By Mark Mueller
Friday, October 22, 2010
The median price of an existing Orange County home moved back above the $500,000 mark in September, while the pace of sales here remained sluggish, the California Association of Realtors said Friday.
The median price for an existing stand-alone OC home sold in September was $510,530, a nearly $11,000 or 2.2% increase from August, and a 2.8% increase from the prices homes here were selling at a year earlier.
The area’s median sales price now is up about 21% from the recent bottom of the market, seen in January 2009, according to the association’s figures.
Prices here are still off more than 31% from the peak of the market, when the median sales price for an OC home topped $747,000 in April 2007.
The number of OC home sales in September was up 1.6% from a month earlier, the Realtor association said.
Sales were down 10.4% from a year earlier.
The median sales price of an existing home in California was $309,900 in September, a 2.7% decrease from August and a 4.5% increase from a year ago, according to the association.
Sales in California were up about 3.8% from August’s levels, but were off nearly 12% from a year earlier. The inventory of homes priced under $500,000 remains “lean,” according to the association.
The association excludes condominiums from its figures.
Including condos, the median price of an OC home sold in September was $445,000, a jump of more than $16,000 or 3.7% from a year earlier, according to a report earlier this week from San Diego-based MDA DataQuick, a unit of Canada’s MacDonald, Dettwiler and Associates.
Thursday, October 28, 2010
Friday, October 22, 2010
A Little-Known Loan Program for Fixer-Uppers
BUYERS of distressed homes or any other fixer-upper not only face the daunting task of turning a run-down property into a livable one, but often worry about paying for it all.
There’s a way to make essential repairs and add other accouterments without dipping into savings or taking out a home-equity loan. The Federal Housing Administration’s 203(k) rehabilitation program provides for loans covering renovation costs as well as the purchase price of a primary residence — investors excluded — and it allows for just a 3.5 percent down payment.
“It’s a fantastic program, one that hasn’t been fully utilized by the American public,” said Arthur Hood, the owner of the Vanguard Inspection Group in Teaneck, N.J., which is certified by the Department of Housing and Urban Development to help borrowers with the program.
Although the program has been around since 1978, it is not well publicized, and many borrowers mistakenly think they have to buy a wreck in order to qualify. They don’t.
The house “doesn’t have to be falling apart; it could just be outdated,” said Joseph Latini Sr., the president of Hartford Funding, a lender in Ronkonkoma, N.Y. “It just has to appraise below market value and then at market value with the repairs.”
While “run-down” typically means a foreclosure, the program also applies to many historic and older houses as well as short sales and bank-owned homes. HUD outlines the rules on its Web site.
Luxury improvements are ineligible, though the program has wide definitions of “repairs” and “modernization.” Covered repairs include a new roof or heating system (geothermal ones too). Decorative changes, like replacing vinyl with ceramic tile on the kitchen floor replacement, or painting the interior, are covered.
The loan rates typically run around a percentage point higher than conventional ones, and come in 15- to 30-year terms, either fixed or adjustable. Additional paperwork for inspection, appraisal, title updating and the like pushes closing costs $1,000 or more higher than average. Most borrowers, however, refinance to a conventional loan after a few years, Mr. Hood said.
Demand for 203(k) financing has been on the rise, although experts predict some contraction given the major banks’ current moratorium on foreclosures. For the first nine months, HUD insured $2.9 billion in 203(k) loans, compared with $3 billion for all of 2009 and $401 million in 2005.
Home buyers must put down at least 3.5 percent of the current value of the property and use a HUD-approved lender, appraiser and a contractor approved by the lender for the repairs. One list of approved businesses can be found at 203kcontractors.com.
Using a HUD-approved consultant like Mr. Hood, who charges a flat fee of $400 to $1,000, is not required, but the agency recommends it to expedite processing. A HUD-approved inspector will make around four trips to the home to ensure that renovations are being properly done; each trip costs the borrower around $150.
Most 203(k) lenders are smaller regional and community banks. Loan limits vary by geography, and range from $271,050 to $729,750, which covers the total mortgage. The first $5,000 must go toward the more substantial repairs like roof replacement. HUD insures the loan.
Once the borrower receives the mortgage, money owed the contractor for repairs is held in escrow by the lender until the work is completed; all work must be finished within six months.
A miniversion of the 203(k) — called a Streamline (k) — has a repair-cost limit of $35,000 and restricts upgrades to minor improvements like replacing gutters. In this case, the do-it-yourself approach is permitted.
“This is a loan for someone who’s willing to be a little involved,” said Jon Sigler, a banker in Madison, Conn., who works for at the Franklin American Mortgage Company.
There’s a way to make essential repairs and add other accouterments without dipping into savings or taking out a home-equity loan. The Federal Housing Administration’s 203(k) rehabilitation program provides for loans covering renovation costs as well as the purchase price of a primary residence — investors excluded — and it allows for just a 3.5 percent down payment.
“It’s a fantastic program, one that hasn’t been fully utilized by the American public,” said Arthur Hood, the owner of the Vanguard Inspection Group in Teaneck, N.J., which is certified by the Department of Housing and Urban Development to help borrowers with the program.
Although the program has been around since 1978, it is not well publicized, and many borrowers mistakenly think they have to buy a wreck in order to qualify. They don’t.
The house “doesn’t have to be falling apart; it could just be outdated,” said Joseph Latini Sr., the president of Hartford Funding, a lender in Ronkonkoma, N.Y. “It just has to appraise below market value and then at market value with the repairs.”
While “run-down” typically means a foreclosure, the program also applies to many historic and older houses as well as short sales and bank-owned homes. HUD outlines the rules on its Web site.
Luxury improvements are ineligible, though the program has wide definitions of “repairs” and “modernization.” Covered repairs include a new roof or heating system (geothermal ones too). Decorative changes, like replacing vinyl with ceramic tile on the kitchen floor replacement, or painting the interior, are covered.
The loan rates typically run around a percentage point higher than conventional ones, and come in 15- to 30-year terms, either fixed or adjustable. Additional paperwork for inspection, appraisal, title updating and the like pushes closing costs $1,000 or more higher than average. Most borrowers, however, refinance to a conventional loan after a few years, Mr. Hood said.
Demand for 203(k) financing has been on the rise, although experts predict some contraction given the major banks’ current moratorium on foreclosures. For the first nine months, HUD insured $2.9 billion in 203(k) loans, compared with $3 billion for all of 2009 and $401 million in 2005.
Home buyers must put down at least 3.5 percent of the current value of the property and use a HUD-approved lender, appraiser and a contractor approved by the lender for the repairs. One list of approved businesses can be found at 203kcontractors.com.
Using a HUD-approved consultant like Mr. Hood, who charges a flat fee of $400 to $1,000, is not required, but the agency recommends it to expedite processing. A HUD-approved inspector will make around four trips to the home to ensure that renovations are being properly done; each trip costs the borrower around $150.
Most 203(k) lenders are smaller regional and community banks. Loan limits vary by geography, and range from $271,050 to $729,750, which covers the total mortgage. The first $5,000 must go toward the more substantial repairs like roof replacement. HUD insures the loan.
Once the borrower receives the mortgage, money owed the contractor for repairs is held in escrow by the lender until the work is completed; all work must be finished within six months.
A miniversion of the 203(k) — called a Streamline (k) — has a repair-cost limit of $35,000 and restricts upgrades to minor improvements like replacing gutters. In this case, the do-it-yourself approach is permitted.
“This is a loan for someone who’s willing to be a little involved,” said Jon Sigler, a banker in Madison, Conn., who works for at the Franklin American Mortgage Company.
Thursday, September 23, 2010
Friday, September 10, 2010
-
Foreclosure Counselors: What They Can and Can't Do
Foreclosure counselors can make the difference between losing your home and keeping it. Here’s how they work and how to choose one. Read
-
Website Resources for Foreclosure Help
Here are some legitimate resources to help you fight the foreclosure crisis. Read
-
Foreclosure Help: 5 Pros You Need on Your Team
Know which experts provide foreclosure help—often at no cost to you—and how to find them. Read
-
Facing Foreclosure: What to Do Right Now
If you’re facing foreclosure, don’t panic: Take steps right now to save your home or at least lessen the blow of its loss. Read
-
Avoid Foreclosure Rescue Scams
With foreclosure rescue scams widespread as more homeowners fall behind on mortgage payments, be smart if you seek help. Read
Visit houselogic.com for more articles like this.
Copyright 2010 NATIONAL ASSOCIATION OF REALTORS®
Wednesday, September 8, 2010
Friday, September 3, 2010
Wednesday, September 1, 2010
High interest rates got you burning like a bratwurst at a Labor Day Barbeque?
High interest rates got you burning like a bratwurst at a Labor Day Barbeque? Time to cool down and refresh yourself with the LOWEST interest rates in 60 YEARS!
Interest rates have dropped over the past few weeks. Call today to see how I can help you save on your monthly budget by lowering your monthly payments, take cash out for home improvements or other needs, or shorten the term of your loan. Even if you have refinanced or completed your purchase loan with me recently, I may be able to help so call to discuss your specific needs and scenario. Don't miss this once in a lifetime opportunity.
I will be in the office all day today and can secure interest rate locks until 3:00PM.
Thank you for your continued business, support and referrals!
Interest rates have dropped over the past few weeks. Call today to see how I can help you save on your monthly budget by lowering your monthly payments, take cash out for home improvements or other needs, or shorten the term of your loan. Even if you have refinanced or completed your purchase loan with me recently, I may be able to help so call to discuss your specific needs and scenario. Don't miss this once in a lifetime opportunity.
I will be in the office all day today and can secure interest rate locks until 3:00PM.
Thank you for your continued business, support and referrals!
Friday, August 27, 2010
Wednesday, June 23, 2010
Friday, June 18, 2010
Friday, May 28, 2010
Mortgage Rates Drop to Lowest Level of the Year
Mortgage interest rates have fallen to their lowest level of the year. Economists say homebuyers have the financial turmoil in Europe to thank for that, as overseas investors have put their dollars instead towards what they see as safer U.S. securities.
The mortgage industry has been bracing for a rise in interest rates now that the Federal Reserve has ceased buying mortgage-backed securities. But with international money being poured into U.S. Treasury bonds, which are closely tied to rates for home loans, that rise has yet to come about – a definite plus for the residential real estate market here in the states as it confronts an expected drop in sales activity now that the homebuyer tax credit has expired.
According to Freddie Mac’s rate report released Thursday, interest rates on 30-year fixed-rate mortgages (FRM) averaged 4.78 percent (0.7 point) this week, down from last week when the average rate was 4.84 percent. According to the GSE’s study, the 30-year FRM has not been lower since the week ending December 3, 2009, when it averaged 4.71 percent.
The 15-year FRM this week averaged 4.21 percent (0.7 point), Freddie Mac reported. That’s a slight drop from last week when it was 4.24 percent. Freddie says the 15-year FRM has not been lower since it started tracking 15-year rates in August of 1991.
“These low rates will help to elevate homebuyer affordability and soften the effects of the sunset of the homebuyer tax credit,” said Frank Nothaft, Freddie Mac’s VP and chief economist. “The latest information from Freddie Mac’s repeat-transactions home-price indexes also show some encouraging signs, with national metrics either slowing their descent or showing a modest rise, suggesting that the sharp downturn in national indexes since 2006 may be nearing an end.”
A separate study from Bankrate Thursday also puts mortgage rates at 2010 lows. Bankrate’s survey is based on data provided by the top 10 banks and thrifts in the top 10 markets.
Thirty-year fixed mortgage rates dropped to 4.92 percent (0.42 point) – a record low in Bankrate’s weekly survey. Last week, the 30-year rate came in at 4.96 percent.
The average 15-year fixed mortgage was unchanged from last week in Bankrate’s study at 4.34 percent, as was the larger jumbo 30-year fixed rate at 5.75 percent.
“The angst of investors around the globe about European debt, slower growth in China, and saber-rattling on the Korean Peninsula all feed into what is known as the ‘fear trade,’” Bankrate said in its report. “That fear trade has helped bring yields on U.S. Treasury securities considerably lower and mortgage shoppers have been direct beneficiaries.”
The mortgage industry has been bracing for a rise in interest rates now that the Federal Reserve has ceased buying mortgage-backed securities. But with international money being poured into U.S. Treasury bonds, which are closely tied to rates for home loans, that rise has yet to come about – a definite plus for the residential real estate market here in the states as it confronts an expected drop in sales activity now that the homebuyer tax credit has expired.
According to Freddie Mac’s rate report released Thursday, interest rates on 30-year fixed-rate mortgages (FRM) averaged 4.78 percent (0.7 point) this week, down from last week when the average rate was 4.84 percent. According to the GSE’s study, the 30-year FRM has not been lower since the week ending December 3, 2009, when it averaged 4.71 percent.
The 15-year FRM this week averaged 4.21 percent (0.7 point), Freddie Mac reported. That’s a slight drop from last week when it was 4.24 percent. Freddie says the 15-year FRM has not been lower since it started tracking 15-year rates in August of 1991.
“These low rates will help to elevate homebuyer affordability and soften the effects of the sunset of the homebuyer tax credit,” said Frank Nothaft, Freddie Mac’s VP and chief economist. “The latest information from Freddie Mac’s repeat-transactions home-price indexes also show some encouraging signs, with national metrics either slowing their descent or showing a modest rise, suggesting that the sharp downturn in national indexes since 2006 may be nearing an end.”
A separate study from Bankrate Thursday also puts mortgage rates at 2010 lows. Bankrate’s survey is based on data provided by the top 10 banks and thrifts in the top 10 markets.
Thirty-year fixed mortgage rates dropped to 4.92 percent (0.42 point) – a record low in Bankrate’s weekly survey. Last week, the 30-year rate came in at 4.96 percent.
The average 15-year fixed mortgage was unchanged from last week in Bankrate’s study at 4.34 percent, as was the larger jumbo 30-year fixed rate at 5.75 percent.
“The angst of investors around the globe about European debt, slower growth in China, and saber-rattling on the Korean Peninsula all feed into what is known as the ‘fear trade,’” Bankrate said in its report. “That fear trade has helped bring yields on U.S. Treasury securities considerably lower and mortgage shoppers have been direct beneficiaries.”
Monday, May 24, 2010
The housing recovery is just around the corner
The housing recovery is just around the corner – at least that’s the consensus among a panel of 92 well-known industry economists and analysts.
The Madison, New Jersey-based analytics firm MacroMarkets LLC, founded by Robert Shiller, real estate sage and father of the closely-watched Case-Shiller Home Price Index, polled the group of housing market experts and strategists from the likes of Alliance Bernstein, Columbia Business School, Deutsche Bank, Moody’s Analytics, and the GSEs.
Based on their responses, the onset of price recovery in U.S. single family real estate is widely expected by 2011.
Between 2010 and 2014, the panelists forecast a rise in home prices of more than 12 percent.
“The survey results are important because they represent a consensus view among experts with rich and diverse knowledge,” Shiller said. “In the May survey they see only the slightest hint of a downdraft in home prices this year, and after that a respectable uptrend in prices, well ahead of the likely inflation rate.”
But Shiller added, “However, there were a number of panelists more or less sanguine than average, some significantly so, and this reflects continuing volatility and risk in the U.S. housing market.”
The views of those questioned by MacroMarkets didn’t all align. Joe LaVorgna, the chief economist at Deutsche Bank, pegs home prices to rise 37 percent over the next four years.
At the low end of the scale, both Gary Shilling, president of A. Gary Shilling & Co., and Anthony Sanders, professor of real estate finance at George Mason University, expect prices to have fallen by 18 percent by the end of 2014.
“The expectations within this first survey were provided following the end of the homebuyer tax credit and of the Federal Reserve’s $1.25 trillion mortgage-backed securities purchase program,” Shiller said. “It will be interesting to see how panelist views evolve in future months.”
According to the Federal Reserve, the aggregate value of real estate owned by households at the end of 2009 was $16.6 trillion.
Terry Loebs, MacroMarkets managing director and co-developer of the survey, put that figure into perspective when he said, “This asset class is still larger than U.S.-listed stocks in aggregate market capitalization terms.”
Loebs said, “The scale of the U.S. housing market, coupled with the powerful wealth effects of prevailing home equity levels, warrant close attention to future home prices. For example, if the cumulative 12.4 percent improvement in aggregate national home value follows the path that this panel’s year-by-year averages are suggesting, consumer balance sheets will improve by $2.1 trillion in less than five years.”
The Madison, New Jersey-based analytics firm MacroMarkets LLC, founded by Robert Shiller, real estate sage and father of the closely-watched Case-Shiller Home Price Index, polled the group of housing market experts and strategists from the likes of Alliance Bernstein, Columbia Business School, Deutsche Bank, Moody’s Analytics, and the GSEs.
Based on their responses, the onset of price recovery in U.S. single family real estate is widely expected by 2011.
Between 2010 and 2014, the panelists forecast a rise in home prices of more than 12 percent.
“The survey results are important because they represent a consensus view among experts with rich and diverse knowledge,” Shiller said. “In the May survey they see only the slightest hint of a downdraft in home prices this year, and after that a respectable uptrend in prices, well ahead of the likely inflation rate.”
But Shiller added, “However, there were a number of panelists more or less sanguine than average, some significantly so, and this reflects continuing volatility and risk in the U.S. housing market.”
The views of those questioned by MacroMarkets didn’t all align. Joe LaVorgna, the chief economist at Deutsche Bank, pegs home prices to rise 37 percent over the next four years.
At the low end of the scale, both Gary Shilling, president of A. Gary Shilling & Co., and Anthony Sanders, professor of real estate finance at George Mason University, expect prices to have fallen by 18 percent by the end of 2014.
“The expectations within this first survey were provided following the end of the homebuyer tax credit and of the Federal Reserve’s $1.25 trillion mortgage-backed securities purchase program,” Shiller said. “It will be interesting to see how panelist views evolve in future months.”
According to the Federal Reserve, the aggregate value of real estate owned by households at the end of 2009 was $16.6 trillion.
Terry Loebs, MacroMarkets managing director and co-developer of the survey, put that figure into perspective when he said, “This asset class is still larger than U.S.-listed stocks in aggregate market capitalization terms.”
Loebs said, “The scale of the U.S. housing market, coupled with the powerful wealth effects of prevailing home equity levels, warrant close attention to future home prices. For example, if the cumulative 12.4 percent improvement in aggregate national home value follows the path that this panel’s year-by-year averages are suggesting, consumer balance sheets will improve by $2.1 trillion in less than five years.”
Tuesday, May 11, 2010
Friday, April 30, 2010
How foreclosure impacts your credit score
NEW YORK (CNNMoney.com) -- If you're delinquent on your mortgage, your credit score will suffer. Everyone knows that. The question is, by how much?
Until recently, those answers were hard to come by. Credit bureaus were uncommunicative about expressing, in points, just how much impact different foreclosure types of mortgage delinquencies have on scores.
Recently, Fair Isaac, which developed FICO scores, pulled back the curtain a bit, revealing some estimates of point-score declines following mortgage delinquency problems.
Here are the average hit your credit will take:
30 days late: 40 - 110 points
90 days late: 70 - 135 points
Foreclosure, short sale or deed-in-lieu: 85 - 160
Bankruptcy: 130 - 240
To come to these figures, Fair Isaac created two hypothetical consumers, one who starts out with a fair-to-middling score of 680 and the other with a very good one of 780. (FICO scores range from 300 to 850.)
The hypothetical person with the 780 FICO has 10 credit accounts versus six for the 580, plus a longer credit history, lower utilization of total credit limit and no missed payments on any account. The other consumer has two slightly damaged accounts. Neither have any accounts in collection or adverse public records.
See the chart above to see how each scenario affected each borrower.
Notice that for both borrowers a single one-time black mark results in steep drops, but it is when they fall further behind that things get really harsh, according to Craig Watts, a spokesman for Fair Isaac.
"The lending industry tends to regard an account differently when it has become 90 or more days late," he said, "The likelihood that consumers will resume paying their overdue obligations drops off significantly after the delinquencies have reached 90 days."
One reason credit companies were so closed-mouthed is that they often can't definitively state how much each delinquencies will affect scores because there are too many variables.
Some borrowers will fall much more steeply than others for the same payment problem, according to Maxine Sweet, vice president for public education at Experian, one of the nation's main credit bureaus.
"If you picture someone who has just one mortgage and one other credit account versus a mature credit user like me with 15 accounts, if they miss one payment that would impact their scores a lot more," she said. "For me, one missed payment would just be a blip."
The point loss also depends on the borrower's starting point: People with very high credit scores have more to lose than low-score borrowers; the impact of a single blemish on an 800 score is more than on a 500
Of course, it just gets worse when you face foreclosure.
Mortgage borrowers can lose their homes three basic ways: a foreclosure; a short sale, where the home is sold for less than than is owed and the bank (generally) forgives the difference; or a deed-in-lieu, in which the borrower gives back the property and the bank again forgives any unpaid balance.
Sweet said credit bureaus generally slash scores equally for those three resolutions to someone losing their home. The important factor, she said, is that "it's reported that you paid less on a settled account."
Some borrowers may think that because they never missed a payment, they can "walk away" from their homes with relatively little impact on scores. Not true. "When a deed-in-lieu or short sale is reported as a partial payment, it's treated as a serious delinquency," Watts said, "just like a foreclosure."
Even if borrowers made payments faithfully for years before short selling or doing a deed-in-lieu, their credit score will still take a hit. The total decline will run about 85 points for the 680 score borrower to as much as 160 for the 780 score.
Mortgage debt, combined with other financial problems, can send borrowers into bankruptcy, the worst thing that can happen to your credit score.
The effects are long-lasting, according to Sweet. In a Chapter 13 bankruptcy, which involves partial repayment over several years, the stain will take seven years to remove. A Chapter 7 bankruptcy, which involves liquidation, takes 10 years to get over.
It's gonna cost you
Absorbing a big credit-score hit can make many transactions more costly. It's not just paying more for credit card debt and auto loans, insurance can cost more as well.
The average savings for someone with a good versus mediocre credit score is about $115 a year for auto insurance and $60 for home, according to Loretta Sorters, of the Insurance Information Institute.
A low credit score can even make it harder to rent a home because landlords often use credit scores to weed out prospective renters.
Despite the problems a poor credit score can cause, Experian's Sweet recommends that people who are in financial dead ends, like totally unaffordable mortgages, it's better to recognize that and cut your losses quickly; don't prolong the problem.
"You need to do what you need to do to get your finances back in order," she said. "Don't worry about your credit score."
Until recently, those answers were hard to come by. Credit bureaus were uncommunicative about expressing, in points, just how much impact different foreclosure types of mortgage delinquencies have on scores.
Recently, Fair Isaac, which developed FICO scores, pulled back the curtain a bit, revealing some estimates of point-score declines following mortgage delinquency problems.
Here are the average hit your credit will take:
30 days late: 40 - 110 points
90 days late: 70 - 135 points
Foreclosure, short sale or deed-in-lieu: 85 - 160
Bankruptcy: 130 - 240
To come to these figures, Fair Isaac created two hypothetical consumers, one who starts out with a fair-to-middling score of 680 and the other with a very good one of 780. (FICO scores range from 300 to 850.)
The hypothetical person with the 780 FICO has 10 credit accounts versus six for the 580, plus a longer credit history, lower utilization of total credit limit and no missed payments on any account. The other consumer has two slightly damaged accounts. Neither have any accounts in collection or adverse public records.
See the chart above to see how each scenario affected each borrower.
Notice that for both borrowers a single one-time black mark results in steep drops, but it is when they fall further behind that things get really harsh, according to Craig Watts, a spokesman for Fair Isaac.
"The lending industry tends to regard an account differently when it has become 90 or more days late," he said, "The likelihood that consumers will resume paying their overdue obligations drops off significantly after the delinquencies have reached 90 days."
One reason credit companies were so closed-mouthed is that they often can't definitively state how much each delinquencies will affect scores because there are too many variables.
Some borrowers will fall much more steeply than others for the same payment problem, according to Maxine Sweet, vice president for public education at Experian, one of the nation's main credit bureaus.
"If you picture someone who has just one mortgage and one other credit account versus a mature credit user like me with 15 accounts, if they miss one payment that would impact their scores a lot more," she said. "For me, one missed payment would just be a blip."
The point loss also depends on the borrower's starting point: People with very high credit scores have more to lose than low-score borrowers; the impact of a single blemish on an 800 score is more than on a 500
Of course, it just gets worse when you face foreclosure.
Mortgage borrowers can lose their homes three basic ways: a foreclosure; a short sale, where the home is sold for less than than is owed and the bank (generally) forgives the difference; or a deed-in-lieu, in which the borrower gives back the property and the bank again forgives any unpaid balance.
Sweet said credit bureaus generally slash scores equally for those three resolutions to someone losing their home. The important factor, she said, is that "it's reported that you paid less on a settled account."
Some borrowers may think that because they never missed a payment, they can "walk away" from their homes with relatively little impact on scores. Not true. "When a deed-in-lieu or short sale is reported as a partial payment, it's treated as a serious delinquency," Watts said, "just like a foreclosure."
Even if borrowers made payments faithfully for years before short selling or doing a deed-in-lieu, their credit score will still take a hit. The total decline will run about 85 points for the 680 score borrower to as much as 160 for the 780 score.
Mortgage debt, combined with other financial problems, can send borrowers into bankruptcy, the worst thing that can happen to your credit score.
The effects are long-lasting, according to Sweet. In a Chapter 13 bankruptcy, which involves partial repayment over several years, the stain will take seven years to remove. A Chapter 7 bankruptcy, which involves liquidation, takes 10 years to get over.
It's gonna cost you
Absorbing a big credit-score hit can make many transactions more costly. It's not just paying more for credit card debt and auto loans, insurance can cost more as well.
The average savings for someone with a good versus mediocre credit score is about $115 a year for auto insurance and $60 for home, according to Loretta Sorters, of the Insurance Information Institute.
A low credit score can even make it harder to rent a home because landlords often use credit scores to weed out prospective renters.
Despite the problems a poor credit score can cause, Experian's Sweet recommends that people who are in financial dead ends, like totally unaffordable mortgages, it's better to recognize that and cut your losses quickly; don't prolong the problem.
"You need to do what you need to do to get your finances back in order," she said. "Don't worry about your credit score."
Thursday, April 22, 2010
Home sales rise more than expected
WASHINGTON (AP) -- Home sales rose more than expected in March, reversing three months of declines, as government incentives drew in buyers and kicked off what's expected to be a strong spring selling season.
Sales of previously occupied homes rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million last month, the highest level since December, the National Association of Realtors said Thursday. February's sales figures were revised downward slightly to 5.01 million.
"The spring selling season will be a success and probably the most active we're seen in years," said Stuart Hoffman, chief economist at PNC Financial Services Group.
Sales are likely to keep growing through the first half of the year as tax credits for first-time buyers and low mortgage rates fuel purchases. The average interest rate this week was 5.07 percent for a traditional 30-year fixed-rate mortgage, Freddie Mac said Thursday.
But doubts remain about whether the momentum will be sustained in the second half of the year when federal support is gone.
"This is a temporary surge that won't be sustained" said Paul Dales, US economist with Capital Economics. "It won't be very pretty."
Sales are now up 18 percent from their low in early 2009, but are still down 26 percent from their peak in fall 2005. March's results had been expected to rise about 5 percent to 5.28 million, according to economists surveyed by Thomson Reuters.
The results show the housing market is stabilizing after a devastating bust. But the true test will be whether the market can stand on its own after federal tax credits expire at the end of this month.
Sales rose in every region, surging more than 7 percent in the Midwest and South, 6.6 percent in the West and 6 percent in the Northeast.
"It's a very broad-based recovery," said Lawrence Yun, the Realtors' chief economist.
The median sales price was $170,700, up almost 4 percent from $164,600 a month earlier and nearly unchanged from $170,000 in March 2009.
The inventory of unsold homes on the market was up 1.5 percent at 3.6 million. That's an eight month supply at the current sales pace.
Sales nationally had declined over the winter, eroding gains made last fall and summer. The downward direction troubled economists because the government has taken unprecedented steps to support the housing sector.
For several months, home shoppers didn't feel rushed after lawmakers extended the deadline to qualify for tax incentives. The government is offering a $8,000 credit for first-time buyers and $6,500 for current homeowners willing to buy and move into another property.
But now time is running out. Buyers must sign contract offers by April 30 to qualify, and real estate agents say that's spurring sales.
"Many people who otherwise wouldn't be on the market for a home want to take advantage of these tax credits," said Kathi McLeod, sales manager for Windermere Real Estate in Boise, Idaho. "You have buyers who have been looking and looking at properties and realizing that it's almost too late, so they're really scrambling and jumping into deals."
The Realtors group is not pushing for an another extension of the tax credit. Yun said he believes there will be enough demand in the second half of the year without a government subsidy.
Still, some housing market experts predict the market will take a dramatic "double-dip" once the government's supports are gone. But others argue that there is enough pent-up demand to keep the market chugging. And prices have fallen dramatically since the boom years -- as much as 50 percent in some places. So buyers can pick up bargain-priced foreclosures.
AP Business Writer Erin Conroy in New York contributed to this report.
Sales of previously occupied homes rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million last month, the highest level since December, the National Association of Realtors said Thursday. February's sales figures were revised downward slightly to 5.01 million.
"The spring selling season will be a success and probably the most active we're seen in years," said Stuart Hoffman, chief economist at PNC Financial Services Group.
Sales are likely to keep growing through the first half of the year as tax credits for first-time buyers and low mortgage rates fuel purchases. The average interest rate this week was 5.07 percent for a traditional 30-year fixed-rate mortgage, Freddie Mac said Thursday.
But doubts remain about whether the momentum will be sustained in the second half of the year when federal support is gone.
"This is a temporary surge that won't be sustained" said Paul Dales, US economist with Capital Economics. "It won't be very pretty."
Sales are now up 18 percent from their low in early 2009, but are still down 26 percent from their peak in fall 2005. March's results had been expected to rise about 5 percent to 5.28 million, according to economists surveyed by Thomson Reuters.
The results show the housing market is stabilizing after a devastating bust. But the true test will be whether the market can stand on its own after federal tax credits expire at the end of this month.
Sales rose in every region, surging more than 7 percent in the Midwest and South, 6.6 percent in the West and 6 percent in the Northeast.
"It's a very broad-based recovery," said Lawrence Yun, the Realtors' chief economist.
The median sales price was $170,700, up almost 4 percent from $164,600 a month earlier and nearly unchanged from $170,000 in March 2009.
The inventory of unsold homes on the market was up 1.5 percent at 3.6 million. That's an eight month supply at the current sales pace.
Sales nationally had declined over the winter, eroding gains made last fall and summer. The downward direction troubled economists because the government has taken unprecedented steps to support the housing sector.
For several months, home shoppers didn't feel rushed after lawmakers extended the deadline to qualify for tax incentives. The government is offering a $8,000 credit for first-time buyers and $6,500 for current homeowners willing to buy and move into another property.
But now time is running out. Buyers must sign contract offers by April 30 to qualify, and real estate agents say that's spurring sales.
"Many people who otherwise wouldn't be on the market for a home want to take advantage of these tax credits," said Kathi McLeod, sales manager for Windermere Real Estate in Boise, Idaho. "You have buyers who have been looking and looking at properties and realizing that it's almost too late, so they're really scrambling and jumping into deals."
The Realtors group is not pushing for an another extension of the tax credit. Yun said he believes there will be enough demand in the second half of the year without a government subsidy.
Still, some housing market experts predict the market will take a dramatic "double-dip" once the government's supports are gone. But others argue that there is enough pent-up demand to keep the market chugging. And prices have fallen dramatically since the boom years -- as much as 50 percent in some places. So buyers can pick up bargain-priced foreclosures.
AP Business Writer Erin Conroy in New York contributed to this report.
Friday, April 9, 2010
Low Rates Likely Through 2010
Interest rates are likely to remain low into 2011, Federal Reserve policymakers hinted this week in at least two presentations. These indications came one week after the Fed shut down its program to buy mortgage-backed securities, which had kept rates at or near record lows in recent months.
In a speech Thursday, Fed Governor Daniel Tarullo said, "The relatively modest pace of recovery, the continued high rate of unemployment, subdued inflation trends, and well-anchored inflation expectations together suggest that the need for highly accommodative monetary policies will not diminish soon.”
Likewise, Donald Kohn, Fed vice chairman in a speech in San Francisco, said the Fed would raise rates, “in due course,” but he also noted that low rates "help offset the lingering restraining effects on economic activity and prices."
So far, rates have risen modestly, but analysts speculate they will likely become much more volatile down the road.
“It’s an uncertain type of market,” says Keith Gumbinger of HSH.com.
Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association, predicts that the Fed will have created a situation where there are days or weeks of low-rate opportunities, and other days and weeks when rates rise significantly.
In a speech Thursday, Fed Governor Daniel Tarullo said, "The relatively modest pace of recovery, the continued high rate of unemployment, subdued inflation trends, and well-anchored inflation expectations together suggest that the need for highly accommodative monetary policies will not diminish soon.”
Likewise, Donald Kohn, Fed vice chairman in a speech in San Francisco, said the Fed would raise rates, “in due course,” but he also noted that low rates "help offset the lingering restraining effects on economic activity and prices."
So far, rates have risen modestly, but analysts speculate they will likely become much more volatile down the road.
“It’s an uncertain type of market,” says Keith Gumbinger of HSH.com.
Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association, predicts that the Fed will have created a situation where there are days or weeks of low-rate opportunities, and other days and weeks when rates rise significantly.
Pending Home Sales Show Healthy Gain
Pending home sales rose in February, potentially signaling a second surge of home sales in response to the home buyer tax credit, according to the National Association of REALTORS®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, says the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he says. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”
Pending home sales by region:
Northeast: the index rose 9.0 percent to 77.7 in February and is 18.9 percent higher than February 2009.
Midwest: jumped 21.8 percent to 97.9 and is 18.7 percent above a year ago.
South: increased 9.2 percent to an index of 107.0, and the index is 17.5 percent higher than February 2009.
West: the index fell 4.8 percent to 98.0 but is 14.6 percent above a year ago.
Source: NAR
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, says the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he says. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”
Pending home sales by region:
Northeast: the index rose 9.0 percent to 77.7 in February and is 18.9 percent higher than February 2009.
Midwest: jumped 21.8 percent to 97.9 and is 18.7 percent above a year ago.
South: increased 9.2 percent to an index of 107.0, and the index is 17.5 percent higher than February 2009.
West: the index fell 4.8 percent to 98.0 but is 14.6 percent above a year ago.
Source: NAR
Is now a good time to buy a home?
I get asked this all the time. And my answer is always the same, “Yes!” Here are just a few reasons why:
1. Buyers Market! Right now we are in a buyers market. The inventory of homes is high and prices have still not bottomed out. There is a lot to choose from which gives you more opportunity to find the house that best fits you and your family’s needs.
2. Low Interest Rates! Current interest rates are sitting right around 5%. This is a great time to jump on the lower interest rate as they are expected to start to climb again, soon. Lower interest rate means a lower payment or a bit more in a house!
3. Tax Credit! Whether you are a first time home buyer or a repeat buyer, there is a credit for you. This is not a tax decuction, it is FREE money!
4. Buyers agent is FREE! As your buyer agent, I will cost you NO money for my services! I am licened in Washington and Oregon and love to help clients find their next home! Consider me your personal home finder! Give me a call and put me to work for you.
1. Buyers Market! Right now we are in a buyers market. The inventory of homes is high and prices have still not bottomed out. There is a lot to choose from which gives you more opportunity to find the house that best fits you and your family’s needs.
2. Low Interest Rates! Current interest rates are sitting right around 5%. This is a great time to jump on the lower interest rate as they are expected to start to climb again, soon. Lower interest rate means a lower payment or a bit more in a house!
3. Tax Credit! Whether you are a first time home buyer or a repeat buyer, there is a credit for you. This is not a tax decuction, it is FREE money!
4. Buyers agent is FREE! As your buyer agent, I will cost you NO money for my services! I am licened in Washington and Oregon and love to help clients find their next home! Consider me your personal home finder! Give me a call and put me to work for you.
Tuesday, March 16, 2010
Earthquake Safety Tips
Have an earthquake readiness plan
A little knowledge and a few precautionary measures can enormously increase your chances of surviving an earthquake - or any other type of hazard. The keys are education and preparing in advance. The earthquake safety tips below will not make you an expert. However, they could make a life-saving difference if you find yourself in an earthquake situation. Invest in your personal safety by studying below.
Consult a professional to learn how to make your home sturdier, such as bolting bookcases to wall studs, installing strong latches on cupboards, and strapping the water heater to wall studs.
Locate a place in each room of the house that you can go to in case of an earthquake. It should be a spot where nothing is likely to fall on you.
Keep a supply of canned food, an up-to-date first aid kit, 3 gallons (11.4 liters) of water per person, dust masks and goggles, and a working battery-operated radio and flashlights.
Know how to turn off your gas and water mains.
Before the Earthquake:
Learn how to survive during the ground motion. This is described in the "During the Earthquake" section below. The earthquake safety tips there will prepare you for the fast action needed - most earthquakes are over in seconds so knowing what to do instinctively is very important.
Teach all members of your family about earthquake safety. This includes: 1) the actions you should take when an earthquake occurs, 2) the safe places in a room such as under a strong desk, along interior walls, and 3) places to avoid such as near windows, large mirrors, hanging objects, heavy furniture and fireplaces.
Stock up on emergency supplies. These include: battery operated radio (and extra batteries), flashlights (and extra batteries), first aid kit, bottled water, two weeks food and medical supplies, blankets, cooking fuel, tools needed to turn off your gas, water and electric utilities.
Arrange your home for safety: Store heavy objects on lower shelves and store breakable objects in cabnents with latched doors. Don't hang heavy mirrors or pictures above where people frequently sit or sleep.
Anchor heavy appliances and furniture such as water heaters, refrigerators and bookcases.
Store flamable liquids away from potential ignition sources such as water heaters, stoves and furnaces.
Get Educated. Learn what to do during an earthquake (see below). Then you will be ready for the fast action needed. Make sure that all members of your family have this important education.
Learn where the main turn-offs are for your water, gas and electricity. Know how to turn them off and the location of any needed tools.
During the Earthquake:
If you are indoors, stay there. Quickly move to a safe location in the room such as under a strong desk, a strong table, or along an interior wall. The goal is to protect yourself from falling objects and be located near the structural strong points of the room. Avoid taking cover near windows, large mirrors, hanging objects, heavy furniture, heavy appliances or fireplaces.
If you are cooking, turn off the stove and take cover.
If you are outdoors, move to an open area where falling objects are unlikely to strike you. Move away from buildings, powerlines and trees.
If you are driving, slow down smoothly and stop on the side of the road. Avoid stopping on or under bridges and overpasses, or under power lines, trees and large signs. Stay in your car.
If Shaking Begins
Drop down; take cover under a desk or table and hold on.
Stay indoors until the shaking stops and you're sure it's safe to exit.
Stay away from bookcases or furniture that can fall on you.
Stay away from windows. In a high-rise building, expect the fire alarms and sprinklers to go off during a quake.
If you are in bed, hold on and stay there, protecting your head with a pillow.
If you are outdoors, find a clear spot away from buildings, trees, and power lines. Drop to the ground.
If you are in a car, slow down and drive to a clear place. Stay in the car until the shaking stops.
If Shaking Begins
Drop down; take cover under a desk or table and hold on.
Stay indoors until the shaking stops and you're sure it's safe to exit.
Stay away from bookcases or furniture that can fall on you.
Stay away from windows. In a high-rise building, expect the fire alarms and sprinklers to go off during a quake.
If you are in bed, hold on and stay there, protecting your head with a pillow.
If you are outdoors, find a clear spot away from buildings, trees, and power lines. Drop to the ground.
If you are in a car, slow down and drive to a clear place. Stay in the car until the shaking stops.
This would be a great email for one of your 33 Step Action Plans to send out to your clients today. Remember, you only need 250 contacts in your database and reach them 33 times to equal 50 transactions! These are real stats! I mass email things like this so you don't have to do the research, but can still touch your clients. Hope this helps, and thank goodness today's earthquake was a minor one! Please enjoy your beautiful day!
A little knowledge and a few precautionary measures can enormously increase your chances of surviving an earthquake - or any other type of hazard. The keys are education and preparing in advance. The earthquake safety tips below will not make you an expert. However, they could make a life-saving difference if you find yourself in an earthquake situation. Invest in your personal safety by studying below.
Consult a professional to learn how to make your home sturdier, such as bolting bookcases to wall studs, installing strong latches on cupboards, and strapping the water heater to wall studs.
Locate a place in each room of the house that you can go to in case of an earthquake. It should be a spot where nothing is likely to fall on you.
Keep a supply of canned food, an up-to-date first aid kit, 3 gallons (11.4 liters) of water per person, dust masks and goggles, and a working battery-operated radio and flashlights.
Know how to turn off your gas and water mains.
Before the Earthquake:
Learn how to survive during the ground motion. This is described in the "During the Earthquake" section below. The earthquake safety tips there will prepare you for the fast action needed - most earthquakes are over in seconds so knowing what to do instinctively is very important.
Teach all members of your family about earthquake safety. This includes: 1) the actions you should take when an earthquake occurs, 2) the safe places in a room such as under a strong desk, along interior walls, and 3) places to avoid such as near windows, large mirrors, hanging objects, heavy furniture and fireplaces.
Stock up on emergency supplies. These include: battery operated radio (and extra batteries), flashlights (and extra batteries), first aid kit, bottled water, two weeks food and medical supplies, blankets, cooking fuel, tools needed to turn off your gas, water and electric utilities.
Arrange your home for safety: Store heavy objects on lower shelves and store breakable objects in cabnents with latched doors. Don't hang heavy mirrors or pictures above where people frequently sit or sleep.
Anchor heavy appliances and furniture such as water heaters, refrigerators and bookcases.
Store flamable liquids away from potential ignition sources such as water heaters, stoves and furnaces.
Get Educated. Learn what to do during an earthquake (see below). Then you will be ready for the fast action needed. Make sure that all members of your family have this important education.
Learn where the main turn-offs are for your water, gas and electricity. Know how to turn them off and the location of any needed tools.
During the Earthquake:
If you are indoors, stay there. Quickly move to a safe location in the room such as under a strong desk, a strong table, or along an interior wall. The goal is to protect yourself from falling objects and be located near the structural strong points of the room. Avoid taking cover near windows, large mirrors, hanging objects, heavy furniture, heavy appliances or fireplaces.
If you are cooking, turn off the stove and take cover.
If you are outdoors, move to an open area where falling objects are unlikely to strike you. Move away from buildings, powerlines and trees.
If you are driving, slow down smoothly and stop on the side of the road. Avoid stopping on or under bridges and overpasses, or under power lines, trees and large signs. Stay in your car.
If Shaking Begins
Drop down; take cover under a desk or table and hold on.
Stay indoors until the shaking stops and you're sure it's safe to exit.
Stay away from bookcases or furniture that can fall on you.
Stay away from windows. In a high-rise building, expect the fire alarms and sprinklers to go off during a quake.
If you are in bed, hold on and stay there, protecting your head with a pillow.
If you are outdoors, find a clear spot away from buildings, trees, and power lines. Drop to the ground.
If you are in a car, slow down and drive to a clear place. Stay in the car until the shaking stops.
If Shaking Begins
Drop down; take cover under a desk or table and hold on.
Stay indoors until the shaking stops and you're sure it's safe to exit.
Stay away from bookcases or furniture that can fall on you.
Stay away from windows. In a high-rise building, expect the fire alarms and sprinklers to go off during a quake.
If you are in bed, hold on and stay there, protecting your head with a pillow.
If you are outdoors, find a clear spot away from buildings, trees, and power lines. Drop to the ground.
If you are in a car, slow down and drive to a clear place. Stay in the car until the shaking stops.
This would be a great email for one of your 33 Step Action Plans to send out to your clients today. Remember, you only need 250 contacts in your database and reach them 33 times to equal 50 transactions! These are real stats! I mass email things like this so you don't have to do the research, but can still touch your clients. Hope this helps, and thank goodness today's earthquake was a minor one! Please enjoy your beautiful day!
Wednesday, March 10, 2010
State of the California Housing Market Report
First-time buyers, distressed properties drove California’s housing market in 2009, C.A.R. reports
LOS ANGELES (March 10) – Affordable home prices, tax credits for home buyers, historically low interest rates, and a large number of distressed properties prompted many first-time home buyers to enter the market in 2009, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) 2009-2010 “State of the California Housing Market” report released today.
The percent of first-time buyers increased dramatically in 2009, from 35.9 percent in 2008 to 47 percent in 2009, according to the report. The share of first-time buyers exceeded the long-run average of 38.6 percent and was the highest since 1995, when more than half of all buyers were first timers.
“It is clear that the federal tax credit for home buyers worked well in 2009 and is continuing to drive home sales,” said C.A.R. President Steve Goddard. “The home buyers’ tax credit is arguably the most successful strategy employed by the government’s efforts to stimulate the economy.”
According to a survey conducted by C.A.R. on the effectiveness of the federal tax credit for home buyers, nearly 40 percent said they would not have purchased a home if the federal tax credit was not offered. On the same note, nearly 70 percent of these buyers said the tax credit was either “very important” or “most important” in their decision to buy a home. The large number of distressed properties led to more than half of all first-time buyers purchasing an REO/foreclosure or short sale property.
Statewide, REO/foreclosures and short sales accounted for almost half of all annual sales in 2009, an increase from 35.6 percent in 2008. The median price of distressed properties declined nearly one quarter to $250,000 in 2009 compared with $330,000 in 2008. Meanwhile, the median price of non-distressed properties decreased only 10.4 percent to $485,000 compared with $541,000 in 2008.
Many sellers sold their homes with a loss in 2009, and those who experienced a net cash loss increased for the fifth consecutive year. With one-third of sellers experiencing a net cash loss in 2009, it was the highest level on record since C.A.R. started tracking net cash losses in 1989, and was more than triple the long-run average of 9.3 percent. Following two consecutive years of significant declines in prices, the median net cash from home sales declined 50 percent last year to $50,000 from $100,000 in 2008.
Although sellers experienced a steeper net cash loss, lower home prices across the state sent affordability for first-time buyers to record-high levels in 2009. C.A.R.’s First-Time Buyer Housing Affordability Index (FTB-HAI) rose to 64 percent in the third quarter of 2009. The FTB-HAI measures the percentage of households that can afford to purchase an entry-level home in California and also reports first-time buyer indexes for regions and select counties within the state.
Affordable home prices also enabled first-time buyers to purchase larger homes. The average size of a first-time buyer’s house increased to 1,560 square feet in 2009 compared with 1,300 square feet in 2005. Nearly 80 percent of first-time buyers purchased a single-family home, a slight increase from 78.5 in 2008, but a significant increase from 2005 when only 61 percent of first-time buyers purchased single-family homes.
Lower home prices not only encouraged first-time buyers to purchase entry-level homes, but also lured investors. More than 70 percent of properties purchased by investors were either short sales or REO/foreclosures. The typical investment property was 1,367 square feet and had a median price of $232,750.
California’s median home price hit bottom in February 2009 at $245,170. Since then, the median home price has increased steadily in month-to-month comparisons, but remained below 2008 levels throughout 2009. The annual median price is projected to increase to $280,000 in 2010 from $271,000 in 2009.
Homes priced $500,000 or less dominated the sales mix throughout 2008 and early 2009, but peaked at 85 percent in January 2009. Meanwhile, the market share of homes sold for more than $500,000 increased from 15 percent in January 2009 to 25 percent in July 2009, holding steady around that figure for the remainder of last year.
Sales of high-end homes started picking up in late 2009, with the number of closings for homes priced $500,000 or higher rising 3 percent, and sales of homes priced $1 million or more experiencing their first year-to-year increase since July 2007. Statewide, annual sales of existing homes are projected to reach 527,500 units in 2010, a 2.7 percent decline compared with 2009’s annual rate of 540,000 units.
As conventional loans became more difficult to obtain, the percentage of FHA-insured loans as a first mortgage increased significantly in 2009. The percentage of home buyers utilizing an FHA-insured loan increased to 32 percent in 2009, compared with 18.9 percent in 2008, partially a result of the agency increasing its loan limit from $362,790 to $729,750. FHA loans typically require lower down payments and have less rigid credit-qualifying guidelines than conventional loans. The median down payment for FHA-insured loans was $9,888 compared with $92,000 for conventional purchase loans.
“Although the huge increase in the use of FHA-insured loans is of concern, the housing market will continue to stabilize as home prices slowly recover and discretionary sellers return to the market in 2010,” said C.A.R. Chief Economist Leslie Appleton-Young.
C.A.R.’s “State of the California Housing Market 2009-2010” report is free to members of C.A.R. or available for purchase for $49.95 in electronic format at http://www.rebsonline.com/category/57/. The survey is no longer available in hard copy format. Journalists who would like a complimentary copy of the report should e-mail markg@car.org or call (213) 739-8363.
Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
LOS ANGELES (March 10) – Affordable home prices, tax credits for home buyers, historically low interest rates, and a large number of distressed properties prompted many first-time home buyers to enter the market in 2009, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) 2009-2010 “State of the California Housing Market” report released today.
The percent of first-time buyers increased dramatically in 2009, from 35.9 percent in 2008 to 47 percent in 2009, according to the report. The share of first-time buyers exceeded the long-run average of 38.6 percent and was the highest since 1995, when more than half of all buyers were first timers.
“It is clear that the federal tax credit for home buyers worked well in 2009 and is continuing to drive home sales,” said C.A.R. President Steve Goddard. “The home buyers’ tax credit is arguably the most successful strategy employed by the government’s efforts to stimulate the economy.”
According to a survey conducted by C.A.R. on the effectiveness of the federal tax credit for home buyers, nearly 40 percent said they would not have purchased a home if the federal tax credit was not offered. On the same note, nearly 70 percent of these buyers said the tax credit was either “very important” or “most important” in their decision to buy a home. The large number of distressed properties led to more than half of all first-time buyers purchasing an REO/foreclosure or short sale property.
Statewide, REO/foreclosures and short sales accounted for almost half of all annual sales in 2009, an increase from 35.6 percent in 2008. The median price of distressed properties declined nearly one quarter to $250,000 in 2009 compared with $330,000 in 2008. Meanwhile, the median price of non-distressed properties decreased only 10.4 percent to $485,000 compared with $541,000 in 2008.
Many sellers sold their homes with a loss in 2009, and those who experienced a net cash loss increased for the fifth consecutive year. With one-third of sellers experiencing a net cash loss in 2009, it was the highest level on record since C.A.R. started tracking net cash losses in 1989, and was more than triple the long-run average of 9.3 percent. Following two consecutive years of significant declines in prices, the median net cash from home sales declined 50 percent last year to $50,000 from $100,000 in 2008.
Although sellers experienced a steeper net cash loss, lower home prices across the state sent affordability for first-time buyers to record-high levels in 2009. C.A.R.’s First-Time Buyer Housing Affordability Index (FTB-HAI) rose to 64 percent in the third quarter of 2009. The FTB-HAI measures the percentage of households that can afford to purchase an entry-level home in California and also reports first-time buyer indexes for regions and select counties within the state.
Affordable home prices also enabled first-time buyers to purchase larger homes. The average size of a first-time buyer’s house increased to 1,560 square feet in 2009 compared with 1,300 square feet in 2005. Nearly 80 percent of first-time buyers purchased a single-family home, a slight increase from 78.5 in 2008, but a significant increase from 2005 when only 61 percent of first-time buyers purchased single-family homes.
Lower home prices not only encouraged first-time buyers to purchase entry-level homes, but also lured investors. More than 70 percent of properties purchased by investors were either short sales or REO/foreclosures. The typical investment property was 1,367 square feet and had a median price of $232,750.
California’s median home price hit bottom in February 2009 at $245,170. Since then, the median home price has increased steadily in month-to-month comparisons, but remained below 2008 levels throughout 2009. The annual median price is projected to increase to $280,000 in 2010 from $271,000 in 2009.
Homes priced $500,000 or less dominated the sales mix throughout 2008 and early 2009, but peaked at 85 percent in January 2009. Meanwhile, the market share of homes sold for more than $500,000 increased from 15 percent in January 2009 to 25 percent in July 2009, holding steady around that figure for the remainder of last year.
Sales of high-end homes started picking up in late 2009, with the number of closings for homes priced $500,000 or higher rising 3 percent, and sales of homes priced $1 million or more experiencing their first year-to-year increase since July 2007. Statewide, annual sales of existing homes are projected to reach 527,500 units in 2010, a 2.7 percent decline compared with 2009’s annual rate of 540,000 units.
As conventional loans became more difficult to obtain, the percentage of FHA-insured loans as a first mortgage increased significantly in 2009. The percentage of home buyers utilizing an FHA-insured loan increased to 32 percent in 2009, compared with 18.9 percent in 2008, partially a result of the agency increasing its loan limit from $362,790 to $729,750. FHA loans typically require lower down payments and have less rigid credit-qualifying guidelines than conventional loans. The median down payment for FHA-insured loans was $9,888 compared with $92,000 for conventional purchase loans.
“Although the huge increase in the use of FHA-insured loans is of concern, the housing market will continue to stabilize as home prices slowly recover and discretionary sellers return to the market in 2010,” said C.A.R. Chief Economist Leslie Appleton-Young.
C.A.R.’s “State of the California Housing Market 2009-2010” report is free to members of C.A.R. or available for purchase for $49.95 in electronic format at http://www.rebsonline.com/category/57/. The survey is no longer available in hard copy format. Journalists who would like a complimentary copy of the report should e-mail markg@car.org or call (213) 739-8363.
Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
Thursday, March 4, 2010
Get off the Nails in Your Life.
There was a man who went to visit his friend in the deep bayous of Louisiana. As he approached his friend’s house he noticed his trusty old hound out on the porch moaning and howling lowly. Puzzled, tried to console the aggravated dog to no avail. When his friend came to the door, he asked why the dog was lowly howling. His friend simply replied that the dog had laid on a nail. Now completely confused, he asked "why doesn’t he just get off it?" His friend replied with a slow southern drawl, "I guess it doesn’t hurt that bad…"
This little story illustrates perfectly the concept of a toleration. They are things that we can do something about, but lack the motivation because they just don’t hurt bad enough to overcome the pain that comes with the discipline to do something positive. Think the papers on your desk, those extra 10 pounds, the prospecting activities that seem to always get put off until tomorrow or next week.
You are tolerating more than you think. We put up with, accept, take on, and are dragged down by people’s behavior, situations, unmet needs, crossed boundaries, unfinished business, frustrations, problems, and even our own behavior.
So what are you tolerating? Take a couple of minutes to write down stuff you that you are putting up with. Not the stuff you can’t change or have no control over, but things like that 5 lbs that hangs around because it really doesn’t bug you enough to motivate you to go to the gym. Or that pile of papers that has sat on the corner of your desk for the last 3 weeks.
As you think of more items, add them to your list. Do you have to do anything about them? No, not really. Just becoming aware of and articulating them will bring them to the forefront of your mind and you’ll naturally start handling, eliminating, fixing, growing through, and resolving these them
This little story illustrates perfectly the concept of a toleration. They are things that we can do something about, but lack the motivation because they just don’t hurt bad enough to overcome the pain that comes with the discipline to do something positive. Think the papers on your desk, those extra 10 pounds, the prospecting activities that seem to always get put off until tomorrow or next week.
You are tolerating more than you think. We put up with, accept, take on, and are dragged down by people’s behavior, situations, unmet needs, crossed boundaries, unfinished business, frustrations, problems, and even our own behavior.
So what are you tolerating? Take a couple of minutes to write down stuff you that you are putting up with. Not the stuff you can’t change or have no control over, but things like that 5 lbs that hangs around because it really doesn’t bug you enough to motivate you to go to the gym. Or that pile of papers that has sat on the corner of your desk for the last 3 weeks.
As you think of more items, add them to your list. Do you have to do anything about them? No, not really. Just becoming aware of and articulating them will bring them to the forefront of your mind and you’ll naturally start handling, eliminating, fixing, growing through, and resolving these them
Tuesday, March 2, 2010
Bright Spots in California
Three of the top 10 markets for rising prices are in California, a state at the heart of the real estate boom and bust. But because markets in that state were inflated earlier, many were well positioned to make a comeback even before the larger economy recovered.
That's true in the cities of Sunnyvale (in Silicon Valley), Poway and affluent Arcadia, outside of Los Angeles, where prices increased an average of 28%. Inventory has dropped in these markets, suggesting demand is up, and prices in California rose overall from January 2009 to August 2009. That's a natural seasonal trend for healthy markets, but it hadn't been reflected in California since the bust
That's true in the cities of Sunnyvale (in Silicon Valley), Poway and affluent Arcadia, outside of Los Angeles, where prices increased an average of 28%. Inventory has dropped in these markets, suggesting demand is up, and prices in California rose overall from January 2009 to August 2009. That's a natural seasonal trend for healthy markets, but it hadn't been reflected in California since the bust
Thursday, February 25, 2010
California median price rises in January
The median price of existing, single-family homes rose 15 percent in January, while sales declined 10.6 percent compared with the prior year, according to C.A.R.’s latest sales and price report. The median price of an existing, single-family detached home in California during January was $287,440, a 15 percent increase from the revised $249,960 median for January 2009, according to the report. The January median price declined 6.3 percent compared with December’s $306,820 median price. Statewide home resale activity decreased 10.6 percent from the revised 602,660 unit sales pace recorded in January 2009. Sales in January 2010 decreased 3 percent compared with the previous month.
“Many sales that closed escrow in January were on homes with offers accepted during the holiday season--a time when many house hunters are first-time buyers,” said C.A.R. President Steve Goddard. “First-time buyers typically purchase homes priced below an area’s median home price. Reflecting this, the percentage of homes priced under $500,000 increased to 77 percent of all sales in January, compared with 75 percent in December.”
“Many sales that closed escrow in January were on homes with offers accepted during the holiday season--a time when many house hunters are first-time buyers,” said C.A.R. President Steve Goddard. “First-time buyers typically purchase homes priced below an area’s median home price. Reflecting this, the percentage of homes priced under $500,000 increased to 77 percent of all sales in January, compared with 75 percent in December.”
Friday, February 5, 2010
Welcome to the most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general.
Please click on this link to view the FEBRUARY-2010 Newsletter Housing Trends eNewsletter:
http://miltgalbraith.housingtrendsenewsletter.com?Newsletter_ID=242&Period_ID=182
The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources.
It also includes press releases with charts and videos, key market indicators and real estate sales and price statistics, a video message by a nationally recognized economist, maps, mortgage rates and calculators, consumer articles, plus local neighborhood information and more.
If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report:
http://miltgalbraith.housingtrendsenewsletter.com/dispContent.cfm?loadid=2&loadtype=0
Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future.
Sincerely yours,
Milt Galbraith
Ricci Realty
616 E Chapman Ave Orange Ca 92866
714-633-3600 | 714-743-0888
mgalbraith@socal.rr.com
Please click on this link to view the FEBRUARY-2010 Newsletter Housing Trends eNewsletter:
http://miltgalbraith.housingtrendsenewsletter.com?Newsletter_ID=242&Period_ID=182
The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources.
It also includes press releases with charts and videos, key market indicators and real estate sales and price statistics, a video message by a nationally recognized economist, maps, mortgage rates and calculators, consumer articles, plus local neighborhood information and more.
If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report:
http://miltgalbraith.housingtrendsenewsletter.com/dispContent.cfm?loadid=2&loadtype=0
Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future.
Sincerely yours,
Milt Galbraith
Ricci Realty
616 E Chapman Ave Orange Ca 92866
714-633-3600 | 714-743-0888
mgalbraith@socal.rr.com
10 Home Features Buyers Want
Home designers and builders speaking at the recent International Builders Show in Las Vegas say that buyers are seeking cost-effective features and rejecting things that don’t have lasting value.
“It's all about family togetherness – casual living, entertaining and flexible spaces," says Carol Lavender, president of the Lavender Design Group in San Antonio.
Paul Cardis, CEO of Avid Ratings, which conducts an annual survey of buyer preferences, identified these must-haves in new homes:
1. Large kitchens with islands
2. Energy efficiency, including energy-efficient appliances, super insulation, and high-efficiency windows.
3. Home offices
4. Main-floor master suite
5. Outdoor living space
6. Ceiling fans
7. Soaking tub in the master suite and/or an oversize shower with a seating area
8. Stone and brick exteriors rather than stucco or vinyl
9. Community walking paths and playgrounds
10. Two-car garages, but three-car garages are even more desirable
Source: MarketWatch, Steve Kerch (01/30/2010)
“It's all about family togetherness – casual living, entertaining and flexible spaces," says Carol Lavender, president of the Lavender Design Group in San Antonio.
Paul Cardis, CEO of Avid Ratings, which conducts an annual survey of buyer preferences, identified these must-haves in new homes:
1. Large kitchens with islands
2. Energy efficiency, including energy-efficient appliances, super insulation, and high-efficiency windows.
3. Home offices
4. Main-floor master suite
5. Outdoor living space
6. Ceiling fans
7. Soaking tub in the master suite and/or an oversize shower with a seating area
8. Stone and brick exteriors rather than stucco or vinyl
9. Community walking paths and playgrounds
10. Two-car garages, but three-car garages are even more desirable
Source: MarketWatch, Steve Kerch (01/30/2010)
Thursday, January 21, 2010
HUD moratorium on FHA 90-day anti-flipping rule
The Dept. of Housing and Urban Development (HUD) announced Friday it is instituting a one-year moratorium on the Federal Housing Administration (FHA) 90-day anti-flipping rule.
With certain exceptions, such as HUD-owned and bank-owned properties, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. However, beginning Feb. 1, buyers may use FHA-insured financing to purchase properties resold through private developers and investors, providing access to a broader array of recently foreclosed properties.
Under the temporary waiver, all transactions must be arm's-length, and most properties will require additional documentation of improvements and justification of the price increase. Additional documentation may include a second appraisal and a property inspection ordered by the lender.
C.A.R. recently submitted a letter to FHA Commissioner David Stevens detailing the challenges facing many home buyers using FHA loans, such as the lack of housing inventory available to FHA buyers, and the need for this rule to be revised to reflect current market conditions. The reexamination of the 90-day anti-flipping rule was passed as an action item during C.A.R.'s board of directors meetings in October.
With certain exceptions, such as HUD-owned and bank-owned properties, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. However, beginning Feb. 1, buyers may use FHA-insured financing to purchase properties resold through private developers and investors, providing access to a broader array of recently foreclosed properties.
Under the temporary waiver, all transactions must be arm's-length, and most properties will require additional documentation of improvements and justification of the price increase. Additional documentation may include a second appraisal and a property inspection ordered by the lender.
C.A.R. recently submitted a letter to FHA Commissioner David Stevens detailing the challenges facing many home buyers using FHA loans, such as the lack of housing inventory available to FHA buyers, and the need for this rule to be revised to reflect current market conditions. The reexamination of the 90-day anti-flipping rule was passed as an action item during C.A.R.'s board of directors meetings in October.
New rules for FHA borrowers
The Federal Housing Administration (FHA) today outlined future changes to the FHA home loan program. The changes first were proposed last month by Secretary of Housing and Urban Development (HUD) Shaun Donovan.
Rising defaults on FHA loans have led to the FHA’s cash reserves falling below federally mandated levels. FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default.
Policy changes include:
. Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its
current 1.75 percent. HUD is expected to release a Mortgagee Letter on Jan. 21 making the
premium increase effective in the spring.
. Raising the minimum credit score requirements: New borrowers will be required to have a minimum
FICO score of 580 to qualify for the FHA’s 3.5 percent down payment program. New borrowers with
less than a 580 FICO score will be required to put down at least 10 percent. FHA expects this to take
effect in early summer after it goes through the normal regulatory process.
. Reduce allowable seller concessions: The agency is lowering the maximum permissible level to 3
percent from its current 6 percent limit. FHA expects this to take effect in early summer after it goes
through the normal regulatory process.
Rising defaults on FHA loans have led to the FHA’s cash reserves falling below federally mandated levels. FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default.
Policy changes include:
. Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its
current 1.75 percent. HUD is expected to release a Mortgagee Letter on Jan. 21 making the
premium increase effective in the spring.
. Raising the minimum credit score requirements: New borrowers will be required to have a minimum
FICO score of 580 to qualify for the FHA’s 3.5 percent down payment program. New borrowers with
less than a 580 FICO score will be required to put down at least 10 percent. FHA expects this to take
effect in early summer after it goes through the normal regulatory process.
. Reduce allowable seller concessions: The agency is lowering the maximum permissible level to 3
percent from its current 6 percent limit. FHA expects this to take effect in early summer after it goes
through the normal regulatory process.
Thursday, January 14, 2010
Having a “can do” attitude
Having a “can do” attitude - very valuable.
Knowing when “can do” won’t do - priceless.
There are times when you’ve done your due diligence, you’ve been honest every step of the way with everyone connected to a venture or project, and suddenly, everything you’ve worked so hard for blows up in your face. You re-attack the problem and it’s like throwing a pebble at a freight train. The problem continues to vex, frustrate you, and is costly to you, your business, and your relationships. The problem is here to stay. The good news is so are you. The scenario I’m presenting to you is not being stuck in traffic. I’m talking about something which has significantly challenged your beliefs, your methods, even your confidence. In other words something significant.
Usually when “can do” fails, the first step is to seek comfort in the arms of others. But when significance strikes, we realize all too well while can be part of the solution they can’t make the problem go away. Being willing to trust others and seek external answers is good. What isn’t good is the usual answer we hear when we’re looking for more than just comfort, but answers. We approach our pastor to be told “You have to have more faith”. We call our parents and are told “Don’t worry dear, your father and I think the world of you.”. Too bad your ex-client or boss doesn’t. A coach or mentor may say “Fake it ‘til you make it” or tells us to invoke the “Power of Positive Thinking”. We approach our spouses or significant others and initially receive a compassionate response. But after awhile we begin to be a drain on the relationship because what’s happened is so big we can talk of nothing else. Defeat happens and you need to understand what it is, how to get out of it, and where to go from there. However, an unguided or unstructured means of restoration will result in more heartache and more problems. As for the original problem, it now becomes a pattern.
So when our relationships don’t cut it we turn to books and that’s good too. The problem is there are way too many books which offer quick, general, and ultimately childish answers. Because we’re in an emotionally altered state, we don’t feel like wading through even more complexity loaded with the unknown. If we feel self-pity then it’s “Don’t Sweat the Small Stuff (and it’s all small stuff)”. What about when your wife is diagnosed with cancer? I guess that’s small stuff. Or, we’re attracted to the mystical such “The Secret”. Essentially “The Secret” is that whatever happens to you is up to you and you alone via “The Law of Attraction” (basically a regurgitated form of “Positive Thinking”). But what about when a pedophile kidnaps and murders an 8 year old child? I guess they attracted it. Or how about the earthquake in Pakistan in 2005 which killed 70,000 people? Did all of those people attract it?
Society is under the delusion that if we just try hard enough, if we’re diligent enough, and have enough heart, victory is assured. The truth is that we can do all of that and more and still sometimes it’s just not our time. Anyone who chooses to make a living based on passion, knows that it’s a matter of time until we tumble and have to change. If you are doing something which you have been called to do, you know that although defeat is a probability over time, it does not make us who we are. We’ve found that the best method to rebound is contained by the “Six Rs”. Let’s look at the amazing comeback of George Foreman as an example.
1. Relax. When a good boxer takes a blow flush on the chin, he’ll relax and absorb the blow will allow the force to flow through him, vs. into him. There’s a reason why in most fatal DUI crashes, the drunk tends to survive. That’s because he has very little tension in his muscles at the point of impact. What this would look like in real life is quickly confessing what just happened. In other words, acceptance. We all hate to lose. However, we have to go into any venture knowing that although “failure is not an option” it’s still possible. If you know who you are and can already envision what might happen (and therefore put it in its proper perspective) you’ll come out on top and rebound quickly. If you’re attacked by someone wielding a knife, you have to know that you’ll be cut at least once, if not several times before you can disarm the attacker. If you defend yourself knowing this already, the chance of going into shock is greatly reduced and so is the chance of you becoming a statistic.
When George Forman fought in his earlier years, he had an amazing amount of power behind his punches. Before he was knocked out by Muhammad Ali in the “Rumble in the Jungle”, he had dispatched the second most powerful boxer of his day, Joe Frazier in a mere 2 rounds. Ken Norton (who broke Ali’s jaw) met a similar fate. But when Foreman squared off against Ali, Ali refused to go toe to toe with Foreman. He danced, backpedaled when he had to, and repeatedly got Foreman in a clinch. Foreman would have to expend energy to untangle himself, and by round 7, against all odds and the unanimous view of the pundits and the public, George Foreman went down. Years later when he reentered the ring, Foreman, although still possessing plenty of power, chose to absorb the blows by staying relaxed vs. bulling his way through the fight.
The endstate of being able to relax is not to cover up what happened. It’s also not repeating that lie we’ve been uttering since boyhood; “That didn’t hurt.”. But being able to talk about it, limit it for what it is, and make sound decisions after the fact. Ultimately, relaxed looks like not experiencing frustration to the point of paralysis when you think about it or deal with it.
2. Remove. If something has you against the ropes and you can’t absorb anymore punishment, remove yourself from the situation. That doesn’t mean you have to quit your job or reconsider what you’re doing for a living. If you remove yourself, you’ll avoid making emotional (as in hasty or reactive) decisions. A sound decision is one which when executed, results in peace in your heart. Try to get away for a bit. Take some time off, take a vacation, but get out of striking distance of the problem.
After George Forman was knocked out by Ali, he was never quite the same again. After a lackluster performance in subsequent bouts, he collapsed in his dressing room one night and basically had an emotional collapse which resulted in his becoming a born-again Christian. He decided to enter into the ministry and raise a family, both of which he did very well. Boxing was his passion and because of that he was very appreciative of what boxing gave him. He knew that he was meant to box and still, despite his intense training regimen, his heart being 100% in it, and his 44-2 record (31 by knockout), it just didn’t happen. He removed himself from the boxing world, seemingly never to come back.
He still boxed as a hobby, still trained, and therefore kept in touch with the boxing world. But he had removed himself from the effects of the media, the ability for anyone to criticize him, or mention that he just wasn’t the “George Foreman of old”. That’s what successful removal looks like. You’re still aware of the problem, but you’re far enough from it financially, socially, and personally, where you know that despite the fallout and feedback, you’re in a safe place.
3. Replenish. This is where most of us go wrong. When we’re drained of energy and hope, we have to go somewhere to fill our tank. “Blowing off steam” is a part of the process. But the pursuit of pleasure, if it’s the core of what you do and think about, is not. It’s very seductive to sink back into the couch and zone out (“chillax” a friend of mine calls it) watching television. That’s ok, but ensure that you have a plan to get back up. The best way to do this is by a) accountability from a peer or coach and b) setting a time limit both long term and daily for leisure activity. And c) Selectively choosing the activities you will use to fill up your tank. Playing endless video games is neither relaxing nor replenishing. Most men play video games which entail shooting, killing, or some sort of competition (myself included). But when you’re done with your Halo or “Street Fighter” marathon, you’re not fulfilled, you’re spent. Try to focus on hobbies which entail some sort of creativity, something which is growth oriented. If it’s a video game, try one of the SIM games or even strategy games, something which uses your mind but doesn’t tax it. If you want to take a vacation, go somewhere relaxing, not Vegas. If you’re taking a break from your career or the market, choose something where you can come home everyday feeling somewhat fulfilled.
George Foreman’s boxing days were over (from his perspective) for quite some time. Yet in the interim he raised a family, developed a great church, constructed a youth center, and was willing to share his experiences on shows such as “The 700 Club”. Most importantly, he got his sense of humor back. Not by “keeping the dream alive” but by seeing what else he could do well, aside from boxing. You can tell where someone is emotionally by watching how they handle their pleasures. And what separates good men from great men, is how they spend their free time, how they connect with others when they’re down, and the sincerity of their reflection.
4. Review. This is usually where most men stop. You don’t have to indulge in debauchery in order to avoid the truth. You also don’t have to whip yourself endlessly (although you can expect this too). But if you want to stick it out, something has to change, usually you. We can keep doing what we do and succeed wildly at it for awhile. But eventually, conditions will change, either in your market, your industry, client base. Whatever it is, no one can get by doing the same thing over and over again no matter how brilliant their past performances were. If you’re properly and adequately replenished, then you’ll have regained your energy. Energy enables hope. And now you’re ready to review what you’ve done, what happened, and how you want to do things from here on out. If all of the above require changing who you are (and usually it does), then you’re ok with that too. What a review looks like is threefold: 1) Asking for counsel from a coach or mentor. A good coach can help you not only conquer lost ground, but to conquer yourself. 2) Being willing to conduct a thorough “AAR” (After Action Report) on not only what went wrong, but also what went right. Avoid the temptation to dissect your reasons for failure alone. 3) Refrain from taking anything which is said or discovered personally. In his book “Integrity”, Dr. Henry Cloud calls this process an “autopsy”. But just remember that you’re conducting an autopsy on something which will remain dead, be it a part of your character or way of doing things.
5. Re-Arm. George Foreman knew that he could no longer throw powerful combinations (a quick series of punches). Throwing a rapid succession of powerful punches like he used to would wear him out too quickly. And, although he had strength, he lost the 2 other “Ss” of punching power: speed and “snap”. Diminishing speed as you age is a given. And “snap” is the quickness and timing applied in retracting a punch. Think of striking someone with a whip. The pain you deliver is not from the whip hitting the unfortunate victim, but pulling back on the whip at just the right time so that the tip of the whip leaves a lash. However, rather than chase his ability to “snap” for endless hours in the gym for minimal overall return, he continued to get stronger and changed his strategy to overwhelm his opponents by sheer size.
What we’re getting at here is that when you decide to increase the lethality of your arsenal, you have to make what made you great even greater, and figure out a way to cover the gaps in your methods. If you spend the bulk of your time and effort working on your weaknesses, you’ll wind up having strong weaknesses. But you also have to find a way to manage your weaknesses. One of George Foreman’s weaknesses in his younger days was his attitude. In public, Foreman appeared morose and sullen. He appeared to be motivated by a grim determination. When he lost, boxing fans didn’t feel like they lost as well. But when he returned to the ring, he answered the borderline insults from the pundits with humor. In an upcoming bout with Evander Holyfield, a commentator said that Holyfield looked like a Greek god and Foreman looked like a Greek restaurant. In the commercial for the fight, Holyfield said that he couldn’t wait to wear the championship belt around his 32 inch waist. When the camera flashed to Foreman, he said “I can’t wait to wrap that belt around my 32 inch…..bicep!”. Foreman simply wasn’t attached to the outcome because God had asked him to do this. In addition to doing something he was literally called to do, he also repeatedly said that he wished to inspire “older folks” and show them that they were capable of more. This time, the American public had not only accepted Foreman, but adopted him as well.
6. Re-engagement. Against all odds, and with several losses along the way, Foreman, at the age of 45, regained the heavyweight championship of the world (and not against weak opponents either). His championship fight was against Michael Moorer, who was not only stronger, but had beaten the “Greek god” Evander Holyfield. Moorer was not only stronger and quicker, he also had a first rate trainer, Teddy Atlas who trained Mike Tyson in his rise to greatness. Years later, Teddy Atlas appeared on ESPN as part of a round table of boxing experts who were debating the greatest heavyweights of all time. When he was asked about how his protégé Moorer was knocked out, Atlas replied; “I knew we were in trouble when I saw him walking towards the ring. He was wearing the same trunks he wore the night he was knocked out by Muhammad Ali. I knew we were in trouble because any man who is willing to confront his past is dangerous.”.
The “Six Rs” are proven. They’re reliable not just for how to get out of a rut, but how to do better next time. This is because the “Six Rs” focus on how to be better next time. Following this method won’t undo your past. But it will make it irrelevant. Not by denial, not by avoidance, but by making it a part of who you are.
Knowing when “can do” won’t do - priceless.
There are times when you’ve done your due diligence, you’ve been honest every step of the way with everyone connected to a venture or project, and suddenly, everything you’ve worked so hard for blows up in your face. You re-attack the problem and it’s like throwing a pebble at a freight train. The problem continues to vex, frustrate you, and is costly to you, your business, and your relationships. The problem is here to stay. The good news is so are you. The scenario I’m presenting to you is not being stuck in traffic. I’m talking about something which has significantly challenged your beliefs, your methods, even your confidence. In other words something significant.
Usually when “can do” fails, the first step is to seek comfort in the arms of others. But when significance strikes, we realize all too well while can be part of the solution they can’t make the problem go away. Being willing to trust others and seek external answers is good. What isn’t good is the usual answer we hear when we’re looking for more than just comfort, but answers. We approach our pastor to be told “You have to have more faith”. We call our parents and are told “Don’t worry dear, your father and I think the world of you.”. Too bad your ex-client or boss doesn’t. A coach or mentor may say “Fake it ‘til you make it” or tells us to invoke the “Power of Positive Thinking”. We approach our spouses or significant others and initially receive a compassionate response. But after awhile we begin to be a drain on the relationship because what’s happened is so big we can talk of nothing else. Defeat happens and you need to understand what it is, how to get out of it, and where to go from there. However, an unguided or unstructured means of restoration will result in more heartache and more problems. As for the original problem, it now becomes a pattern.
So when our relationships don’t cut it we turn to books and that’s good too. The problem is there are way too many books which offer quick, general, and ultimately childish answers. Because we’re in an emotionally altered state, we don’t feel like wading through even more complexity loaded with the unknown. If we feel self-pity then it’s “Don’t Sweat the Small Stuff (and it’s all small stuff)”. What about when your wife is diagnosed with cancer? I guess that’s small stuff. Or, we’re attracted to the mystical such “The Secret”. Essentially “The Secret” is that whatever happens to you is up to you and you alone via “The Law of Attraction” (basically a regurgitated form of “Positive Thinking”). But what about when a pedophile kidnaps and murders an 8 year old child? I guess they attracted it. Or how about the earthquake in Pakistan in 2005 which killed 70,000 people? Did all of those people attract it?
Society is under the delusion that if we just try hard enough, if we’re diligent enough, and have enough heart, victory is assured. The truth is that we can do all of that and more and still sometimes it’s just not our time. Anyone who chooses to make a living based on passion, knows that it’s a matter of time until we tumble and have to change. If you are doing something which you have been called to do, you know that although defeat is a probability over time, it does not make us who we are. We’ve found that the best method to rebound is contained by the “Six Rs”. Let’s look at the amazing comeback of George Foreman as an example.
1. Relax. When a good boxer takes a blow flush on the chin, he’ll relax and absorb the blow will allow the force to flow through him, vs. into him. There’s a reason why in most fatal DUI crashes, the drunk tends to survive. That’s because he has very little tension in his muscles at the point of impact. What this would look like in real life is quickly confessing what just happened. In other words, acceptance. We all hate to lose. However, we have to go into any venture knowing that although “failure is not an option” it’s still possible. If you know who you are and can already envision what might happen (and therefore put it in its proper perspective) you’ll come out on top and rebound quickly. If you’re attacked by someone wielding a knife, you have to know that you’ll be cut at least once, if not several times before you can disarm the attacker. If you defend yourself knowing this already, the chance of going into shock is greatly reduced and so is the chance of you becoming a statistic.
When George Forman fought in his earlier years, he had an amazing amount of power behind his punches. Before he was knocked out by Muhammad Ali in the “Rumble in the Jungle”, he had dispatched the second most powerful boxer of his day, Joe Frazier in a mere 2 rounds. Ken Norton (who broke Ali’s jaw) met a similar fate. But when Foreman squared off against Ali, Ali refused to go toe to toe with Foreman. He danced, backpedaled when he had to, and repeatedly got Foreman in a clinch. Foreman would have to expend energy to untangle himself, and by round 7, against all odds and the unanimous view of the pundits and the public, George Foreman went down. Years later when he reentered the ring, Foreman, although still possessing plenty of power, chose to absorb the blows by staying relaxed vs. bulling his way through the fight.
The endstate of being able to relax is not to cover up what happened. It’s also not repeating that lie we’ve been uttering since boyhood; “That didn’t hurt.”. But being able to talk about it, limit it for what it is, and make sound decisions after the fact. Ultimately, relaxed looks like not experiencing frustration to the point of paralysis when you think about it or deal with it.
2. Remove. If something has you against the ropes and you can’t absorb anymore punishment, remove yourself from the situation. That doesn’t mean you have to quit your job or reconsider what you’re doing for a living. If you remove yourself, you’ll avoid making emotional (as in hasty or reactive) decisions. A sound decision is one which when executed, results in peace in your heart. Try to get away for a bit. Take some time off, take a vacation, but get out of striking distance of the problem.
After George Forman was knocked out by Ali, he was never quite the same again. After a lackluster performance in subsequent bouts, he collapsed in his dressing room one night and basically had an emotional collapse which resulted in his becoming a born-again Christian. He decided to enter into the ministry and raise a family, both of which he did very well. Boxing was his passion and because of that he was very appreciative of what boxing gave him. He knew that he was meant to box and still, despite his intense training regimen, his heart being 100% in it, and his 44-2 record (31 by knockout), it just didn’t happen. He removed himself from the boxing world, seemingly never to come back.
He still boxed as a hobby, still trained, and therefore kept in touch with the boxing world. But he had removed himself from the effects of the media, the ability for anyone to criticize him, or mention that he just wasn’t the “George Foreman of old”. That’s what successful removal looks like. You’re still aware of the problem, but you’re far enough from it financially, socially, and personally, where you know that despite the fallout and feedback, you’re in a safe place.
3. Replenish. This is where most of us go wrong. When we’re drained of energy and hope, we have to go somewhere to fill our tank. “Blowing off steam” is a part of the process. But the pursuit of pleasure, if it’s the core of what you do and think about, is not. It’s very seductive to sink back into the couch and zone out (“chillax” a friend of mine calls it) watching television. That’s ok, but ensure that you have a plan to get back up. The best way to do this is by a) accountability from a peer or coach and b) setting a time limit both long term and daily for leisure activity. And c) Selectively choosing the activities you will use to fill up your tank. Playing endless video games is neither relaxing nor replenishing. Most men play video games which entail shooting, killing, or some sort of competition (myself included). But when you’re done with your Halo or “Street Fighter” marathon, you’re not fulfilled, you’re spent. Try to focus on hobbies which entail some sort of creativity, something which is growth oriented. If it’s a video game, try one of the SIM games or even strategy games, something which uses your mind but doesn’t tax it. If you want to take a vacation, go somewhere relaxing, not Vegas. If you’re taking a break from your career or the market, choose something where you can come home everyday feeling somewhat fulfilled.
George Foreman’s boxing days were over (from his perspective) for quite some time. Yet in the interim he raised a family, developed a great church, constructed a youth center, and was willing to share his experiences on shows such as “The 700 Club”. Most importantly, he got his sense of humor back. Not by “keeping the dream alive” but by seeing what else he could do well, aside from boxing. You can tell where someone is emotionally by watching how they handle their pleasures. And what separates good men from great men, is how they spend their free time, how they connect with others when they’re down, and the sincerity of their reflection.
4. Review. This is usually where most men stop. You don’t have to indulge in debauchery in order to avoid the truth. You also don’t have to whip yourself endlessly (although you can expect this too). But if you want to stick it out, something has to change, usually you. We can keep doing what we do and succeed wildly at it for awhile. But eventually, conditions will change, either in your market, your industry, client base. Whatever it is, no one can get by doing the same thing over and over again no matter how brilliant their past performances were. If you’re properly and adequately replenished, then you’ll have regained your energy. Energy enables hope. And now you’re ready to review what you’ve done, what happened, and how you want to do things from here on out. If all of the above require changing who you are (and usually it does), then you’re ok with that too. What a review looks like is threefold: 1) Asking for counsel from a coach or mentor. A good coach can help you not only conquer lost ground, but to conquer yourself. 2) Being willing to conduct a thorough “AAR” (After Action Report) on not only what went wrong, but also what went right. Avoid the temptation to dissect your reasons for failure alone. 3) Refrain from taking anything which is said or discovered personally. In his book “Integrity”, Dr. Henry Cloud calls this process an “autopsy”. But just remember that you’re conducting an autopsy on something which will remain dead, be it a part of your character or way of doing things.
5. Re-Arm. George Foreman knew that he could no longer throw powerful combinations (a quick series of punches). Throwing a rapid succession of powerful punches like he used to would wear him out too quickly. And, although he had strength, he lost the 2 other “Ss” of punching power: speed and “snap”. Diminishing speed as you age is a given. And “snap” is the quickness and timing applied in retracting a punch. Think of striking someone with a whip. The pain you deliver is not from the whip hitting the unfortunate victim, but pulling back on the whip at just the right time so that the tip of the whip leaves a lash. However, rather than chase his ability to “snap” for endless hours in the gym for minimal overall return, he continued to get stronger and changed his strategy to overwhelm his opponents by sheer size.
What we’re getting at here is that when you decide to increase the lethality of your arsenal, you have to make what made you great even greater, and figure out a way to cover the gaps in your methods. If you spend the bulk of your time and effort working on your weaknesses, you’ll wind up having strong weaknesses. But you also have to find a way to manage your weaknesses. One of George Foreman’s weaknesses in his younger days was his attitude. In public, Foreman appeared morose and sullen. He appeared to be motivated by a grim determination. When he lost, boxing fans didn’t feel like they lost as well. But when he returned to the ring, he answered the borderline insults from the pundits with humor. In an upcoming bout with Evander Holyfield, a commentator said that Holyfield looked like a Greek god and Foreman looked like a Greek restaurant. In the commercial for the fight, Holyfield said that he couldn’t wait to wear the championship belt around his 32 inch waist. When the camera flashed to Foreman, he said “I can’t wait to wrap that belt around my 32 inch…..bicep!”. Foreman simply wasn’t attached to the outcome because God had asked him to do this. In addition to doing something he was literally called to do, he also repeatedly said that he wished to inspire “older folks” and show them that they were capable of more. This time, the American public had not only accepted Foreman, but adopted him as well.
6. Re-engagement. Against all odds, and with several losses along the way, Foreman, at the age of 45, regained the heavyweight championship of the world (and not against weak opponents either). His championship fight was against Michael Moorer, who was not only stronger, but had beaten the “Greek god” Evander Holyfield. Moorer was not only stronger and quicker, he also had a first rate trainer, Teddy Atlas who trained Mike Tyson in his rise to greatness. Years later, Teddy Atlas appeared on ESPN as part of a round table of boxing experts who were debating the greatest heavyweights of all time. When he was asked about how his protégé Moorer was knocked out, Atlas replied; “I knew we were in trouble when I saw him walking towards the ring. He was wearing the same trunks he wore the night he was knocked out by Muhammad Ali. I knew we were in trouble because any man who is willing to confront his past is dangerous.”.
The “Six Rs” are proven. They’re reliable not just for how to get out of a rut, but how to do better next time. This is because the “Six Rs” focus on how to be better next time. Following this method won’t undo your past. But it will make it irrelevant. Not by denial, not by avoidance, but by making it a part of who you are.
Monday, January 4, 2010
Happy New Year?
Being the beginning of a new year, you may have developed a list of New Years resolutions. Having goals is excellent. Goals reflect a desire to be better than who we currently are. As the final seconds of the previous year count down, our hope builds and we say to ourselves “This year will be different.”. The ugly truth is that although 52% of us feel confident that we will be able to turn our resolutions into reality, only 12% of us actually do. And of that 12%, the overwhelming majority wishes it achieved their aims in a more cost-effective and less demanding way. The most cited reasons were lack of planning, poor situational awareness, and a narrow vision of what they really wanted to accomplish. An excellent case study in the mismanagement of all three of these key elements to goal attainment is Napoleon’s invasion of Russia.
The year was 1812 and Napoleon was the master of Europe. Against his wishes, Russia and England (the only two major powers he hadn’t conquered yet) continued to trade with one another. Napoleon’s strategic goal was to isolate Britain economically and politically. The purpose was to set the stage for a future invasion of England which he saw as his only remaining rival. The method would be a punitive expedition into Russia so severe that the Czar Alexander I would be compelled to cease trade with England and succumb to the economic system of the French Empire.
Planning: What set Napoleon apart from all other generals was his extraordinary attention to detail not only on the battlefield but also on the drawing board. Napoleon meticulously arranged for the construction of supply depots to enable the French army to achieve his objective of punishing Russia into compliance. We all know what happened next. What many don’t know is the true cause of the demise of the French army. “General Winter” did not destroy the French Army as many assume. It merely finished the job which Napoleon’s lack of oversight began. Although the lack of winter clothing resulted in a rout instead of an orderly retreat, Napoleon’s lack of a plan for resupply once in enemy territory literally snatched defeat from the jaws of victory. As a result within 8 weeks, the “Grande Armee” had suffered 50% casualties to disease, starvation, and desertion all without engaging in any large scale (and therefore decisive) battles. By late June the French army had slaughtered virtually all of its horses for food which crippled supply efforts since its supply wagons were horse-drawn. By the time Napoleon had crossed the Russian border, his army was literally feeding on itself. By September of 1812, the Grande Armee went from 690,000 effectives to only 135,000 again, without even fighting one battle. The plan had failed. There was no effort to modify it and not even talk of making a new one. Meanwhile the Russian army was nowhere in sight.
Situational Awareness: Success leaves clues. Fortunately, so does failure. More often than not, we receive signals along the way which, if handled properly, can allow us to maintain our even increase momentum. When we’re emotionally involved in a big project which has already incurred high cost and commitment on our part, the temptation to “drop the shoulder” and continue to attack increases. There’s a satisfaction in doing what others told you could not be done. But when the thrill of victory dissipates, have you reached your true objective?
A month before entering Moscow, Napoleon finally found and fought the Russian army at the Battle of Borodino. The hope of inflicting a decisive defeat didn’t materialize. Borodino was a nasty, vicious, bloody battle which accomplished nothing. Although the Russians withdrew, the “Grand Armee” was now down to 95,000 men. Taking Moscow was questionable and holding it was impossible. The army would be lucky to make it back to France much less ask anything of Czar Alexander.
It was time to stop, reassess, and ensure actions aligned with goal achievement and resources could handle reality. Virtually all of Napoleon’s advisors urged him to at least stop and consider the situation. Napoleon would have none of it. He had succumbed to the “sunk cost fallacy” which is basically a reluctance or refusal to change a course of action due to overfocus on resources committed or already spent. What’s needed is not necessarily quitting or abandoning your aims. However, when setbacks accumulate to the point of not only compromising the goal but bringing you to the point of ruin, it is definitely time to stop, review, and seek counsel.
Vision: There is a Japanese proverb which states “Vision without action is a daydream, action without vision is a nightmare.”. The purpose of the campaign was to force Russia to cease trading with England. That’s it. When losses accumulated and it seemed that Napoleon could actually “lose” he changed his mind to achieve a goal which was “doable” but would not support his original intention. Napoleon’s army did reach Moscow by mid-September. However, the residents had fled (including Czar Alexander) and burned Moscow to the ground. Because Napoleon had compromised his vision, his judgment followed suit. Consequently the master of Europe forgot that winning a war was no longer about taking a capital city and being presented with the keys. After leaving France with 695,000 experienced and competent soldiers, the Grand Armee returned to France with only 5,000 stragglers. Napoleon, having abandoned his troops in the field, returned to France only to be handed over to his enemies. His original vision of a French Empire which could act with impunity had crumbled around him. His country paid for his lack of planning, his army paid for his lack of situational awareness, and a promising future for both himself and France paid for his lack of vision.
Napoleon is but one of many individuals who have failed to achieve enormous goals due to poor planning and unwillingness to see the truth. Many top-ranked executives, small business owners, generals, and others have gone this route. However the ones who manage to recover momentum and achieve something truly significant know the difference between a risk and a gamble. The difference is best summed up by Erwin Rommel, a great general in his own right; “A risk is a chance you take; if it fails you can recover. A gamble is a chance taken; if it fails, recovery is impossible.”
In order to assume risk with confidence, develop a plan which is solid and flexible. Understand what your blind spots are and employ people who can tactfully point them out. Seek the company and counsel of those who are experienced enough to remind you when you are straying from your integrity, values, and vision. Or, you can roll the dice. The choice is yours.
The year was 1812 and Napoleon was the master of Europe. Against his wishes, Russia and England (the only two major powers he hadn’t conquered yet) continued to trade with one another. Napoleon’s strategic goal was to isolate Britain economically and politically. The purpose was to set the stage for a future invasion of England which he saw as his only remaining rival. The method would be a punitive expedition into Russia so severe that the Czar Alexander I would be compelled to cease trade with England and succumb to the economic system of the French Empire.
Planning: What set Napoleon apart from all other generals was his extraordinary attention to detail not only on the battlefield but also on the drawing board. Napoleon meticulously arranged for the construction of supply depots to enable the French army to achieve his objective of punishing Russia into compliance. We all know what happened next. What many don’t know is the true cause of the demise of the French army. “General Winter” did not destroy the French Army as many assume. It merely finished the job which Napoleon’s lack of oversight began. Although the lack of winter clothing resulted in a rout instead of an orderly retreat, Napoleon’s lack of a plan for resupply once in enemy territory literally snatched defeat from the jaws of victory. As a result within 8 weeks, the “Grande Armee” had suffered 50% casualties to disease, starvation, and desertion all without engaging in any large scale (and therefore decisive) battles. By late June the French army had slaughtered virtually all of its horses for food which crippled supply efforts since its supply wagons were horse-drawn. By the time Napoleon had crossed the Russian border, his army was literally feeding on itself. By September of 1812, the Grande Armee went from 690,000 effectives to only 135,000 again, without even fighting one battle. The plan had failed. There was no effort to modify it and not even talk of making a new one. Meanwhile the Russian army was nowhere in sight.
Situational Awareness: Success leaves clues. Fortunately, so does failure. More often than not, we receive signals along the way which, if handled properly, can allow us to maintain our even increase momentum. When we’re emotionally involved in a big project which has already incurred high cost and commitment on our part, the temptation to “drop the shoulder” and continue to attack increases. There’s a satisfaction in doing what others told you could not be done. But when the thrill of victory dissipates, have you reached your true objective?
A month before entering Moscow, Napoleon finally found and fought the Russian army at the Battle of Borodino. The hope of inflicting a decisive defeat didn’t materialize. Borodino was a nasty, vicious, bloody battle which accomplished nothing. Although the Russians withdrew, the “Grand Armee” was now down to 95,000 men. Taking Moscow was questionable and holding it was impossible. The army would be lucky to make it back to France much less ask anything of Czar Alexander.
It was time to stop, reassess, and ensure actions aligned with goal achievement and resources could handle reality. Virtually all of Napoleon’s advisors urged him to at least stop and consider the situation. Napoleon would have none of it. He had succumbed to the “sunk cost fallacy” which is basically a reluctance or refusal to change a course of action due to overfocus on resources committed or already spent. What’s needed is not necessarily quitting or abandoning your aims. However, when setbacks accumulate to the point of not only compromising the goal but bringing you to the point of ruin, it is definitely time to stop, review, and seek counsel.
Vision: There is a Japanese proverb which states “Vision without action is a daydream, action without vision is a nightmare.”. The purpose of the campaign was to force Russia to cease trading with England. That’s it. When losses accumulated and it seemed that Napoleon could actually “lose” he changed his mind to achieve a goal which was “doable” but would not support his original intention. Napoleon’s army did reach Moscow by mid-September. However, the residents had fled (including Czar Alexander) and burned Moscow to the ground. Because Napoleon had compromised his vision, his judgment followed suit. Consequently the master of Europe forgot that winning a war was no longer about taking a capital city and being presented with the keys. After leaving France with 695,000 experienced and competent soldiers, the Grand Armee returned to France with only 5,000 stragglers. Napoleon, having abandoned his troops in the field, returned to France only to be handed over to his enemies. His original vision of a French Empire which could act with impunity had crumbled around him. His country paid for his lack of planning, his army paid for his lack of situational awareness, and a promising future for both himself and France paid for his lack of vision.
Napoleon is but one of many individuals who have failed to achieve enormous goals due to poor planning and unwillingness to see the truth. Many top-ranked executives, small business owners, generals, and others have gone this route. However the ones who manage to recover momentum and achieve something truly significant know the difference between a risk and a gamble. The difference is best summed up by Erwin Rommel, a great general in his own right; “A risk is a chance you take; if it fails you can recover. A gamble is a chance taken; if it fails, recovery is impossible.”
In order to assume risk with confidence, develop a plan which is solid and flexible. Understand what your blind spots are and employ people who can tactfully point them out. Seek the company and counsel of those who are experienced enough to remind you when you are straying from your integrity, values, and vision. Or, you can roll the dice. The choice is yours.
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