasury was wider than normal, which will narrow, but that won't be enough to prevent the cost of borrowing from getting more expensive. Does that mean Richard Williams was on target in soothsaying interest rates and subsequently mortgage rates will be heading into the double-digit range, thus making home purchases considerably more expensive?
In summer 2009, mortgage rates had risen from below 5 percent earlier in the year to about 5.2 percent, and Conerly's predictions are that the 30-year fixed mortgage rate will climb to 7.7 percent at the end of 2010.
Chen's crystal ball shows a more conservative picture. "We have the fixed-rate climbing to 6.6 percent in 2010," she says. "We expect mortgage rates to rise to 6.9 percent in mid-2011 and we don't have those numbers going above 7 percent until the year 2012."
Chen expects a reasonable economic rebound but inflation remaining at bay. Still, she recognizes there are some risks ahead. "Those predicting a higher mortgage rate are worried about too much credit on the market and the Fed having to keep inflation from creeping back," she adds.
I bought my first home back in the 1970s. Apparently, sometime around then so did Conerly, because we both remember having to acquire homes at double-digit interest rates. Indeed, it wasn't until 1985 that interest rates fell below double digits. The concern about interest rates rising past what to some is the seemingly astronomical 6 percent mark brings considerable levity to Conerly's demeanor.
"I hear real estate brokers whining that interest rates, which have been at record lows, may go up to 6.5 percent," he says. What these brokers don't realize, he adds, "is that they are really living in the golden age of mortgage rates."
Steve Bergsman is a freelance writer in Arizona and author of several books, including "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade."
The new REO reality: above-asking offers
Q: I am in the market for a new home, and I am worried. My friend recently put an offer in on a house of $109,000, which was the list price. The bank came back with a counteroffer of $150,000! Is that even ethical? Can the bank really do that? Is that something I should be looking out for?
A: Your question reflects the essence of why I write this column. I know that's a little heavy, but let me explain. Hindsight for hindsight's sake sounds a little too much like fodder for guilt or blame or regret for my tastes. Those are probably three of the most counterproductive of all the human emotions, and definitely cause more harm than good.
But looking back at what happened in your own -- or a friend's -- past transaction to glean the lessons for how you can avoid the same mistakes, protect yourself or optimize your experience the next time around? Now that's what I'm talking about! (Translation: Learning from the past is definitely a worthwhile pursuit.)
So here's the skinny on your friend's REO offer. Her dismaying surprise at the bank's counteroffer, which was far and above the list price, might just save you from losing one or two of your "dream" homes. These days, there is an intense amount of competition among buyers, as first-time homebuyers try to close their deals before the Nov. 30 deadline and as cash-waving investors take advantage of what they see as bargain-basement property pricing.
As the tax credit deadline looms nearer, the competition and number of multiple offers grows more and more intense. The result? Many bank-owned homes are selling over the asking price.
That's probably what happened in your friend's situation. Her competing offerors viewed the list price like I used to view the speed limit: as a suggested minimum, or starting point. The offer prices went way over asking and, frankly, the bank and listing agent did your friend the favor of giving her another shot at it by issuing a counteroffer -- giving her the opportunity to get into the game if she wanted to.
More often, a bank will counter only the top offer or so, or will generically counter all offers asking them to come back with their "highest and best," requiring everyone to take a total shot in the dark about whether it would take an increase of $5,000 or $50,000 (or no increase at all) to get into or retain the top spot.
Know this -- when you are in a multiple-offer situation, you are in a competition. A "good" offer is not enough, because the second- and third-place offers don't get the house. Every house might not be worth going to your extreme top price for, but you need to be aware of the rules of the game.
To fully answer your question, though, it's unfortunate, but not at all unethical for the bank to do what it did in your friend's situation. In fact, as I said, I feel like your friend got better than she would have in the average case, where she'd likely have received nothing more than a rejection.
Why do I think your friend's loss might be your gain? Well, time and time again I've seen buyers ignore their agent's advice to offer more than the asking price for a listed home because they think the fact that it's a buyer's market or that the property is a foreclosure renders an over-asking offer absurd.
Many such buyers lose a couple of homes in this fashion before they get aggressive about offering more than the asking price, while they experience what I call "the market educating them."
In fact, multiple offers and above-asking sales prices are the rule of the day in many areas. Your friend's experience has very likely opened both her and your eyes to these market realities. When it comes time for you to start your own house hunt, ask your agent to brief you on local list-price-to-sale-price ratios, so you can focus your search on homes listed appropriately lower than the maximum price you can spend, empowering you to compete and offer more than the asking price, as necessary.
A: Your question reflects the essence of why I write this column. I know that's a little heavy, but let me explain. Hindsight for hindsight's sake sounds a little too much like fodder for guilt or blame or regret for my tastes. Those are probably three of the most counterproductive of all the human emotions, and definitely cause more harm than good.
But looking back at what happened in your own -- or a friend's -- past transaction to glean the lessons for how you can avoid the same mistakes, protect yourself or optimize your experience the next time around? Now that's what I'm talking about! (Translation: Learning from the past is definitely a worthwhile pursuit.)
So here's the skinny on your friend's REO offer. Her dismaying surprise at the bank's counteroffer, which was far and above the list price, might just save you from losing one or two of your "dream" homes. These days, there is an intense amount of competition among buyers, as first-time homebuyers try to close their deals before the Nov. 30 deadline and as cash-waving investors take advantage of what they see as bargain-basement property pricing.
As the tax credit deadline looms nearer, the competition and number of multiple offers grows more and more intense. The result? Many bank-owned homes are selling over the asking price.
That's probably what happened in your friend's situation. Her competing offerors viewed the list price like I used to view the speed limit: as a suggested minimum, or starting point. The offer prices went way over asking and, frankly, the bank and listing agent did your friend the favor of giving her another shot at it by issuing a counteroffer -- giving her the opportunity to get into the game if she wanted to.
More often, a bank will counter only the top offer or so, or will generically counter all offers asking them to come back with their "highest and best," requiring everyone to take a total shot in the dark about whether it would take an increase of $5,000 or $50,000 (or no increase at all) to get into or retain the top spot.
Know this -- when you are in a multiple-offer situation, you are in a competition. A "good" offer is not enough, because the second- and third-place offers don't get the house. Every house might not be worth going to your extreme top price for, but you need to be aware of the rules of the game.
To fully answer your question, though, it's unfortunate, but not at all unethical for the bank to do what it did in your friend's situation. In fact, as I said, I feel like your friend got better than she would have in the average case, where she'd likely have received nothing more than a rejection.
Why do I think your friend's loss might be your gain? Well, time and time again I've seen buyers ignore their agent's advice to offer more than the asking price for a listed home because they think the fact that it's a buyer's market or that the property is a foreclosure renders an over-asking offer absurd.
Many such buyers lose a couple of homes in this fashion before they get aggressive about offering more than the asking price, while they experience what I call "the market educating them."
In fact, multiple offers and above-asking sales prices are the rule of the day in many areas. Your friend's experience has very likely opened both her and your eyes to these market realities. When it comes time for you to start your own house hunt, ask your agent to brief you on local list-price-to-sale-price ratios, so you can focus your search on homes listed appropriately lower than the maximum price you can spend, empowering you to compete and offer more than the asking price, as necessary.
Friday, October 9, 2009
Aides: Home Buyer Tax Credit Extension Likely
Extending the First-Time Home Buyer Tax Credit, due to expire at the end of November, is high on the Democratic Congressional to-do list, legislative aides said.
After Wednesday’s meeting with President Obama and House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.) released a statement that the government should “continue efforts to strengthen the housing market by extending the home buyer tax credit.”
Mark Zandi, chief economist at Moody’s Economy.com, who is a consultant to Democrats in the administration and Congress, is advocating extending the credit through August and making it available to all home buyers. He said failure to extend the credit just as more foreclosures enter the market will push housing prices down.
Also, on Thursday, the House is expected pass legislation to extend the credit through 2010 for people who have been out of the country in the military, intelligence, or foreign services.
After Wednesday’s meeting with President Obama and House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.) released a statement that the government should “continue efforts to strengthen the housing market by extending the home buyer tax credit.”
Mark Zandi, chief economist at Moody’s Economy.com, who is a consultant to Democrats in the administration and Congress, is advocating extending the credit through August and making it available to all home buyers. He said failure to extend the credit just as more foreclosures enter the market will push housing prices down.
Also, on Thursday, the House is expected pass legislation to extend the credit through 2010 for people who have been out of the country in the military, intelligence, or foreign services.
Wednesday, October 7, 2009
California's rollercoaster ride to end?
The up-and-down rollercoaster ride that California home sales and prices have been on for the last several years could finally even out in 2010, although the state will continue to have a bifurcated housing market, the California Association of Realtors said today.
The "new normal" for California housing markets -- brisk sales and lean inventory on the low end, coupled with continued roadblocks to closing deals on the high end -- could produce a slight increase in the state's median home price, even as sales cool down a bit, CAR said.
In its 2010 forecast, CAR projects the state's median home price will rise 3.3 percent next year to $280,000, even though sales of existing homes are expected to decrease by 2.3 percent, to 527,500 units.
After double-digit declines in sales in 2006 and 2007 -- followed by double-digit increases in 2008 and 2009 -- CAR sees sales moderating to "a more sustainable pace" in 2010.
During the boom, sales of existing homes peaked at 625,000 in 2004 and 2005, and bottomed out at 346,900 in 2007. The median home price has also been on a rollercoaster ride, peaking at $560,300 in 2007 and falling to a projected $271,000 this year.
"Housing in California has become a tale of two markets," CAR President James Liptak said in a press release. "The low end continues to attract first-time buyers and investors, with a resulting shortage in the number of homes for sale. Sellers at the high end, however, continue to be challenged by the ability of homebuyers to secure financing as well as their concerns about where prices are headed."
CAR expects demand for low-end properties from first-time buyers will continue throughout next year, but it remains to be seen whether discretionary sellers return to the market by the second half of 2010, the group said CAR chief economist Leslie Appleton-Young expects distressed properties will account for nearly one-third of sales next year and that inventory will be "relatively lean" -- under six months of supply in the off-season, and about four months during the peak season.
"Although it appears at this time that lenders are closely monitoring the flow of distressed properties onto the market, there could be an exertion of downward pressure on home prices should a heavier-than-expected wave of foreclosures come to market next year," she said.
"The wild cards for 2010 include foreclosures, loan resets, the labor market, the California budget crisis, and the actions of the federal government," Appleton-Young said.
Like other real estate industry groups, CAR is calling on Congress to not only extend but expand the $8,000 first-time homebuyer tax credit that's scheduled to expire Nov. 30.
Liptak said 2009 presented a unique opportunity for first-time homebuyers, who were helped not only by the tax credit but more affordable home prices and interest rates at near historic lows.
CAR is forecasting that the 30-year fixed-rate mortgage will average 5.6 percent next year, up from 5.2 percent this year, and that rates on one-year adjustable-rate mortgage (ARM) loans will increase to 5.2 percent, up from an average of 4.8 percent this year
The "new normal" for California housing markets -- brisk sales and lean inventory on the low end, coupled with continued roadblocks to closing deals on the high end -- could produce a slight increase in the state's median home price, even as sales cool down a bit, CAR said.
In its 2010 forecast, CAR projects the state's median home price will rise 3.3 percent next year to $280,000, even though sales of existing homes are expected to decrease by 2.3 percent, to 527,500 units.
After double-digit declines in sales in 2006 and 2007 -- followed by double-digit increases in 2008 and 2009 -- CAR sees sales moderating to "a more sustainable pace" in 2010.
During the boom, sales of existing homes peaked at 625,000 in 2004 and 2005, and bottomed out at 346,900 in 2007. The median home price has also been on a rollercoaster ride, peaking at $560,300 in 2007 and falling to a projected $271,000 this year.
"Housing in California has become a tale of two markets," CAR President James Liptak said in a press release. "The low end continues to attract first-time buyers and investors, with a resulting shortage in the number of homes for sale. Sellers at the high end, however, continue to be challenged by the ability of homebuyers to secure financing as well as their concerns about where prices are headed."
CAR expects demand for low-end properties from first-time buyers will continue throughout next year, but it remains to be seen whether discretionary sellers return to the market by the second half of 2010, the group said CAR chief economist Leslie Appleton-Young expects distressed properties will account for nearly one-third of sales next year and that inventory will be "relatively lean" -- under six months of supply in the off-season, and about four months during the peak season.
"Although it appears at this time that lenders are closely monitoring the flow of distressed properties onto the market, there could be an exertion of downward pressure on home prices should a heavier-than-expected wave of foreclosures come to market next year," she said.
"The wild cards for 2010 include foreclosures, loan resets, the labor market, the California budget crisis, and the actions of the federal government," Appleton-Young said.
Like other real estate industry groups, CAR is calling on Congress to not only extend but expand the $8,000 first-time homebuyer tax credit that's scheduled to expire Nov. 30.
Liptak said 2009 presented a unique opportunity for first-time homebuyers, who were helped not only by the tax credit but more affordable home prices and interest rates at near historic lows.
CAR is forecasting that the 30-year fixed-rate mortgage will average 5.6 percent next year, up from 5.2 percent this year, and that rates on one-year adjustable-rate mortgage (ARM) loans will increase to 5.2 percent, up from an average of 4.8 percent this year
Friday, October 2, 2009
Relating Skills to Master
I am asked from time to time why some do so well in this business and some, well, don’t. There are more than a handful of “secrets” but there are very few that are more important that mastering your relatioanl skills. In fact, there is nothing in this world that pays better, in every realm of life, than relational skill mastery. Here’s a few things to keep in mind as you go through your day.
Don’t just listen to or understand people: Really hear them.
Love and support everyone, but require their best.
Speak in messages, not clichés, opinions, or possibilities.
Communicate fully in the moment.
See faults in people, but accept them.
Be unconditionally constructive.
Fully handle tasks.
Don’t seek credit.
Want the best for people, but don’t be tied to it.
Show people you care.
Be others focused.
Be interested in the conversation at hand.
Appreciate others.
Watch your association.
Be interdevelopmental with people: Not codependent, dependent, or merely interdependent.
Be grateful to and for others, and they feel it.
Cause things to happen, don’t wait for them to happen.
Always add value.
Give the gifts that the other person really wants.
Don’t just listen to or understand people: Really hear them.
Love and support everyone, but require their best.
Speak in messages, not clichés, opinions, or possibilities.
Communicate fully in the moment.
See faults in people, but accept them.
Be unconditionally constructive.
Fully handle tasks.
Don’t seek credit.
Want the best for people, but don’t be tied to it.
Show people you care.
Be others focused.
Be interested in the conversation at hand.
Appreciate others.
Watch your association.
Be interdevelopmental with people: Not codependent, dependent, or merely interdependent.
Be grateful to and for others, and they feel it.
Cause things to happen, don’t wait for them to happen.
Always add value.
Give the gifts that the other person really wants.
The First Step to Success
“The first step to success is to stop lying to yourself”
I would dare say that the vast majority of people would consider themselves honest, ethical people. In fact, I was in a room of 500 top producing agents when the speaker asked who in the room felt they had integrity. 98% of the room raised their hands. When asked to lower their hand if they had ever lied to themselves or made a promise, resolution or goal and not kept it all the hands went down.
Our quest for success starts within and to truly address the issues that are getting in the way of our achieving our wildest and most audacious dreams we need to have an honest look at ourselves. Our justification, excuses and reasons are all hindering us. The first step to our success is to face the truth about our situation.
I am not talking about condemnation, guilt or shame - none of those have a place in helping us. But honesty and truth, yes, honesty and truth will allow us to see things for what they are. Once problems and issues are identified our mind has a way of seeking answers that were previously hidden from us. I’m not talking in a meta-physical way, but in a very practical way. Our mind blocks millions of things a day from our 5 senses that it doesn’t feel are relevant. When we face our issues, the possible solutions become relevant and our mind will allow us to see and hear them.
If we want to achieve success, whether it is an increase in income, growth in business or overall life balance, we must first face the truth of where we are and the very real disparity of where we want to go and seek the solutions that will allow us to bridge the gap.
Remember, The first step to success is to stop lying to yourself.
I would dare say that the vast majority of people would consider themselves honest, ethical people. In fact, I was in a room of 500 top producing agents when the speaker asked who in the room felt they had integrity. 98% of the room raised their hands. When asked to lower their hand if they had ever lied to themselves or made a promise, resolution or goal and not kept it all the hands went down.
Our quest for success starts within and to truly address the issues that are getting in the way of our achieving our wildest and most audacious dreams we need to have an honest look at ourselves. Our justification, excuses and reasons are all hindering us. The first step to our success is to face the truth about our situation.
I am not talking about condemnation, guilt or shame - none of those have a place in helping us. But honesty and truth, yes, honesty and truth will allow us to see things for what they are. Once problems and issues are identified our mind has a way of seeking answers that were previously hidden from us. I’m not talking in a meta-physical way, but in a very practical way. Our mind blocks millions of things a day from our 5 senses that it doesn’t feel are relevant. When we face our issues, the possible solutions become relevant and our mind will allow us to see and hear them.
If we want to achieve success, whether it is an increase in income, growth in business or overall life balance, we must first face the truth of where we are and the very real disparity of where we want to go and seek the solutions that will allow us to bridge the gap.
Remember, The first step to success is to stop lying to yourself.
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