What An Incredible Age It Is

50 Billion Dollar Ponzi Scheme. Trillion Dollar Stimulus Package. UAW Bailout. Fox Business News Suing Paulson, Treasury To Force Revelation Of Where TARP Funds Are Going, And, The News In Mortgages, 30 Year Fixed At Lowest Rate In 37 Years. Now if only we could make effective use of it. For some of you it represents a chance to buy at very favorable terms, for others, a chance to refinance out of potentially dangerous adjustables or high fixed rate loans, and for a great many others it's simply a point of interest because there is no job, or you're upside down in your home, or credit scores have deteriorated because living expenses have escalated beyond expectations. I hope that for many of you we can provide some service by placing your loans with one of our many premium lenders, including the largest mortgage companies in the country. Chico and Northern California generally have many great buying opportunities and our business philosophy of saving clients as much as possible will either put or leave extra money in your pocket. Please call us to list, buy, or finance your home or your commercial property.
Our best wishes for a safe and prosperous year for you and yours, and a very Merry Christmas.

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Turbulent Times

Congress and the bureaucrats cannot leave well enough alone. Each day brings some new intervention or threat of one that absolutely guarantees instability in equity markets, credit markets (including mortgages), and business in general. There is apparently going to be a new "Car Czar" to oversee manufacturing of the Big Three. Probably just in design, emission standards, number of doors and colors. Not certainly in labor costs. It will be easy to select the new "Czar" from the large pool of people who have been in charge of Social Security, Medicare, the Post Office and providing oversight to Fannie and Freddy.
So far the stock market is still in turmoil, credit is frozen, and mortgages are uncertain. At our very low level of participation in the economy, trying to sell and finance homes for people, people ready to make a move are now on hold again because the treasury may be providing 4.5% interest money in the near future, so everything waits for that to happen, or not, as the case may be. The altruistic move to force loan modification on lenders to benefit delinquent borrowers has been less than satisfactory. One third of mortgages are again delinquent three months after modification, and after eight months fully 58% are delinquent again. Nothing is more frightening to investors and businessmen than unpredictability, and the frantic behavior of legislators and bureaucrats is providing more fear than the markets can stand, and creating an instability that threatens to bury us all. As this is written the former CEO'S of Fannie and Freddie are undergoing a scorching at the hands of a Congressional Committee for causing the financial mess we're suffering through. Just a few short months ago these same Congressmen were exerting pressure on these same CEO'S to make risky loans to expand home "ownership", and their institutions were threatening lenders to make such loans or risk being eliminated from participation in the loan pools and guarantees. Why do we continue to return these misfits to office? Pelosi, Dodd, Reid, Frank, Schumer, Waxman are unfit to manage a magazine stand, and here they are standing and posing for pictures while giving away billions of tax dollars and contriving to appear able to ask intelligent questions of business people (who are not blameless). A clear picture of what these people are really all about is being developed by the current Governor of Illinois. Egocentricity and greed in its most naked form on display, and as voters we ignore it on election day.
This was going to be on the subject of real estate commissions but that will wait for another day. My ranting about politicians won't have any impact, but maybe will keep my own heartbeat in parameters.

As usual,
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Home Pricing

We need listings, as does every agent or broker, and the biggest barrier for us in obtaining listing is our unwillingness to list a property for an unrealistic price. All agents complain about the same thing when comparing notes; prospective sellers will not accept the reality of the marketplace, or they are too deep into their mortgage and cannot afford to sell. The latter is beyond our ability to solve. Short sales or some other accommodation from the lender is called for, and this requires counseling, legal guidance, and financial advice, and we are not particularly interested in talking to these potential sellers until they have these problems sorted out, and by that time some other office has the business. The people unwilling to confront reality we have a chance with if we can point out that the loss of value is a market fact. A house is a tangible asset just as a share of stock in General Motors or some other company is an asset, and the value is determined in the same way; what is someone willing to pay for it? Sure people have lost money on their homes, but a lot less than on most other assets, and if there is a reason to convert the asset to cash, it will happen fairly quickly if the asking price reflects the real value. Most homes listed appropriately sell within 30 days of listing, even in this market. The prospective buyers are out there, but they are not going pay for the seller's emotional attachment. One of the problems with home pricing is the enormous, (in our view), commission add on of the real estate agent. In any market, but particularly in a troubled market, adding 4 to 6 per cent to the home price makes no sense, and in some cases prices the home out of reach of potential buyers. We charge $4995 to sell a home, provide the same service as any other broker, and in general make it possible to price a home for a fast sale and still return maximum value to the seller. When home prices were escalating rapidly and people were selling at huge profits, it allowed buyers and sellers alike to ignore the large amount of money being dissipated in selling costs. No longer. It was always silly to waste money. Now it's almost criminal.
More on this subject later, but remember, it's always smart to reduce the cost of doing business.
As usual,
Thanks for visiting.

Feds To The Rescue?

The incredible uncertainty about the possible/probable next action of the Fed, the Treasury and the Congress is keeping the banks, the equity markets, and us, just plain folks in a state of disarray. It's a little like being trapped in a room with a drunk waving a loaded gun. Do we run, duck, or attack? Our elected and appointed officials who have a track record of running everything they touch into the ground are engaged in debating the strategy for running corporate manufacturers, banks and the mortgage industry, either by direct investment or the creation of oversight committees to provide guidance. One way or another the Congress, which is deeply beholden to the UAW, is going to find a way to throw a lot of our money at the auto industry, or at least the most inefficient members. Toyota, Hundai, BMW, Honda, and Mercedes won't get any of the money because they have efficient business models and don't need it. Mr. Paulson has already delivered a freight car full of money to the banks, so far without increasing their desire to lend to any noticeable degree. Now there is a plan afoot to provide mortgages for home purchase at 4.5%, a full point below the current market rate, in an attempt to spur home purchases. The rate will not be available for refinance, thus no benefit to those who have been diligent in maintaining their mortgage, nor any benefit to those facing foreclosure. We assume there will be another plan to help this latter group. Once more this is a scheme to help a few at the expense of the many. A major problem with our representatives is that they are not smart enough to realize that they are not smart enough. Not even close. We keep putting them back in office, so what does that say about us?
A thought occurred about helping people buy or sell their homes. Why not have real estate agents reduce their commissions so the price of homes would be more realistic? Why does it cost twice as much to sell a home for $400,000 as one for $200,000, or three times as much for a $600,000 home. Same paperwork. Why does it cost between $16,000 and $24,000 to sell a $400,000 home? Reduce that commission by 1/2 and a lot more people could afford the home. Reduce it a bit more and even more people could buy. That would have a dramatic impact on home sales. More than the reduction in mortgage interest. The idea has the same chance of adoption by the real estate community as you have of making a rock float, but why not ask your real estate agent anyway?
As usual,
Thanks for visiting.