Housing supply falls further, feeding prices

Ask anyone trying to buy a home today, and the vast majority will launch into a story about a bidding war. Demand for housing has returned, but housing supply has not, and the numbers are only getting worse. The supply of homes for sale nationally in June fell 6.5 percent from a year ago, according to a new report from Zillow, a real estate listing and analytics company."Finding a house is the last hurdle for many buyers who have saved a down payment and gotten pre-approved for a mortgage, but low inventory levels like those we're seeing across the country can bring the homebuying process to a screeching halt," said Stan Humphries, chief economist at Zillow. "In many markets, there just isn't a lot to choose from in terms of homes on the market." The bigger the city, the bigger the problem. Inventory fell in 19 of the nation's largest metropolitan areas. Supplies are also falling the most in the lower price ranges, making it even more difficult for already cash-strapped first-time buyers to get into home ownership. The reasons for tight supply are manifold: Homebuilders are putting up single family homes at a far slower pace than historical norms. They cite a shortage of labor for at least some of that weakness, but they also are not seeing strong demand, due to their higher prices.Another reason is negative equity. Millions of homeowners still owe more on their mortgages than their homes are worth, or they don't have enough equity in their homes to afford to move up, leaving them unable to list their homes for sale. Still other potential move-up buyers are afraid they won't be able to find a home to buy, so they stay where they are. Supply is also directly connected to price. Supplies are lowest in markets where prices continue to rise, but supply is actually starting to ease in markets where home prices have flattened. Take Washington, D.C., for example. Home prices are flat from a year ago, and inventory is now up nearly 19 percent, according to Zillow. In Dallas, however, where prices are still rising, up 12.5 percent from a year ago, inventory is down nearly 20 percent. "Sellers tend to want to hang in and get the last juice out of the orange," said Humphries. "If you think you might see 10 percent appreciation over the next year, is it rational to move where you might squeeze more out of the market? No."That seller psychology is only feeding the problem in some of the hottest markets. Low inventory only pushes prices higher, and makes more sellers want to wait. That in turn pushes supply lower, as housing demand rises. In addition, higher rents are keeping more first-time buyers from saving for a down payment. "If we can get additional increase in supply, then price increases will begin to flatten out, which will be good for the economy, good for many first time buyers, but as long as we have limited supply, and that's what we have today, then prices inevitably will continue to rise," said Lawrence Yun, chief economist for the National Association of Realtors.

2014 Holiday Party Success

Congrats to All the CENTURY 21 JRS Realty agents that received awards at the annual CENTURY 21 JRS Realty Holiday Party. At this years Holiday party Khem Persaud, Eddie Kefalas, and Ana Montes received top honors for sales achievement. Congratulations to all CENTURY 21 JRS Realty agents for making people happy again this year.

A HUGE THANK YOU to the staff of lady's that keep the office going behind the scenes. Betty, Zakiyya, Jennifer, and Melissa are the best administrative assistants any business owner could ask for. THANK YOU ALL!!!!!!!

It is about to get easier to get a Loan

For years now, if you didn't have near perfect credit and a hefty 20% down payment, chances were slim that lenders would give you a mortgage. But that's all about to change. That's because Fannie Mae and Freddie Mac, the two government-backed mortgage giants that backstop a majority of all mortgages, have put new lending guidelines in place that should make it easier for borrowers to secure loans. Not only are the two agencies lowering downpayment requirements and making it easier for loans to be classified as qualified mortgages, but more importantly, they have clarified when lenders will be on the hook if borrowers default. In the past, Fannie and Freddie have been able to force lenders to buy back loans that have defaulted soon after it was issued, if any mistakes were made in the paperwork or if there was borrower fraud. "Lenders have been real concerned about these buybacks," said Doug Lebda, CEO of LendingTree. "If problems arise with loans, the [Fannie/Freddie] guarantee often fails when lenders need it the most." Related: The 3% down payment mortgage makes a comeback Mel Watt, the head of the Federal Housing Finance Agency, acknowledged that the previous policy made it hard for lenders to understand exactly when Fannie Mae or Freddie Mac would require the banks to repurchase loans. Under the new rules, any loans with no missed payments for 36 consecutive months after they were first issued will be backed by Freddie or Fannie should they default. The agencies will also allow two missed payments in the first 36 months without forcing borrowers into foreclosure.And if private mortgage insurance, which is required for all low downpayment mortgages, is rescinded, say due to errors made in the underwriting process, lenders will not automatically be required to repurchase the loans. "That makes the Fannie/Freddie guarantees more like real insurance," said Lebda. According to Lawrence Yun, chief economist for the National Association of Realtors, the buyback issue has been "the number one hindrance to mortgage lending lately. If it disappears, it would be a big boost to mortgage lending." Freddie and Fannie have also said they will start backing 3% down loans. Borrowers can currently get 3.5% down loans from the FHA, although they require borrowers to pay mortgage insurance premiums for the life of their loans. The new low down payment loans should help boost homebuying among low-income and first-time homebuyers, who have been conspicuously absent from the housing market over the past year. Lenders already seem to be loosening up a bit. Mark Palim, who oversees economic and strategic research at Fannie Mae, said average credit scores for approved loan applications have dropped slightly over the past few months and lenders are doling out loans with lower downpayments as well. According to the Federal Reserve, nearly 14% of senior loan officers said their banks had gotten less strict in the three months ended in October. Of course, lenders are not expected to return to the lax underwriting standards of the boom years. Banks are much more careful these days, making sure that all mortgages are fully documented, said Palim. They don't want to look irresponsible, or worse, predatory. "They're very concerned about reputational risk," he said.

Inventory Down, Prices on the Rise

Home prices will rise in 2014 but at a slower, more steady pace compared with historical trends. The housing recovery has pushed up home prices nearly everywhere. In the past year, home prices rose in 225 of the 276 cities tracked by Clear Capital, a provider of real estate data and analysis. (See how home prices are shifting in 276 metro areas.) Prices nationwide increased by 10.9 percent, pushing the median price for existing homes up by $30,000, to $215,000. For people who have waited to sell their home or refinance their mortgage, that's good news. (Bing: How are interest rates looking this week?) Rising home prices in Seattle enabled Mike and Kristin Litke to refinance their first mortgage last summer and pay off a second mortgage that had an 8.2 percent interest rate. The Litkes, who bought their three-bedroom, 1.5-bath home for $512,500 in 2007 at the peak of Seattle's housing market, had used the second mortgage to avoid paying private mortgage insurance. In 2010, just as home prices in the area hit a trough, they refinanced their first mortgage to a 30-year fixed rate of 4.375 percent but were stuck with the second mortgage because they didn't have enough equity to do a "cash-out" refi. This time, however, their home appraised for $521,000, allowing them to refinance into one 30-year, fixed-rate mortgage of $416,800 at 4.25 percent. They have reduced their monthly payment by $360, giving them some wiggle room in their budget and providing an infusion of college-savings funds for their kids: Stephen, 3½, and Stella, 10 months. What's ahead In 2013, a sense of urgency drove traditional buyers hoping to take advantage of still-affordable home prices and historically low mortgage rates. Buyers found selection limited and were often forced into bidding wars with investors and other buyers who paid cash. Sellers reaped the rewards in terms of quick sales, often above the asking price. Almost half of the cities tracked by Clear Capital experienced double-digit increases in home prices, led by Las Vegas, with a gain of 32 percent. Such spikes reflected a continuing "correction to the overcorrection," says Alex Villacorta, vice-president of research and analytics for Clear Capital. Buyers and investors rushed in to snap up homes with prices that had fallen too far. Homes continue to be affordable, despite recent run-ups — on average, prices are still 31.5 percent below their 2006 peak. The percentage of monthly family income consumed by a mortgage payment (assuming a mortgage rate of 4.1 percent) is just 15.6 percent, on average, compared with 23.5 percent in mid 2006. Home affordability calculator Combined annual income $ Other monthly obligations $ Cash for down payment $ "Houses are very cheap," says David Stiff, principal economist at CoreLogic, a property and mortgage-data analytics company. Market observers agree that home prices will rise in 2014, but at a slower, more steady pace compared with historical trends. Clear Capital forecasts that home prices nationally will rise by 3 percent to 5 percent in 2014, about the historical average. Kiplinger expects an increase of 4 percent. "The most notable thing about 2014 will be how un-notable 2014 is," Villacorta says. Meanwhile, the Conference Board, a nonprofit association of businesses, found that the percentage of consumers who intend to buy a home in the next six months was the highest since 2000. Adding to the push: pent-up demand among young people who, hampered by lack of jobs or insufficient income, have been living in their parents' basements or sharing apartments with roommates. Celia Chen, a housing analyst with Moody's Analytics, says Moody's expects the economy to expand enough in the coming year to enable young people to begin moving out. They'll probably rent first, but low vacancy rates and higher rents will prompt some renters to move on to homeownership. 'Listed': What young homebuyers really want As home prices continue to rise, more owners who had been underwater — meaning that they owed more on their mortgage than their home was worth — will emerge from the sidelines and start selling and buying homes. CoreLogic reports that almost 3.5 million homeowners were lifted out of negative equity between the end of 2012 and mid 2013. Nevada, Florida, Arizona, Michigan and Georgia have the highest shares of underwater homeowners. A sellers market In the past year, sales of existing homes and condos rose by 11 percent, to 5.29 million — almost the highest level in four years. The National Association of Realtors expects sales to remain about the same in 2014. Sales nationally have increased across all regions and in all but one price category, signaling a broad-based recovery. MSN Money: Getting a mortgage is about to get harder Although sales of entry-level homes (priced at $100,000 or less) have fallen by almost half in the past year in the West, they're still rising in the Northeast, where the job recovery has lagged behind other regions. Sales of homes priced between $750,000 and $1 million have risen the most. "A consistent stock market recovery for a prolonged period has opened up the wallets of upper-income homeowners," says Lawrence Yun, chief economist for the National Association of Realtors. Nationally, the supply of homes for sale stands at five months' worth. (Months' supply is a measurement of how long it would take to sell everything at the current pace of sales. A market balanced between buyers and sellers has about six months' supply of homes.) The current level slightly favors sellers, but in many cities inventory is much tighter. For example, the Washington, D.C., suburbs of Montgomery County, Md., and Northern Virginia had about two months' supply in September. Yun says the housing market has moved toward a shortage that will persist through 2014. Why is inventory low? In some cities, institutional investors have been scooping up properties to rent out. Plus, builders cut way back on new-home construction during the bust, and homeowners who bought at the top of the market are still reluctant to sell until they can recoup more of their investment. Some are still underwater, unable to pay off their mortgage with what they'd get for their home. results by Bing Bing Search:Calculating Your Homebuying CostsCalculating Your Homebuying Costs Home Buying Closing Costs How to Estimate Closing Costs home-buying-costs More results from Bing:web | videos | imagesIn Oakland County, Mich., in suburban Detroit, agent Melanie Bishop says home prices fell so far during the economic downturn that even longtime homeowners reaped little or no profit when they sold. But with the housing market's rebound, sellers' prospects have improved. She recently helped Corey and Suzy MacDonald sell the four-bedroom, 2.5-bath home in West Bloomfield that they bought in late 2006 for $272,000. In the spring of 2012, Corey MacDonald became self-employed, and the couple decided to relocate to Florida. They listed their home for sale at $265,000, just enough to pay off their mortgage and expenses. The best offer they received was $245,000, so they decided to postpone their move and try again later. Last summer, they listed the home for sale at $289,900. On the first day, they received an offer of $310,000. "It was a perfect deal," MacDonald says. He ultimately took a job in Atlanta, and the couple used the proceeds from their Michigan sale to put down 20 percent on their next home. The influence of investors will wane as the low-hanging fruit (including foreclosures) disappears in 2014. Once, whole cities were ripe for the picking — such as Cape Coral, Fla., and Phoenix in 2012, as well as Las Vegas and Atlanta in 2013 — but investors must now dig deeper at the neighborhood level, says Villacorta. That's a job probably best suited to smaller numbers of local investors who know their markets best. 'Listed': Homebuilder confidence flat amid rising construction costs Where will new supply come from? Most people who list their homes for sale expect to buy another one, so it's a wash in terms of net inventory. According to the National Association of Home Builders, whose members retrenched during the bust, just less than half as many homes were started this year as in a normal market. NAHB forecasts that a normal pace of housing starts won't resume until late 2015. Tight credit, land and labor, as well as rising costs for materials, are constraining builders. Distressed properties are still adding to the supply of homes nationally, but foreclosure filings are falling. Fewer homeowners are losing their homes as the economy improves, home prices (and home equity) rise, and lenders agree to more short sales (homes sold for less than their owners owe on their mortgages). Slide show: 5 tips to ensure your short sale succeeds "We're in the home stretch of getting through the foreclosure crisis," says Daren Blomquist, vice-president at RealtyTrac, which monitors the foreclosure market. "But we won't cross the finish line, with filings back to pre-crisis level, until early 2015."

What to Do After A Flood

After flood waters subside, document, work with your insurer, and clean up safely. Whether a flood is caused by ground water, falling water, or home water system malfunction, there are some best practices you’ll need to employ within the first 24 hours after the flood to ensure the safety of your home and family and give you the best outcome possible with your insurance company. Avoid additional risks If the flood was serious enough for you to leave your home, be sure you stay safe upon your return. The Federal Emergency Management Agency warns that you should check for any visible structural damage, such as warping, loosened or cracked foundation elements, cracks, and holes before entering the home and contact utility companies if you suspect damage to water, gas, electric, and sewer lines. In addition, it’s important to have a working flashlight and turn off all water and electrical sources within the home, says Dr. Maurice A. Ramirez, author of The Complete Idiot’s Guide to Disaster Preparedness. Even if the power isn’t operational, it’s a good idea to go to your fuse box and turn off the main, plus all of the individual fuse connections. That way, if the power is reactivated, you’re not at risk for mixing standing water and electricity. Take pictures Before you remove any water or make any repairs, fully document the damage for your insurer by taking photos or video. Digital versions are best, says Ramirez, because they can be stored electronically and easily copied. If you start removing water or making repairs before you photograph the damage, you could potentially decrease the extent of your coverage, he says. Protect your health Even if the water in your home is clear, it could be contaminated by sewage or household chemicals. Ramirez recommends wearing waders, hip- or waist-high waterproof boots. In addition, wear rubber gloves to remove water-damaged possessions and to avoid contaminants, Ramirez notes. Be sure to throw out any food that may have come into contact with flood waters. FEMA recommends boiling water until authorities declare the water supply is safe. Call your insurance company Since you should notify your insurer soon as possible after the flood, it’s a good idea to keep your insurance company and local agent’s phone number in your always-ready emergency bag. (Note that the NFIP works through private insurance companies, so you contact your insurer just as you would for any other type of claim). In cases where a flood has affected a region or community, your agent may be busy handling his or her own flood issues. In that case, contact the insurance company’s headquarters. Since groundwater flood damage typically isn’t covered by conventional homeowners insurance policies, you’ll need to work with your insurer to determine the cause of the flood and the extent of your coverage. Advise your insurance representative of the state of your home and any repairs you intend to do immediately. Be sure to follow the insurance company’s direction about whether or not to wait for an adjuster to inspect the property before making repairs, says Ramirez. Document the damage and conversations at every stage of the process. What can you expect in terms of time to get back to normal? It could be as little as one week if the claim and clean up is minimal to five to six months if you’re working with an insurance adjustor and contractor to complete extensive repairs. Find out if you’re in a disaster area Once a region has been officially declared a “disaster area” by government authorities, property owners have access to increased resources, including public services to protect and remediate the area. In addition, you may have access to financial assistance. Your insurance company will have additional information on this or you can contact FEMA directly. Remove water Once you get the OK from your insurer to remove the water, use a sump pump, available from most hardware or home supply stores for $150 to $500, and a wet vac ($40 to $130). Ramirez cautions that water is heavy—a cubic foot weight 10 lbs.—so be careful not to injure yourself, especially if you’re carrying buckets of water up and down stairs. Open doors and windows to allow fresh air to circulate so long as that won’t allow in more water. Mitigate mold damage Mold can develop within 24 to 48 hours of a flood, says Ashley Small of FEMA, so remove wet contents, including carpeting and bedding, as soon as possible. If an item has been wet for less than 48 hours, it may be salvageable. However, you’ll need to decide whether it holds enough monetary or sentimental value to try to do so. And notify your insurance company before removing items to ensure that you’re not affecting coverage. Always photograph the flood-soaked items. Rugs, for example, may be dried and then cleaned professionally, which could cost $100 to $500 or more, depending on the size and number. Large pieces of furniture that are saturated will likely be difficult to dry effectively, and should often be discarded. Mold growth can be controlled on surfaces by cleaning with a non-ammonia detergent or pine oil cleaner and disinfecting with a 10% bleach solution. (Caution: Never mix ammonia and bleach products, as the resulting fumes can be highly toxic.) Always test this solution on a small area of the item or area you’re cleaning to be sure it doesn’t cause staining or fading. Take photographs before removing wet wallboards and baseboards because insurers will want to see the height of any water damage to walls. Carefully poke holes at floor level in the drywall to allow water trapped behind it to escape. You may also wish to hire a flood restoration service—you can find pros under “Flood” or “Disaster recovery” in your local phone book, or check with the Better Business Bureau, local Chamber of Commerce, or contractor recommendation sites, such as Angieslist.com or MerchantCircle.com. Look for those with Institute of Inspection, Cleaning, and Restoration Certification. Secure the property As the homeowner, it’s your responsibility to secure the property so that no additional damage occurs. Put boards over broken windows and secure a tarp as protection if the roof has been damaged. Again, take photographs to prove to the insurance company that you have done everything possible to protect your home against further damage. If the home is habitable, take precautions to keep yourself and your family safe from injury. Use flashlights to move around dark rooms, for example. If the home isn’t habitable, don’t try to stay there. Move to a shelter or alternate location. Consult your insurer to find out what provisions the company will make for temporary housing while your home is being repaired. Read more: http://www.houselogic.com/home-advice/disaster-insurance/what-do-first-24-hours-after-flood/#ixzz2MIaMT98r

Consumer confidence, home sales up

MoneyWatch) Reports out today show increases in consumer confidence and home sales, further evidence Americans are focusing more on an improving economy than the drastic, across-the-board "sequestration" cuts slated to take effect Friday. The Conference Board Consumer-Confidence Index rose to 69.6 in February, the highest level in three months and an 11 point increase over January's 58.4. The rebound is the result of consumers coming to terms with the rise in payroll taxes which took place in January, according to Lynn Franco of the Conference Board. As sequester looms public attention fades U.S. housing market poised to take-off this year Home prices post healthy gain in December "Consumer confidence rebounded in February as the shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears to have abated," says Franco, director of economic indicators at The Conference Board. "Consumers' assessment of current business and labor market conditions is more positive than last month. Looking ahead, consumers are cautiously optimistic about the outlook for business and labor market conditions. Income expectations, which had turned rather negative last month, have improved modestly." Modestly is clearly the governing word here. Even with February's sharp rebound confidence remains relatively low -- generally when the economy is growing at a good rate, levels are at least 90. Also, analysts remain concerned that confidence could drop again, even if looming government budget cuts don't happen. "The latest increase presumably reflects the upward trend in equity prices seen during the survey period, which has gone into reverse in recent days," says Amna Asaf of Capital Economics. "It is possible that confidence will drop back in the coming months. Since the cutoff date for this survey, which was mid-February, gasoline prices have risen by an additional 10 cents a gallon, while equity prices are below their five-year high levels." However, the continuing recovery in the housing market may further boost that confidence. Last month, new-home sales jumped to the highest level since July 2008. With the month's supply of houses on the market at its lowest since March 2005, current home owners are also seeing a rise in home prices. The Commerce Department said Tuesday that new-home sales rose nearly 16 percent in January to a seasonally adjusted annual rate of 437,000. The percentage increase was the largest in nearly 20 years. And December's sales were revised higher to 378,000 from 369,000. Steady job creation and near-record-low mortgage rates are spurring more Americans to buy houses. In addition, the number of previously occupied homes for sale is at a 13-year low; all of which is increasing demand for new homes. In 2012, builders began construction on the most homes in four years. Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the National Association of Homebuilders. The increase in home building has helped boost construction hiring. The industry has gained 98,000 jobs since September, the best stretch since the spring of 2006. Still, the increases in new-home sales are coming from depressed levels. Sales plummeted to a record low in 2011. And sales are still well below the 700,000 annual level economists considered healthy.

Courage

When the burden grows heavy, and rough is the way, When you falter and slip, and it isn't your day, And your best doesn't measure to what is required, When you know in your heart that you're fast growing tired, With the odds all against you, there's one thing to do: That is, call on your courage and see the thing through. Who battles for victory ventures defeat. Misfortune is something we all have to meet ; Take the loss with the grace you would take in the gain. When things go against you, don't whine or complain; Just call on your courage and grin if you can. Though you fail to succeed, do not fail as a man. There are dark days and stormy, which come to us all, When about us in ruin our hopes seem to fall. But stand to whatever you happen to meet— We must all drink the bitter as well as the sweet. And the test of your courage is: What do you do In the hour when reverses are coming to you. Never changed is the battle by curse or regret, Though you whimper and whine, still the end must be met And who fights a good fight, though he struggle in vain, Shall have many a vict'ry to pay for his pain. So take your reverses as part of the plan Which God has devised for creating a man. Courage-By Edgar A Guest

How to Become a Top Realtor in Your Area

If you have recently begun a career in real estate, you should know that things are not always what they seem. The top producer in a company may make it look easy, but the fact is a career in real estate is not so simple. The top producers did not get there by luck. They took the necessary steps to put them at the top. These steps are not always easy to figure out, however, the following information will help you to become a top producing real estate professional. Get your systems in place. This means your website, database system, assistant, branding material, promotional material, vendors, follow-up system, marketing strategy, farming area, etc. Let us just talk about a few Farming is a term that is used in real estate that simply means an area that is your territory. Many real estate agencies will allow you to choose the area in which you wish to concentrate on. It might be in your neighborhood or it could be in an affluent section across town. The farming technique will allow you to be known in that neighborhood as the real estate agent to go to. Many wonder how big their farm should be. This is entirely up to you and how well you want to do. If you farm an area of 100 homes, you may get a couple of listings every couple of months. Farm an area of 1000 or more homes and you will probably end up with 3-4 every couple of months. The more homes you farm, the better your chances are. The thing to remember is it takes repetition and time to create you as a household name but it will happen! Another method that top producing real estate agents use is branding. Branding is the process of applying repetition and consistency in your business and leading potential clients to believe you are the best in the business and thereby, the only one to call when it comes time to selling or buying real estate. The key to branding is to invoke this brand in everything you do and make sure you back up your brand by providing excellent service. The fact is branding can and will eliminate your need to the more traditional marketing. It is a slower process, but if done correctly, will last you throughout your career in real estate. The outcome of branding is that when anybody, especially those in your targeted market, thinks about real estate, they will immediately think of you. In their eyes, the only one to call is you. One sign of a successful real estate agent is the assistant. Many top producing agents find themselves to be more effective by hiring a personal assistant to handle the time-consuming aspects of their business. Your assistant should be handling items that take up too much of your time, such as advertising, staying in touch with past clients, mailings, transaction management, etc. It is also wise to make a list of the skills you lack, such as technology skills on the computer, and hire an assistant who has better skills than you do in these areas. If you do not have time to train an assistant or you just do not want the liability you should hire a Certified Virtual Assistant (CVA). These, of course, are only a few of the techniques and methods used by top producing real estate agents. To be successful, you must have a dedication to providing excellent service to your clients and you must enjoy what you are doing. Helping someone to fulfill their dream of home ownership is one reason why many agents become top producers. To become a top producer, you simply have to want it and commit to it by taking the required steps.

Apartment, Condo Market Heats Up

For the sixth consecutive quarter, the apartment and condo housing market continued to show signs of improvement.

The Multifamily Production Index, released by the National Association of Home Builders, measures builder and developer sentiment about current market conditions in the sector. The index reached 48.9 in the fourth quarter — out of a scale up to 100 — and reached its highest reading since the fourth quarter of 2005.

"The apartment and condo sector continues to be a bright spot in the housing market, with the overall index at its highest level in six years," says David Crowe, NAHB’s chief economist. "The rental components have been the driving force behind the increased index level. And although the for-sale component remains weaker, it is still double what it was just six quarters ago."

Still, the improvements are met with caution. Builders warn about the ongoing difficulty developers have faced in obtaining credit to finance development of new apartments as a major roadblock.

What Do Americans Want Most Once Finances Improve?

Fifty-one percent of Americans in a recent poll say that if their financial situation were to improve, they’d buy a home. Coming in second on the list of wishes, they’d make repairs or improvements to the home they already have, according to the poll of more than 1,400 Americans conducted by the National Foundation for Credit Counseling Web site, www.DebtAdvice.org.

Meanwhile, 17 percent of Americans polled said they’d upgrade their car and 9 percent said they’d take a vacation.

"Home ownership has traditionally been a part of sound financial planning," says Gail Cunningham, spokesperson for the NFCC, a nonprofit credit counseling organization. "With a combined total of 74 percent of respondents selecting a home-oriented option, the poll results strongly suggests that people continue to place value in owning a home, and are anxious to buy a house or improve their existing one."

Home Ownership Matters

Home ownership has a significant impact on net worth, educational achievement, civic participation, health, and overall quality of life. And, home ownership helps create jobs—lots of them—right here at home.

Home Ownership matters…to people, to communities, and to America. Why?

For every two homes sold, one job is created in the U.S.
Each purchase generates as much as $60,000 in economic activity over time.
The home ownership debate

Some who care about creating jobs also argue that home ownership may be overrated, and that we might be better off as a nation of renters.

If that’s of concern to you, follow the debate about federal government incentives to home ownership—the outcome of which will determine whether the average American can still get an affordable mortgage and whether home owners can continue to deduct their mortgage interest as a benefit of home ownership.

Stay in the know on this debate by subscribing to the HouseLogic newsletter and following us on Facebook and Twitter. Sign up in the “Stay Connected” box at the top of this page.
Read about the issues affecting you as a home owner right now:
Home ownership

It Pays to Support Responsible Home Ownership
Protect your home’s value and build stronger communities.

Home Ownership Matters Bus Tour Hits the Road
The Home Ownership Matters bus tour, sponsored by the NATIONAL ASSOCIATION OF REALTORS®, is revving up to celebrate the benefits of home ownership with you.

Home Ownership Matters Ad

Mortgages

How Fannie Mae, Freddie Mac Save You Money
Home owners who use Fannie Mae and Freddie Mac mortgages save thousands of dollars in interest payments each year.

Show Your Support for FHA
FHA supports home values by providing a steady source of mortgage financing for families across the country, but critics worry it has taken on too much risk.

Mortgage deduction

Your Mortgage Deduction: Turn Tax Savings into Home Value
Sock away your mortgage deduction tax savings, and you’ll have a nice cushion for life’s necessities—and a few luxuries. Here’s how a typical household might spend their tax savings at various life stages.

7 Mortgage Interest Deduction Myths
Think losing the mortgage interest deduction would be no big deal? We bust seven myths to show why the cost is bigger than you think.

Mortgage Interest Deduction Vital to Housing Market
The mortgage deduction saves the average home owner thousands of dollars at tax time, supports home values at the community level, and helps American home buyers get into their first house.

Deduct Mortgage Interest and Home Equity Loans
Deducting mortgage interest, as well as interest on home equity loans and HELOCs, can save you money on taxes.

MID app
Estimate your tax savings based on the mortgage interest deduction.

Home Sales on the Rise: Ready for Spring Buying Season?

Existing-home sales rose 4.3 percent in January to a seasonally adjusted annual rate of 4.57 million, marking the third gain for home sales in the last four months, the National Association of REALTORS® reports.

“The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” NAR’s Chief Economist Lawrence Yun says.

While sales ticked up, inventories of for-sale homes also continued to show improvement, NAR reported. At the end of January, total housing inventory fell 0.4 percent to 2.31 million existing homes for sale, which represents a 6.1-month supply at the current sales pace.

“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” Yun says. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.”

Unsold listed inventory has steadily dropped since reaching a peak of 4.04 million in July 2007. It now is 20.6 percent below where it was a year ago, NAR reports.

Housing Affordability Improves
As home prices have fallen and mortgage rates at all-time record lows, housing affordability is at some of its highest levels on record.

“Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago,” says NAR President Moe Veissi. “With other favorable market factors, these are hopeful indicators leading into the spring home-buying season. We’re cautiously optimistic that an uptrend will continue this year.”

The national median existing-home price for all housing types in January was $154,700, which is down 2 percent year-over-year.

Distressed sales, which tend to sell at steep discounts, continue to hamper home prices nationwide. Foreclosures and short sales accounted for 35 percent of all January home sales, which is up slightly from 32 percent in December.

Still, “home buyers over the past three years have had some of the lowest default rates in history,” Yun said. “Entering the market at a low point and buying at discounted prices have greatly helped in that success.”

Breakdown by Housing Type
Here’s a closer look at how home sales fared by housing type in January:

Single-family home sales: increased 3.8 percent to a seasonally adjusted annual rate of 4.05 million in January from 3.90 million in December. They are 2.3 percent above the 3.96 million-unit pace a year ago. Median price: $154,400 in January, down 2.6 percent from January 2011.

Existing condominium and co-op sales: rose 8.3 percent to a seasonally adjusted annual rate of 520,000 in January from 480,000 in December. They are 10.3 percent lower than the 580,000-unit level in January 2011. Median price: $156,600 in January, up 2 percent from a year ago.

Home Sales by Region
The following is a breakdown of existing-home sales in January by region:

•Northeast: increased3.4 percent to an annual pace of 600,000 in January and are 7.1 percent above a year ago. Median price: $225,700, which is 4.2 percent below January 2011.
•Midwest: increased 1 percent in December to a level of 980,000 and are 3.2 percent higher than January 2011. Median price: $122,000, down 3.9 percent from a year ago.
•South: rose 3.5 percent to an annual level of 1.76 million in January but are unchanged from a year ago. Median price: $134,800, which is 0.3 percent below January 2011.
•West: increased 8.8 percent to an annual pace of 1.23 million in January but are 3.1 percent below a spike in January 2011. Median price: $187,100, down 1.8 percent from a year ago.
Contract Delays, Cancellations Remain High
Twenty-one percent of NAR members in January reported delays in contracts, and 33 percent said contracts fell through, according to NAR. The number of contract cancellations remains mostly unchanged from December.

The increase in the past year of contract cancellations or delays has been blamed on more lenders declining mortgage applications from stricter underwriting standards and low appraisals coming in under the agreed upon contract price.

Source: National Association of REALTORS®

Is Earnest Money Required in A Short Sale?

Is Earnest Money Required In A Short Sale Situation?


Q: My agent informed me that earnest money for a short sale transaction was required to make a contract binding. Is that true? More importantly, is earnest money refundable if a buyer pulls out of a contract prior to bank approval even though our contract provides for bank approval within 60 days?
–Anonymous, Bartlett, IL

A: The promise of the earnest money deposit is needed, but the money does not have to be placed into escrow until the bank approves the sale. This is a common error.

The contract is not binding because it is still subject to the banks approval. But even if you do place the money into escrow, you still have the right to its return before bank approval. Even after bank approval, you may still have a right to its return, but this is dependent on the terms of the contract.

If the contract cancels and your deposit is in escrow, then you will need both you and the seller to sign documents allowing its release. Without the signatures, you start down the path of legal recourse.

I always recommend that in a short sale, the earnest money deposit be placed into escrow after the banks approval. Since banks do not give you much time to close after their approval, I tell my clients to do their investigation, inspections and prepare their financing documents with the lender’s underwriter before the bank approves the short sale. This way when the approval arrives, the buyer is ready to close quickly.

Costs Associated with a Home Loan

Costs Associated with a Home Loan
Closing costs are the actual expenses that the lender incurs in the origination of a new home loan.

I want to review some of the costs you can expect to pay associated with any new home loan. With any luck, the builder or seller will agree to pay at least some of these expenses for you. But regardless of who pays them, these costs are part of the price of buying your next home, so let's take a look. They are closing costs, loan discount points and prepaid items.
Closing costs are the actual expenses that the lender incurs in the origination of a new home loan. Some of the costs are related to your loan application, such as the expense of newly updated credit reports on all applicants. Other fees are related to the house itself, such as the appraisal of the property. Others are payment to the lender for processing your application, such as the loan origination fee. All these costs are lumped into a broad category called "closing costs." Unless the seller offers to pay them for you, this area of expenses is charged to the buyer, and often runs between 2 and 3 percent of the amount being borrowed. Because different states have different fees and taxes that are a part of these costs, it's impossible to generalize nationwide. So it's important that you talk with a reputable lender ahead of time about what costs you can expect to pay in your part of the country.
Loan discount points are, in essence, a form of prepaid interest. One discount point is exactly equal to one percent of the amount being borrowed. It is paid in cash at closing to the lender as a form of interest. Discount points have the effect of lowering the stated interest rate you will pay on the loan you obtain. For example, a lender might offer you a 30 year fixed rate loan at 8% with zero points or the same loan at 7.5% with 2 discount points. Because the points are considered interest, the yield to the lender is approximately the same. So why, you are asking, would I want to pay points? You probably won't, but sometimes new home builders or employers will offer to pay up to a certain number of points as an incentive, and I want to make sure you get everything that's coming to you.
Last, there is the issue of prepaid items. Most home lenders want you to set up what is called an "escrow" account. This is nothing more than a savings account that the lender holds. Every month you will, in addition to your regular loan payment, deposit a sum for property taxes and for homeowner's insurance into this account. And when the next bill comes due for taxes or insurance, your lender will make the payment for you. The reason that all this matters today is that, on the day of your purchase, you will be required to set up an escrow account with about 9 months worth of taxes and about 2 months worth of insurance payments. In addition, you will have to pay for the first year's insurance policy in full. These costs are called prepaid items, and you must pay for them yourself.
Because regulations and customs vary from state to state, the amount you need at settlement may be more or less than the amounts I have discussed here. Talk to a reputable lender to get an accurate estimate of how much you will need to buy your next home.

A Short Guide to Real Estate Lingo and Acronyms

A Short Guide to Real Estate Lingo and Acronyms
Real estate ads are usually full of acronyms and terms that are unfamiliar to first-time buyers.

Here's a cheat sheet to let you in on the lingo.

4B/2B -- four bedrooms and two bathrooms. "Bedroom" usually means a sleeping area with a window and a closet, but the definition varies in different places. A "full bathroom" is a room with a toilet, a sink and a bathtub. A "three-quarter bathroom" has a toilet, a sink and a shower. A "half bathroom" or powder room has only a toilet and a sink.

assum. fin. -- assumable financing
closing costs -- the entire package of miscellaneous expenses paid by the buyer and the seller when the real estate deal closes. These costs include the brokerage commission, mortgage-related fees, escrow or attorney's settlement charges, transfer taxes, recording fees, title insurance and so on. Closing costs are generally paid through escrow.

CMA -- comparative market analysis or competitive market analysis. A CMA is a report that shows prices of homes that are comparable to a subject home and that were recently sold, are currently on the market or were on the market, but not sold within the listing period.

contingency -- a provision of an agreement that keeps the agreement from being fully legally binding until a certain condition is met. One example is a buyer's contractual right to obtain a professional home inspection before purchasing the home.
dk -- deck
expansion pot'l -- expansion potential mean that there's extra space on the lot or the possibility of adding a room or even an upper level, subject to local zoning restrictions.
fab pentrm -- fabulous pentroom, a room on top (but under the roof) that has great views
FDR -- formal dining room
fixture -- anything of value that is permanently attached to or a part of real property. (Real estate is legally called "real property," while movables are called "personal property.") Examples of fixtures include installed wall-to-wall carpeting, light fixtures, window coverings, landscaping and so on. Fixtures are a frequent subject of buyer and seller disputes. When in doubt, get it in writing.

frplc, fplc, FP -- fireplace
gar -- garage (garden is usually abbrevated as "gard.")
grmet kit -- gourmet kitchen
HDW, HWF, Hdwd -- hardwood floors
hi ceils -- high ceilings
in-law potential -- potential for a separate apartment, subject to local zoning restrictions
large E-2 plan -- this is one of several floorplans available in a specific building

listing -- an agreement between a real estate broker and a home owner that allows the broker to market and arrange for the sale of the owner's home. The word "listing" is also used to refer to the for-sale home itself. A home being sold by the owner without a real estate agent isn't a "listing."

lo dues -- low homeowner's association dues. But find out how "low" the dues are compared to other dues in the area.

lock box -- locked key-holding device affixed to a for-sale home so real estate professionals can gain entry into the home after obtaining permission from the listing agent

lsd pkg. -- leased parking area. May come with additional cost.
MLS -- Multiple Listing Service. An MLS is an organization that collects, compiles and distributes information about homes listed for sale by its members, who are real estate brokers. Membership isn't open to the general public, although selected MLS data may be sold to real estate listings Web sites. MLSs are local or regional. There is no MLS covering the whole country.

nr bst schls -- near the best schools
pot'l -- potential
pvt -- private
pwdr rm -- half bathroom or powder room
REALTOR® -- a real estate broker or sales associate who is a member of the National Association of REALTORS®. Not all real estate agents are REALTORS®.

title insurance -- an insurance policy that protects a lender's or owner's interest in real property from assorted types of unexpected or fraudulent claims of ownership. It's customary for the buyer to pay for the lender's title insurance policy.
upr -- upper floor
vw, vu, vws, vus -- view(s

Fed Vows to Keep Rates Low Until 2014

Daily Real Estate News | Thursday, January 26, 2012
The Federal Reserve announced that short-term interest rates will likely stay near zero for nearly three more years, a move that is expected to spillover to long-term mortgage rates for home buyers and home owners.

In August, the Fed had made a rare move to say it would keep rates near zero until at least mid-2013. The Fed said Wednesday that the economy still needs more help and it will now extend that period to 2014.

Fed Chairman Ben Bernanke said in a news conference that the Fed isn’t happy with the modest economic recovery and that the Fed may need to take additional steps to spur recovery. He did not comment further on what those steps might be, though.

While the economy has improved somewhat in recent weeks, Fed officials say it’s worried about “strains in global financial markets” and the still high unemployment rate.

Some critics say that the Fed’s vow to keep mortgage rates longer won’t do enough to help the economy and the housing market. They argue that too many Americans are already unable to take advantage of the record low mortgage rates because of the tightening of lending standards.

Bernanke shared that concern, saying that millions of home owners were unable to refinance because of damaged credit or being from underwater in their homes.

Source: “Fed Sees Low Rates to 2014,” The Wall Street Journal (Jan. 26, 2012) and “Fed Signals That a Full Recovery Is Years Away,” The New York Times (Jan. 25, 2012)

Tax Credits for Adding or Replacing Insulation

The 2010 energy tax credit for adding insulation is gone, but a smaller one in 2011 is better than nothing.

Whether it’s summer heat or winter cold, insulation makes your house a lot more livable. And if you added insulation in 2011, you may be eligible to collect a $500 energy tax credit.

Tax credit limits and deadlines:10% of expenditures, up to $500 for the year, for all energy improvements combined.
Insulation must have been installed by Dec. 31, 2011.
Save receipts and labels for Uncle Sam.
Be sure to file IRS Form 5695 with your 2011 return.
The Energy Star site is your safest bet for information on how to get the credit. Energy Star has been pretty flexible on what it allows for this credit:

Batts
Rolls
Blow-in fibers
Rigid boards
Expanding spray
Pour-in-place
Products that reduce air leaks also qualify:

Weather stripping (such as fabric, foam, or metal to provide a seal)
Spray foam in a can, designed to air seal
Caulk designed to air seal
House wrap
Installation isn’t covered.

Don’t rely solely on contractors who may not know the details or who promise their products will get the credit in order to make a sale.

As of January 2012, the feds haven’t extended the energy tax credits for insulation beyond 2011.



Read more: http://www.houselogic.com/home-advice/tax-credits/tax-credits-adding-or-replacing-insulation/#ixzz1kaE2zHcz

2011 Energy Tax Credits: What You Need to Know to Collect

They’re not as much as they used to be, but there are still energy tax credits to be had for upgrades made in 2011.

2011’s federal energy tax credits of up to $500 for various home improvements are a far cry from what they were in 2009 and 2010. But if you upgraded to one or more of the following systems in 2011, you may be eligible to take a tax credit on your 2011 returns. (As of January 2012, the feds haven’t extended the credits beyond 2011.)

Biomass stoves
Heating, ventilation, air conditioning
Insulation
Home Taxes & Financing
Taxes & Incentives

Tax Credits
They’re not as much as they used to be, but there are still energy tax credits to be had for upgrades made in 2011.Effort: Low 1-2 hrs (Form 5695)
Saves: Low $500 (tax credit).

2011’s federal energy tax credits of up to $500 for various home improvements are a far cry from what they were in 2009 and 2010. But if you upgraded to one or more of the following systems in 2011, you may be eligible to take a tax credit on your 2011 returns. (As of January 2012, the feds haven’t extended the credits beyond 2011.)

Biomass stoves
Heating, ventilation, air conditioning
Insulation
Roofs (metal and asphalt)
Water heaters (non-solar)
Windows, doors, and skylights
Storm windows and doors
The energy tax credits are small, but at least a credit is better than a deduction:

Deductions just reduce your taxable income.
With a credit, you get a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.
Other limits on IRS energy tax credits besides $500 max

Credit only extends to 10% of the cost (not the 30% of yesteryear), so you have to spend $5,000 to get $500.
$500 is a lifetime limit. If you pocketed $500 or more in 2009 and 2010 combined, you’re not entitled to any more money for energy-efficient improvements in the above seven categories. But if you took $300 in the last two years, for example, you can get up to $200 in 2011.
With some systems, your cap is even lower than $500.
$500 is the max for all qualified improvements combined.
Certain systems capped below $500

No matter how much you spend on some approved items, you’ll never get the $500 credit—though you could combine some of these:

System Cap
New windows $200 max (and no, not per window—overall)
Advanced main air-circulating fan $50 max
Qualified natural gas, propane, or oil furnace or hot water boiler $150 max
Approved electric and geothermal heat pumps; central air-conditioning systems; and natural gas, propane, or oil water heaters $300 max

And not all products are created equal in the feds’ eyes. Improvements have to meet IRS energy-efficiency standards to qualify for the tax credit. In the case of boilers and furnaces, they have to meet the 95 AFUE standard. EnergyStar.gov has the details.

Tax credits cover installation—sometimes

Rule of thumb: If installation is either particularly difficult or critical to safe functioning, the credit will cover labor. Otherwise, not. (Yes, you’d have to be pretty handy to install your own windows and roof, but the feds put these squarely in the “not covered” category.)

Installation covered for:

Biomass stoves
HVAC
Non-solar water heaters
Installation not covered for:

Insulation
Roofs
Windows, doors, and skylights
How to claim the 2011 energy tax credit

Determine if the system you installed is eligible for the credits. Go to Energy Star’s website for detailed descriptions of what’s covered; then talk to your vendor.
Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.
File IRS Form 5695 with the rest of your tax forms in 2012.
This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice, and remember that tax laws may vary by jurisdiction.

December Existing-Home Sales Show Uptrend

December Existing-Home Sales Show Uptrend
Daily Real Estate News | Friday, January 20, 2012
Existing-home sales continued on an uptrend in December, rising for three consecutive months and remaining above where they were a year ago, according to the National Association of REALTORS®.

The latest monthly data shows total existing-home salesrose 5.0 percent to a seasonally adjusted annual rate of 4.61 million in December from a downwardly revised 4.39 million in November, and are 3.6 percent higher than the 4.45 million-unit level in December 2010. The estimates are based on completed transactions from multiple listing services that include single-family homes, townhomes, condominiums and co-ops.

Lawrence Yun, NAR chief economist, said these are early signs of what may be a sustained recovery. “The pattern of home sales in recent months demonstrates a market in recovery,” he said. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”

For all of 2011, existing-home sales rose 1.7 percent to 4.26 million from 4.19 million in 2010.

Affordability Conditions
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to another record low of 3.96 percent in December from 3.99 percent in November; the rate was 4.71 percent in December 2010; recordkeeping began in 1971.

NAR President Moe Veissisaid more buyers are expected to take advantage of market conditions this year. “The American dream of homeownership is alive and well. We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” he said. “More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services.”

Total housing inventory at the end of December dropped 9.2 percent to 2.38 million existing homes available for sale, which represents a 6.2-month supply at the current sales pace, down from a 7.2-month supply in November.

Available inventory has trended down since setting a record of 4.04 million in July 2007, and is at the lowest level since March 2005 when there were 2.30 million homes on the market.

“The inventory supply suggests many markets will see prices stabilize or grow moderately in the near future,” Yun said.

Who’s Buying What
Foreclosures sold for an average discount of 22 percent in December, up from 20 percent a year ago, while short sales closed 13 percent below market value compared with a 16 percent discount in December 2010.

The national median existing-home price for all housing types was $164,500 in December, which is 2.5 percent below December 2010. Distressed homes — foreclosures and short sales — accounted for 32 percent of sales in December (19 percent were foreclosures and 13 percent were short sales), up from 29 percent in November; they were 36 percent in December 2010.

All-cash sales accounted for 31 percent of purchases in December, up from 28 percent in November and 29 percent in December 2010. Investors account for the bulk of cash transactions.

Investors purchased 21 percent of homes in December, up from 19 percent in November and 20 percent in December 2010. First-time buyers fell to 31 percent of transactions in December from 35 percent in November; they were 33 percent in December 2010.

Contract failures were reported by 33 percent of NAR members in December, unchanged from November; they were 9 percent in December 2010. Although closed sales are holding up better than this finding would suggest, contract cancellations are caused largely by declined mortgage applications and failures in loan underwriting from appraised values coming in below the negotiated price.

Single-family home sales increased 4.6 percent to a seasonally adjusted annual rate of 4.11 million in December from 3.93 million in November, and are 4.3 percent higher than the 3.94 million-unit pace a year ago. The median existing single-family home price was $165,100 in December, which is 2.5 percent below December 2010.

Existing condominium and co-op sales rose 8.7 percent to a seasonally adjusted annual rate of 500,000 in December from 460,000 in November but are 2.0 percent below the 510,000-unit level in December 2010. The median existing condo price was $160,000 inDecember, down 3.0 percent from a year ago.

Around the Country
Regionally, existing-home sales in the Northeast jumped 10.7 percent to an annual pace of 620,000 in December and are 3.3 percent above a year ago. The median price in the Northeast was $231,300, which is 2.7 percent below December 2010.

Existing-home sales in the Midwest rose 8.3 percent in December to a level of 1.04 million and are 9.5 percent above December 2010. The median price in the Midwest was $129,100, down 7.9 percent from a year ago.

In the South, existing-home sales increased 2.9 percent to an annual level of 1.76 million in Decemberand are 3.5 percent above a year ago. The median price in the South was $146,900, down 1.1 percent from December 2010.

Existing-home sales in the West rose 2.6 percent to an annual pace of 1.19 million in December but are 0.8 percent below December 2010. The median price in the West was $205,200, up 0.3 percent from a year ago.

7 Mortgage Interest Deduction Myths

Think losing the mortgage interest deduction would be no big deal?

We bust seven myths to show why the cost is bigger than you think.

Proposals floating on Capitol Hill to curb the mortgage interest deduction gloss over all the ways home owners, and even renters, would be hurt by the change. Let’s set the record straight.

Myth #1: The mortgage deduction is just for rich people.
The mortgage interest deduction helps mostly middle- and lower-income families.
65% of families who use it earn less than $100,000 per year.
91% earn less than $200,000 per year (that’s where most economists draw the line between rich and middle-class).
Only 9% earn more than $200,000 per year.
This myth may have arisen because of a related fact: If you buy a house, you’re much more likely to accumulate wealth by the end of your life. Home owners have an average net worth of $200,000, while the average renter’s net worth is $5,000, according to the Federal Reserve’s Survey of Consumer Finances.

Myth #2: I'm not affected by the mortgage deduction because I don't own a home.

If the mortgage interest deduction goes away, home values would fall by 15%, the NATIONAL ASSOCIATION OF REALTORS® estimates. When home values fall, tax revenues follow suit, giving your local government two choices:

Raise property taxes. Not only will home owners pay more in taxes, renters won’t escape unscathed either as landlords raise rents to cover their costs.
Cut services that everyone—renters and owners—enjoys.


Myth #3: Switching to a 12% mortgage interest credit would be a wash for most.


One proposal floating around Congress is to replace the mortgage interest deduction with a 12% nonrefundable mortgage interest tax credit. (Deductions reduce your taxable income; credits reduce your tax liability.) This plan would increase taxes for many home owners.

Example: If you paid $10,000 in mortgage interest, and you’re in the 25% bracket, you’d pay $1,300 in extra taxes.

The $10,000 deduction you have now saves you $2,500 on your taxes (25% x 10,000).
The 12% credit would save you only $1,200 (12% x 10,000) on your taxes.
In this scenario, if the mortgage interest deduction is changed to a 12% credit, you’d lose $1,300 (the current $2,500 savings minus the $1,200 you’ll save under the 12% plan).

Myth #4: Not that many people take the mortgage interest deduction.

There are 75 million American home owners, and 38.5 million of them take the mortgage interest deduction. The average mortgage interest tax deduction is $12,200, and a typical benefit for home owners is $3,050 a year.

The mortgage deduction is a key benefit to first-time home owners and trade-up buyers because you pay the most mortgage interest when you first take out a mortgage. (You won’t pay equal amounts of principal and interest until year 13 or later, depending on your interest rate.)

People with large families also get a lot of bang from mortgage interest deductibility—they buy relatively big houses for their big families.

Myth #5: Getting rid of the deduction won't affect me or my housing market.

It will mean lower property values for all American home owners, including the one-third who own their homes outright and the 12 million who take the standard deduction.

Even if you don’t have a mortgage, getting rid of the MID will affect how much home you can afford to buy—and how much a buyer will pay for your home.

Myth #6: People will still buy my house without the mortgage interest deduction.

Yes, people will still value home ownership, but it will be harder for them to buy your house. The mortgage interest deduction makes it cheaper to buy a home because it saves real money at tax time.

If you bought a home last year with a $200,000, 30-year, 5% fixed-rate mortgage and you’re in a 25% tax bracket, you’d save about $2,500 from the mortgage interest deduction alone in the first year you own your home. That’s money you can use to pay down other debts, save for your children’s college education, or put away to buy a move-up house.

Myth #7: Solving the U.S. budget problems requires everyone to sacrifice.

Home owners already pay 80% to 90% of the federal income tax collected. If mortgage interest deductibility disappears, you and your fellow home owners could foot 95% of federal income tax.

If you’re at the beginning of your mortgage, losing the mortgage deduction will cost you a bundle:

$26,685—a 15% drop in value for the median home valued at $177,900.
A proportionally smaller gain in overall home equity over your lifetime, because your home now starts from a lower value.
Dona DeZube has been writing about real estate for more than two decades. She lives a suburban Baltimore 1970s rancher on a 3-acre lot shared with possums, raccoons, foxes, a herd of deer, and her blue-tick hound.

When to Get a New Real Estate Agent

Real estate agents come in all different stripes, but it takes a personal experience to hammer that home. As my bio says, I'm a management consultant for institutions in the real estate industry, and have been working in the real estate space for several years. But recently, my wife accepted a tremendous opportunity for her career in Houston, so I've been busy doing consumer things in the consumer world: trying to find a place for us to live, at least for a year, while we get to know the area to decide where to purchase.

The experience of looking at the real estate industry through a normal consumer's eyes is... interesting. I'd like to relate a few of the experiences I've gone through and am still going through here, starting with...

The Subscriber's Voicemail Is Full

So I travel down to Houston, taking a couple of days, to locate a house that my brood and I might transform into our lair while we settle in. I find a pleasant, professional real estate agent to help me with my search (wave to everybody, Sara Nguyen of Prudential Gary Greene), and use the various online tools on HAR.com to conduct the search. I'll have a word or two about that experience later.

Together, Sara and I narrow our options down to a couple of neighborhoods, and a dozen houses or so. We start going through them rapid-fire style on Monday, so I can narrow the choices down. We get to one house that looks
Find Local Homes for Sale
Browse through photos of millions of home listings on AOL Real Estate
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Search Foreclosures for Salepromising, and Sara turns to me in the car and makes a confession. (Much of the dialogue below consists of me putting words in people's mouths, but hey, I didn't have a tape recorder on me or anything while, y'know, just being a consumer. But the facts are absolutely true.)

"I'm so sorry, Rob, but this house... I need a few more minutes," she says.

"Why is that?"

"Well, I've been trying for the last four hours to get a hold of the agent here to make an appointment, and she's not answering her phone."

I had noticed that Sara was awfully busy while we were touring the four previous houses. Now I knew what she had been trying to do.

"I tried to leave her a message to call me back as soon as possible, but her voicemail is full."

Say what now? I pull my Blackberry out of the holster and check: yep, it says right there that this is year 2010. For a moment, I thought I was back in the days when Motorola RAZR was the hot phone, and voicemail was this new thing that people didn't know how to use.

By sending her a couple of emails, leaving messages with her office, and perhaps by divine intervention, Sara gets a call back, and we're able to go in and see the place. I like the house, seems like it'll do for a temporary hideout, and talk it over with my wife that evening. We decide that we'll take it.

The next day finds me in Sara's office filling out applications and lease agreements. We're not in the least bit worried about approval; my wife and I are homeowners, have been for some nine years, have good credit, and the rent is cheap to our New Jersey eyes. We send the forms over, and I hope to have cashier's checks ready to go by the afternoon.

In the age of instant communication, of Twitter, Facebook, email, email on mobile phone, text messages, and so on, I figure it'll be a couple of hours before we hear back and can start negotiating the fine points of the lease.

Four hours pass without a word. Sara, in a near-panic, tells me that she's tried the other agent's phone a dozen times. "Her voicemail is still full, so I can't leave her messages, and she's just not getting back to me at all."

I'm about two minutes away from deciding to say screw it, and move on to our second choice house, when the other agent finally calls Sara back.

If Your Agent's Voicemail Is Full... Fire Her

I'm not going to bore you with the details of the negotiation, which still has not concluded, because, guess what, the other agent rarely answers the phone, and her voicemail is still full. But as a trespasser in Consumer World, let me suggest something: If your Realtor's voicemail is full, you've let her know this, and it's still full after an hour... fire her.

This agent, whose name I never learned, came within two minutes of losing her client the deal. In my case, he almost lost out on a great, stable tenant who would take care of his property, pay the rent on time, and won't make a fuss (without a very, very good reason). If I had been a buyer, her client might have lost the deal completely, simply because she can't be bothered to delete old voicemail messages (or answer the phone for that matter).

Let me be charitable and assume that perhaps the other agent is Hillary Clinton, moonlighting to supplement her income, while she tries to negotiate some treaty with Azerbaijan. That might be great for Azerbaijan and American foreign policy, but if you are Realtor Clinton's client, you're gettin' screwed.

Within the industry, we've heard that consumers are getting more demanding. Consumers want answers immediately, we hear. You'd better get on Twitter, and get that iPad, and have four mobile phones to deal with the impatient consumer - that's what we hear. Well, from Consumer World, let me suggest that the reason why consumers might be impatient is that we live in 2010, and we have jobs, and we have clients, and we know that we have to respond when our boss or our client calls us. We have mobile phones and voicemail too, and we know how they work. We're pretty reasonable folks, I think, but not when your damn voicemail has been full for two days and you can't be bothered to take five minutes to delete your three-month old messages!

There are complexities to being a real estate agent these days, I get that better than most people. But the essence of being an agent is to represent the client. Tell you what, it's awfully hard to represent your client when you don't pick up your phone, and people calling you with offers can't leave messages because your voicemail is full.

As a buyer/seller, or a landlord/tenant, your financial future might hang in the balance in a real estate transaction. Even if you are renting for a short-term, like I am now, you have to make decisions, and usually with very little time. Using a real estate agent who can't even be bothered to check (and delete!) voicemails might be your choice as a consumer, but don't be surprised if you're having trouble selling that house of yours.

Oh, and if you happen to think that technology is the solution -- well, someone who can't even be bothered to pick up phone calls and deal with a full voicemail inbox is not exactly a prime candidate for using avatars in SecondLife to do real estate transactions. Yes, the industry itself needs to do better at pruning out bad agents. Brokers need to do more to train, educate, and discipline agents who (in theory) work for them. But you, as the consumer, can do more too: stop hiring morons.

One clear sign? Her voicemail is full. Move on, friend, move on. Find someone else. Because I, and millions of consumers like me, will find another house instead.

Why Home Buyers Can't Evaluate Real Estate Agents

What do home buyers expect from a real estate agent? The answers might surprise you, and go a long way to explain the reasons why buyers are ultimately disappointed with the one they pick.

An interesting result from the good people at the National Association of Realtors from their survey of home buyers on what it is that consumers value in a Realtor: Honesty and integrity. Knowledge of purchase process. Responsiveness. And so on.

These all sound like wonderful things to want in the professional you're hiring to help you spend the most you've ever spent on anything, if you're in the 99.999 percent of the population who doesn't own a private jet.
But there are some odd things about this survey and its results.
Of the nine skills/qualities listed, over 79 percent rated eight of them as "Very Important," while only 40 percent rated tech skills as "Very Important." I find that bizarre. What's more bizarre, though, is that only 85 percent of respondents rated communication skills as Very Important.

Judging by these results, it seems to me that the survey question probably asked, "Rate the following skills and qualities of a real estate agent from Not Important to Very Important." Clearly, people weren't asked to rank these qualities in order of importance, as that would not result in four of the qualities scoring above 90 percent. So... who the hell are the 15 percent of See photos of homes for sale in your area and across the country on AOL Real Estatepeople who thought communication skills were not very important? Are there that many people walking around saying, "Hey, it's okay if my agent mumbles on the phone and writes nonsensical emails"? According to the results above, one out of four single male buyers couldn't care less if their real estate agent has no people skills and has the manners of a Taliban enforcer attending a Women's Rights Rally. Really?

But there is a more fundamental problem, and one that actually impacts the consumer experience.

Assuming you do think things like honesty and integrity are Very Important to you... how exactly would you know if your agent has them?

It isn't as if people -- even if they're Realtors -- walk around with signs around their necks saying, "I'm not really honest all the time, and my integrity is somewhat shaky." Until you work with someone for a while, go through some ups and downs, and have reason to verify that the person is in fact honest and has integrity, how could you tell?

Professional services are full of these problems, which I call the "Great Lover" problem after an illustration by Marty Neumeier. Someone comes up to you and claims, "I'm a great lover." Is there some way of knowing whether he or she is right or wrong, short of going to bed and experiencing it for yourself? Lawyers say they're competent -- but short of having them handle a case for you, how could you tell? Doctors might tell you they have great judgment under pressure of a crisis in the operating room, but how would you know? References from past clients (or lovers) help, as does diplomas, degrees, credentials ("Black Belt Lover, Third Degree"), but all of those are substitutes for personal knowledge, which only comes from working with that professional.

For real estate transactions, the problem is compounded by lack of experience of the consumer. Most people buy or sell a house once every seven years on average. If you buy your first home at 30 (which is sort of on the early side), you're ready for retirement by the time you've had your fifth transaction. During that same period, you may have dealt with a doctor hundreds of times.

Consider some of these "Very Important" skills and qualities. "Knowledge of the purchase process" is one. If you've never bought a house before (as I strongly think would be the case for single men and women), how in the world are you going to be able to evaluate how much your real estate agent knows or doesn't know about the purchase process? Exactly what part of the process will you able to step in and say, "Hey, wait a minute - you're not doing that right"?

What about knowledge of the real estate market? If you, a random consumer, know more about the real estate market than your real estate agent who does this day in and day out, why on earth would you (a) hire her, and (b) not work as a real estate agent yourself? It's like my saying that a heart surgeon's "Knowledge of the cardiopulmonary system" is Very Important to me, except for the fact that I don't know jack about the cardiopulmonary system and would have to take whatever Doctor House has to tell me at face value.

This is the reason why I don't believe various consumer ratings of real estate agents have much value at all, even when it comes from past clients. They simply lack any basis to form judgments about the quality of service they received. Sure, they can tell me things about basic customer service issues, like Responsiveness or Communication Skills. But unless they've been actually ripped off, defrauded, or caught their agents in a baldfaced lie, they're going to assume that the agent was honest and had integrity. And unless they are real estate professionals themselves, there's no basis on which they can evaluate an agent's knowledge, negotiation skills, or transaction management skills.

In fact, something that experienced real estate agents talk about all the time is the fact that the opposite is more likely to be true: that consumers think the agent who put forth heroic efforts on their behalf is awesome, even though that heroic effort was necessary because the agent screwed something up badly, while smooth, trouble-free transactions make them think the agent was lazy or didn't negotiate hard enough, even though the reason why everything went so smoothly was due to the agent being a master at her craft.

So consumer reviews of real estate agents is not particularly meaningful. You know what would be meaningful though? Real estate agent reviews of other real estate agents. I, for one, would like to see what qualities and skills Realtors think are important, ranked in order of importance, and then see them rate each other on it after each transaction.

Of course, I would also like to have Steve Jobs leave his fortune to my favorite charity: The Rob Hahn Foundation for Education (Of Rob Hahn's Children)....

Closing Techniques To Master Closing in Sales

Your investment in yourself is the best investment you can make. I recommend you spend the bulk of your energy and efforts learning about things that make money so that you can be financially free to do the things you want and to help those that you care about. Every little bit you learn makes you more valuable in assisting those around you and yourself. That’s true even if you stay at a company you’ve been with for a long time.

Okay so I realize that real estate isn’t really “selling”. The truth is that there is probably more negotiating involved. A lot of people don’t want to learn real selling because they think it isn’t relevant to their field of work, it is beneath them or most of the time because we have a learned image of a high pressure salesman that we just don’t really like. That person is so uncomfortable to be around that we don’t understand why anyone would want to be like them. The good news is this, those high pressure sales people are generally very poor at their job. They also generally sell people a bunch of shit (excuse my language) that people don’t want. Usually behind the scenes you will find that their customers are rarely satisfied and life is a continuous struggle for them to meet quotas they can’t reach. I’m not going to teach you to be like them because the truth is that type of selling doesn’t work.
The Misconceptions About Selling

Remember that people buy products all the time. People also buy services all the time. A lot of times people don’t need sold on the value of those services as they’ve already made up their mind to purchase them. I don’t know about you but when I went to buy my last computer, I knew what I basically wanted. All I needed the salesperson to show me was the best laptop for my price range. The salesperson advised me, I bought my computer and that was the end of it. I didn’t require high pressure sales to close, I needed advice. In fact, if he had tried to sell me via high pressure selling, I probably would have left to another store to find someone who was able to listen to my request and advise me accordingly. I knew what I basically wanted and needed the salesperson for their knowledge on the specifics. If you can learn to effectively lead people’s conversations to where they had already decided to close the deal with you and you simply had to advise them on the specifics, wouldn’t that be a lot easier? The good news is that this is just what you’re going to learn today.

I suppose a small minority of people would disagree with me but McDonald’s does not make the best hamburgers. However, McDonald’s is the best selling hamburger joint in the world. What McDonald’s does have though is the world’s best system of marketing and selling to deliver their product to their customer. Do you think McDonald’s has ever tried to force you to buy a hamburger against your will via some high pressure sales pitch? Or could it be that their success in selling hamburgers is due to something more subtle and powerful?

Becoming a successful real estate investor isn’t about being the most intelligent, motivated or attractive, it is all about who can consistently close the deal. If you want to consistently close deals a big part of it will be your learning resources like this. Every little bit you invest in yourself will only serve to make you a more powerful and confident individual.
The Great Myth

“I’m not in sales, so why should I learn selling?”

Yes you are!

Suppose you never take any of this information on this site and you never use it to become a successful real estate investor. Suppose you are content with your current job and you don’t see a need to change what you’re doing. When you went in for your job interview, a huge part of whether or not you obtained the desirable job was due to your ability to sell yourself at your job interview. Next time you go for a promotion, your success or failure will be determined by how well you’ve sold yourself and your value to your company all along. Next time you hope to attract a mate of the opposite sex, it will all be in how you present and sell yourself. Trust me when I say that I have many friends who fail miserably with women simple due to their inability to sell themselves. They often have poor communication skills and poor self belief. This leads me to…

The Great Truth

Everyone is involved in selling – all the time, no exceptions
The problem with this is that we as a society have a learned perception that a great sales master is one who talks a lot and is boastful. The reality is that a great salesperson closes deals. The even lesser understood reality is that great selling involves great listening. I want to remind you that McDonald’s has never (via high pressure sales) sold you a hamburger but the average person will go there over 1800 times over the course of their life. I should elaborate to say that McDonald’s has never “sold” you a hamburger in terms of our preconceived view of selling. However, McDonald’s has marketed and communicated effectively enough that you have decided you would like one of their products and simply went in to the store to complete your order. That is what selling really is. You need people to have already decided in their mind to buy your hamburger so to speak so that you can simply advise them about the specifics.

In real estate, you only get paid if you close deals so understanding the psychology of people helps you drastically. Let’s simply change the term “selling” to a better more fuller term – “effectively communicating”. Communicating is a great deal different than talking even though some people use them interchangably. It encompasses your body language, the emotion behind what you say, your tone of voice and most importantly, your listening skills. If you only learn one skill the rest of your life, master communication and every aspect of your life will improve accordingly.

When I originally wrote this information a while ago, I had written it for sales people. I urge you to read it with an open mind even if you are not currently selling anything (except yourself because you will never be done selling that). All of the information is still relevant to you if you ever plan to move towards any sort of a desired outcome in your life. In real estate, you need to close deals for your desired outcome of wealth to manifest but in real life, there are 100s of daily examples where persuasion can lead you to a better result.

So What Stops People From Closing?

The vast majority of salespeople fear potential objections so much that they don’t even ask for the close. Over 90% of most sales presentations actually end without the salesperson asking for the close even just one time. Think of all the ineffective salespeople you’ve dealt with in your life. How is their demeanor? What kind of closing questions do they ask?

Closing should be a natural outcome to a well done presentation. Before we look at techniques, let’s understand the difference between poor performing and well performing salespeople. Which one are you now? Which one are you going to choose to be from now on? If you’re not already a great salesperson, make a goal to become one in the next 30 days. All the techniques in the world mean nothing without being applied.

Closing With Ineffective Salespeople

When most people picture a person who should be in sales, they picture someone who is a smooth talker. They are very cunning with their words. In reality, rarely does this type of person ever actually excel at selling. People buy products from people they feel comfortable around and even friendly with. Have you ever went to buy an electronic part and the salesperson wouldn’t stop droning on about every single technical detail and specification of it?

The three most common closing techniques of ineffective salespeople:
- They hint that you could buy the product if you want
- The fantastic and well thought out “So… what do you think?”
- They just keep talking about the product waiting for the potential client to make the first move.

None of those work for a few reasons:

- Most notably, their lack of belief is translated to you
- You can get the feeling that they’re just trying to get you to buy for their benefit, not yours
- Chances are they haven’t actually listened to you through the duration of the presentation
- They give you a sense of mistrust in them
- They are rarely passionate about the product they are selling
- They are rarely passionate about seeing you make the best choice for you
- It seems as if they’re hiding something
- If they just listened to you just a little bit, they might actually understand what you’ve said
- Seriously would you buy something from someone who just won’t shut up if you didn’t previously want the product?
- More often than not, they don’t have money themselves so they are afraid to ask assuming everyone else is as limited as they are
- They project their beliefs onto the other person instead of listening to the other person’s unique problems and circumstances

If you are one of these people, then fear is the primary motivation that holds you back from elite selling. Generally you either have money issues yourself and project that unto others, you are a poor listener, you overwhelmingly fear rejection or probably a combination of all of them.

Fear of rejection can be overcome. The key is to realize that by being scared of rejection, you get rejected all the time. Can you say irony? How do you handle this now? If you realize that this is the most rejection that you can possibly experience can we move on?

What if you could change the world for only a day so that you knew ahead of time that 99% of the people you saw would purchase a large order or in our case, do the deal with us.. The catch was you had only 24 hours to see them. How many people would you see then in 24 hours? If the answer is a hell of a lot, then clearly it is fear holding you back. Learn to master your fears. Mastering fear altogether is a whole different topic but if you’re looking for help on it, having the knowledge to be prepared for any outcome should will make your fears subside. You’ll realize that it doesn’t matter what the other person does, only what you do in response to them. If you know you can handle all the possible outcomes, then you won’t be afraid ever.

Effective Salespeople

First off, if you are looking to be effective in selling. Step 1 is to ensure that you are passionate about your product. Because everybody needs to live somewhere, I think there is always something within real estate to be passionate about. It is your space after all. When you legitimately believe that your client will be better off for having purchase your service/product, your persuasive power goes up immediately. It is true that sales techniques will allow you to be more effective in selling any product and in communicating in everyday life. However, it’s much better to do it with integrity, right? Not to mention much more fulfilling when you see other’s lives improved. The bottom line is to sell something you are passionate about.
In my own personal life, I am very pro health. I eat a lot of organic fruits and vegetables and never have any health complications. I persuade people to do more for their health all the time. In the future I will open up a business related to health and I’m already positive it will be successful because I’ve been persuading people all this time to better their lives. I’m already selling them, I’m just not getting paid for it yet. You’ll find a much easier path to success when you find out what that is for you instead of selling what you must do for a living. There is always a niche or two within real estate that you find passion with.

Here are some of the characteristics of proven winners in sales and the associated techniques. Although any 50 techniques may work, you only need a few of them that work for you and suit your individual personality:

1. They Continually Use Assumptive Language

If your presentation went as it should, it is only natural to assume they would want to make a purchasing decision. Again, being passionate about your product, you’d like to help them. They also use assumptive language throughout the presentation. Choose one that you yourself would feel comfortable and natural saying.
- Mr. Prospect, how would you like to take delivery?
- Mr. Prospect, should I write up this order for the red or the blue?
- Mr. Prospect, how do I spell your middle name on this order form?
- Mr. Prospect, I wouldn’t be doing my job if I didn’t ask, why don’t you get it?
- Mr. Prospect, what’s the easiest way to write this part up? What type of credit card are we going to use?
- Mr. Prospect, are we going to get one or two of them?
- Mr. Prospect, ok I’m filling up the order for 400 of them. No I’m just kidding. One or two will be fine. Standard delivery is ok?
- Ms. Prospect, how many am I going to fill out the order for?
- Mr. Prospect, I’m going to ahead and fill out a contract for the house for ____, is that correct?
- Mr. Prospect, I’m still a little new at this. How many of them is the order going to be for?
- Mr. Prospect, who should I invoice this to?

Take your assumptive language further. Every time your customer agrees to a benefit of a product, write it down on your order form. The first time they will stop you and they will ask what you’re doing. You just calmly respond “Oh don’t mind me Mr. Prospect, I just like to keep my thoughts organized on paper. I write stuff down as I hear it to help keep it organized”. Or you can use some humour “Oh I’m not supposed to tell you this” and then pause, lean forward and whisper, “but the IRS thinks you’re cheating on your taxes again and I’m taking notes on you.” Pause again and in normal tone again “No I’m just kidding. I just keep all my thoughts organized by writing them down on paper. Don’t mind me doing it throughout because it’s just what I do. I do it all the time.” By the time you get to the close, you’ll have all of the information ready to go. Now that’s assumptive power.

2. They Rarely Ask Yes or No Questions

There’s a serious problem with yes or no questions. Most notably, the person can say “No”. Aside from the obvious, when a person asks you “How are you doing?” you automatically say “good” without even giving it a real thought. This is true, right? A lot of yes or no questions will be responded to with “no” without the other person giving it a real honest thought. People are taught to have natural sales resistance even when the product is in their best interest. A lot of times, they are especially like this when it is in their best interest. it’s crazy, wouldn’t you say? Your job is to get them thinking again. They are always infinite choices to choose from so your job is to lead your prospect to the right product choice just like McDonald’s would. Choose questions that either have specified options as answers or make a statement that you believe in followed by “right?” or “isn’t it?” as a token of their agreement.

Mr. Prospect, would you prefer your order in the white or the black?
Mr. Prospect, would you prefer one or two of them on this order?
Ms. Prospect, would you prefer to take delivery on Tuesday or Thursday?
Ms. Prospect, are we going to be paying for this with Visa or Mastercard?
Mr. Prospect, you’re going to go with this order in the black, right?
Ms. Prospect, I just want to get this order information accurate. The correct spelling of your last name is €˜P€¦ R€¦.’ (etc.), isn’t it?
Ms. Prospect, would you prefer if I we ship the order to your home address or work address?

3. They Act As Your Advisor Instead of Selling You

This is the secret of secrets in selling. Don’t sell anything, advise. Great salespersons know that sales will come. They are greatly attached to long term outcomes but not bound by individual sales one way or another. They are very keenly aware that their long term success is assured. Knowing that enables them to play more of the role an advisor.

What if whether the person bought the largest order, the smallest order or nothing at all you got paid the same money either way? What if it made absolutely no difference to you at all what the customer purchased or if they purchased at all? How would your demeanor change?

Most people have a natural barrier to sales because so many people in various markets are trying to sell them junk. Most often after making a large purchase, buyers go through what it is called buyer’s remorse. Typically, they doubt their purchase and they often even regret their purchase.

Have you ever bought from a really professional salesperson? You’ll know it because you actually felt good about it. Let me explain this with a story. I was with a friend and had the benefit of watching a real pro of a car salesman work his magic. She had said that she wanted to spend no more than $5000 on a used car. She wanted it to be good on gas and she didn’t want an ugly car. Most car salesman walk up to you and awkwardly initiate conversation. Then they try to lead towards some car while they smile and nod “isn’t this the car for you?” They might ask a few questions first if you’re lucky. Not this pro. This is how the scenario played out.

Firstly, he came up to us and asked us if he could help us with anything to which her response was a typical “oh no thanks, we’re just browsing”. He very calmly said “if you guys don’t mind, I’d like to tag along with you. It looks bad on us if we don’t show some good hospitality to people who pay us a visit. I won’t bug you guys at all.” He was so calm and nonchalant about it that her reply at this point was “yeah sure ok”. He went on further “It’s such a nice day outside anyways and I’ve been cooped up in the office all morning.” At this point, she sort of began walking again and partly ignored the comment, giving it no response.

We casually walked around for a while making small talk until she finally came to a car that she actually liked. “Wow this one’s pretty cute” she said. She leaned towards the salesman and asked him “how much is it?” It wasn’t posted anywhere on the window. His reply was a very calm “to be honest, this one’s new here and I’m not really sure. I can find out for you in just a minute. Can I ask you something if you don’t mind? It’s the front up here that makes it look cute, isn’t it?” he said referring to a custom decal on the front of the car. He smartly suggested something so that she would offer her own evaluation of the situation.

A little aside, if your prospect won’t tell you what’s going through their mind, suggest something and they’ll correct you with what’s really going on in their mind.

It was a very cunning move for a man who had patiently waited almost 10 minutes without being part of the conversation. “Actually” she replied, “that’s the only part I’m not really fond of”. “Oh, so what do you think is cute about it?” he inquired. She replied, “definitely the colour and the look of it over here. I’m not going to buy a car today though,” she said which is another very typical response or objection which wasn’t at all true for starters. He calmly replied, “my job is to make people happy with their time here even if they don’t purchase. If you don’t come back for ten years I’ll still be looking to make your day worthwhile here” he said very matter-of-factly. He then paused, “I’ll tell you what. I know you’re not looking to purchase but these are fun cars to drive. Let’s take it for a spin for 10 minutes before you guys are on your way. You guys have 10 minutes, right?” The enthusiasm about how fun it was hit you when he said it.

He then came back with the keys and we went for a ride. She obviously loved the car but was still struggling with the usual natural sales barrier. Though this particular gentleman could not have been more dead on which how he had handled her, ultimately the decision still weighed with her. He then went on to ask her a few clever questions to uncover what particular aspects mattered most to her decision, including how it was on gas. There were other factors but I’m trying to keep the story brief.

When he got to price, he very calmly asked her “is price a factor in your decision or can you spend whatever you want within reason?” to which she replied “Yeah, well I can’t spend any more than $5000 on a car before taxes.”

We got back to the lot and he commented to her on a series of points she agreed to. “You like the car? It’s cute enough for your taste right? It’s good on gas as you said you wanted. I haven’t checked the price yet but I’m sure it’s within your budget. Why don’t you get it?” he asked. “Oh I don’t know” she replied. “I wasn’t looking to make a decision today and we’ve still got a few other places to go.” He replied, “I see. You’ve been to a few other places. Where does this car rank so far?” Well to be honest she said, “It’s at the top right now but I still want to shop around.” His response was “I agree with you. It’s important to make a sound decision instead of an impulse emotional buy. Is that why you’re looking some more to be sure that this is your best available option?” She replied, “Yes that’s why. I just want to be sure.”

He came back “well I see that and for this model and shape, I’m confident this is the best you’ll find.” He paused again, “I don’t know the exact sticker price on this car but I’m sure I could let it go for $4500. Although, I don’t want to rush you guys to a decision. It’s your money and it’s smart to be wise with it. I see that you guys just need time to think about it, right?” She responded, “Yes just a little bit”.

He cleverly replied, “I’ll tell you what, why don’t you take it for another drive without me just to sure it in your memory before you guys leave today. You just loved the way it felt behind the wheel so one more trip will help you remember it. Take your time” She couldn’t resist, we grabbed the keys and on we went.

Upon our return she had her check book ready. She bought the car. Before we drove off, he said “I’ll get those decals taken off for you at no charge since you said you preferred it without them.” At this point she felt like royalty and called everyone she knew to brag about her new car. Even mentioning how awesome the guy was there in helping her. No buyer’s remorse there.

The Moral of the Story

When you buy from a pro you leave fulfilled and happy. They have you in mind. The lesson to be learned here: Top sales pros act as advisors.

He didn’t talk about mileage because she wasn’t concerned with it. We didn’t waste time talking about payment methods because he already knew how she was going to pay for it. He only advised on her the criteria she said was most important to her choosing. He let her name the terms and price and simply fulfilled it. We never haggled over price at any point. In fact, the car might have only been worth $3000 but what does it matter if she loved it?

I am a little more observant than her. I happened to notice his picture on the wall as the top salesman in their rather large branch. No coincidence there I might add.

As a technique to take the advisor role a little further, if you’re seated, slide your chair over to be on the same side as your customer. Advisors don’t sit awkwardly across from people, they work together. When they ask why you’re doing it just say “it’s just easier for us to figure stuff out if as it comes up”. I usually throw in a bit of humor and say “don’t worry, I won’t bite you” or “don’t worry, I don’t eat people”.
4. They Listen Well and Their Presentations Continually Invoke Customer Involvement

The simplest way to handle objections is to deal with them before they even come up. Did you know the average person has only a 3 sentence attention span? That means as soon as you say 4 things in a row without their involvement, they’re probably not listening to you anymore. How can you stop this? Very simply by getting them included. If you have an obvious point to make say it but add a simple “right?”, “isn’t it” or “isn’t that right?” at the end of your point. Use their name if you can.

“Mr. Prospect, this is the best quality product on the market today. Top quality is important, isn’t it?”

Another more effective way to do this to ask a question before you make the point.

“Mr Prospect, what would you rather have, top quality or average quality?”
He’ll reply to the obvious point and you show him why your product is the top quality.

Momentarily pause your presentation after a key benefit and say “Mr. Prospect, I just want to make sure I’m explaining this the right way to you, does that make sense how I just explained that?”

Assuming you do this correctly, you’ll deal with numerous objections before they even come up. You can deal with it here and now.

Lastly, this one is this most powerful. Illustrate the benefit. Don’t say your car has the most power, floor it and show them. Don’t say your knives cut the best, take them out and have the customer slice. The more out of the ordinary it is, the better.

There was once a man who was number one in selling hurricane-proof windows. People asked him how he became number one in the entire country in such a fast time beating out every top salesperson the company had in less than one year. He showed them that everyone claimed the windows were hurricane-proof. At his presentation, he paused, pulled out a hammer and hit the window as hard as he could which left no mark on it. How would that impact you if it happened right before your eyes? That’s how you get customer involvement and make your point.

The reason this works is that knowledge and wisdom are two different things. Wisdom is knowledge applied through experience. You may realize how great your product is but the customer does not. Further still, they may not realize how great it is the first time through. By asking them, you get them to stop and think and pull their mind back to thinking about your product where it tends to wander. As that happens, they’ll be forced to agree with your conclusion or not but one way or another they’ll have their own wisdom right then and there.

5. They See Top Prospects

A prospect is someone who has the means to afford the product or service and can definitely benefit from its use. This may seem like an obvious point but you may have a great product, a great presentation and a great close and still not generate the sales you need. If you’re a top salesperson and you’re seeing run of the mill prospects, how are you going to succeed in sales?

6. They Paint Visual Pictures Throughout the Presentation

As stated above, one way to make your benefit clear is to have it used right then and there during the presentation. However, there’s more to great selling than just that. Besides that, some products, like say investments, are too abstract to visually demonstrate. What reasons do you think people buy from you? In a poll I read, over 90% of customers said they purchased because of the salesperson’s enthusiasm and only 7% said it was because of the salesperson’s technical knowledge. You should be technically sound on your product, right? But understand that it is the picture you paint that makes the difference and not the technical detail. You give the technical detail life but illustrating its benefit. If you can’t be passionate about your product, again, find one that you can be passionate about.

Paint visual pictures in the other persons mind. When a person agrees to a benefit get them to picture using it. I start all my sentences with “Ms. Prospect, you’re going to love…”
- the way this car handles in the mountains
- being so relaxed at night in bed when you know the bank isn’t beating your down door anymore
- going to the bank to find out your investments made you this much
- the way this house feels to show off when the family comes to visit
- the way this looks right over there in that room

You break down their natural sales barrier by picturing them already owning it. If you were excited about driving a card in the mountains and you were a prospect, wouldn’t you buy it too? As you they tell you they can use a benefit, throw in a visualisation about how they can use it.

7. They Are Calm and Relaxed During Closing

This may seem like another obvious point but top salespeople are very calm and relaxed during the closing. If you drastically fear the rejection of closing to the point where you can’t even ask, you’re causing yourself a whole lot of rejection.

Success is preparation meets opportunity. The more you’re prepared with handling objections, the less you’ll worry. When you realize that you can handle every possible outcome, it’s much easier to be relaxed. It’s only how it’s going to play out that is the interesting part.

Ask to follow a top salesperson in your company (or in our case a top investor at the investor club) or through someone you know so you can watch them work. The more you see them do it, the more you’ll realize €˜hey, I can do that too’. It is a quick way to turn your knowledge into wisdom. This is a must even if you are at the top. Spend a day with someone else just to learn.

Take responsibility for your results. Everything is in your control. Even the sales that got away, it was you who didn’t find the right prospect or it was you who didn’t build enough excitement in the other to warrant a buying decision. You either didn’t find the right buyer or didn’t handle the circumstances properly. All of it is within your control so when you see that, you see the big picture instead of the individual sales. They are just a reflection of your larger goals playing out. No great salesperson ever needed one individual person to say yes.

There are only about 10 really mean people in the world. They just get around a lot. You can deal with the same 10 idiots. Really, can’t you? Learn to be calm.

When people ask for the close, you’re almost always faced with an inevitable pause. Rarely does a person say yes the very first time without any hesitation.

Poor salespeople take this pause after asking for the close as a no and begin talking again. I bet you’ve all done this at some point. In all selling and negotiating, be patient. I’ve looked potential clients as long as 60 seconds in the face without any conversation to let them decide. How’s that for patience anyways? Can you imagine how long that felt in my head? If anything goes that long and you feel the need to say something, ask for the close again. A huge number of people actually talk themselves out of sales by not just keeping quiet. Your only move should be to lean back and relax. This is good practice for a good poker face too, right? Learn to keep your big mouth shut when it’s required.

Learn 5 closes you can use and how to handle every objection, when you’re prepared, being calm is a natural conclusion. One thing’s for sure, as long as you fear rejection, you’ll get rejected. As long as you know you can handle it, you’ll rarely get rejected.

8. They Are Empathetic But Not Sympathetic

People are going to give you objections during closing and throughout the whole presentation. This is just how things are. When customers give you objections, it does not mean no but rather that they are unclear on a benefit. They have the knowledge but not the wisdom. That is they understand what you have said but their experience does not lead them to see how it will save them money, make them more energetic or whatever benefit you have said it will cause. It is simply a different point of view that is neither right nor wrong. If you are selling a $5000 product that saves them $10,000 then they are simply not clear on how that’s going to happen if they give you an objection. They are not clear on the benefits as you stated them.

A lot of sales people get frustrated when people don’t immediately see a benefit. Life is wonderful because they are so many different points of view. Learn to be empathetic. That means learn to understand their point of view from their unique perspective. That doesn’t mean to be sympathetic. If they say they can’t afford it doesn’t help either of you to say “oh I know times sure are tough”. That is sympathy and allows both of you to stop thinking.

Empathy allows you to strive to see their point of view so that together you can arrive at a new conclusion. If you strive to see their point, it is natural to agree instead of argue. Never ever ever argue in a sales presentation. “I see where you’re coming from Mr. Prospect. No one ever said our product was cheap”. That’s very different than saying “It’s not that expensive” which is disagreeing and arguing. At that point your goal is to show them how the use of its benefits far outweighs the cost and how they can afford it. Poor salespersons will actually get frustrated and say, “No it’s really not that expensive at all”. If you aren’t empathetic, you’re already losing.

The way to be empathetic properly is to always agree with their point as they make it. In fact, you can even compliment them on it sometimes. “Mr. Prospect that’s really clever of you to notice. Most people don’t ask that question”. Agree with it as their truth and clarify with a question to see that you see it as they do. From there you can invite them to a new point of view on it.

9. There’s Lots of Humour In Their Presentation

Smart salespeople know that the close begins long before the close. It begins the moment first contact is initiated, generally on the phone. Most salespersons are forgettable. It’s the unfortunate but honest truth. Adding humour breaks tension, increases trust and makes you more memorable. How funny are you? My presentations are always funny. People don’t realize though that the things I say that seem very spontaneously funny are the same jokes I make again and again given the right opportunity to use them. They work for me, they’ll work for you. Feel free to steal them without crediting the source (ME! Matthew David). When I call people on the phone, regardless of what I’m doing I have a few funny ones that I use repeatedly.

“How Long Will It Take?”

It takes about 24 hours. Don’t worry though, I bring my sleeping bag over. I make eggs in the morning. How do you take your eggs? (pause) No I’m just kidding. It takes only about …

“What are you selling?”

We sell farm animals. I only need to bring over about 5-10 live animals to show you our top notch livestock. They hardly make a mess at all. (pause) Mr. Prospect, I’m just kidding. It’s actually €¦..

In the presentation, you can use things like:

Ok so it does happen to cost $10,000 dollars (or some very large figure for your product) to which they’ll object. (pause) No I’m only kidding. It really only costs…

Yeah and you can use the money you saved to play the lottery. Just when you win, don’t forget us little people. I don’t ask for much though. You just owe me lunch.

It’s going to take a little creativity here but have 5 funny things you can say in every presentation you use but that seem as if they’re spontaneous. It has to be unique to your product and your presentation.

10. They Actually Ask For the Sale

90% of sales end without the salesperson asking for the sale even one time. Also, the average person purchases after the fifth time of the salesperson asking. All you’ve go to do is ask, handle objection, ask, handle objection, etc 5 times and you’ll be a pro. This is exactly I told you that you need at least 5 closes to use. If you know 4 or less closes, that’s why you’re not at the top yet. Are you choosing to get there now? What are your long term and short term goals?

11. They Sell Benefits, Not Products

Customers don’t buy products, they buy benefits. Pros sell the emotion behind the technical detail. This ties in with visualization. If a customer finds that the product makes their life easier, illustrate this with “you know what’s going to be great? Just picture the way the kids will still be whining about dinner and the husband will still need a good kick in the pants but you’ll comfortably know your investments are well taken care of. You won’t need to call me to add to the stress”. That goes a heck of a lot further than saying that it’s an easy to use investment plan, doesn’t it?

12. Continuous Improvement

Top people in anything always strive to better themselves through reading books, taking courses, attending seminars and listening to audio. Your car should be a mobile university on wheels. As little as twenty minutes per day can make all the difference in the world if you’re committed and low on time. Being a pro isn’t a sometimes thing, it takes lots of practice of the fundamentals whether you see or not. Being the best is not a sometimes things, you have to choose it every moment of every day. What’s in your personal development library? Hopefully at least you’re using the material on this website and access to my courses.

13. The Lucky 13 All Else Fails Technique

Ok so you’ve used your 5 closes and you still haven’t finished with this person. They’ve agreed to all the benefits, its use, its price and the whole shebang but at the end of the day haven’t agreed to purchase. Your stalemate at this point should just be a result of their indecision. You’ve added humour, visuals and everything but they’re just indecisive. It happens from time to time. They’re so paralyzed with fear that they can’t decide one way or another.

Repeat after me and memorize this word for word.

“You know, we have long considered Benjamin Franklin one of our wisest men. When Ben felt stuck with a problem as you do right about now, right? (pause for agreement) Do you know what old Ben did? He would grab a piece of paper and draw a line down the middle and put the reasons for the decision on this side and the reasons against the decision on this side (draw the lines). At the end he would simply tally them up and found the decision was made for him. Why don’t we try it and see what happens?”

Some people in sales may even recognize the close but it’s perfectly ok because it is sound logic. They can’t disagree with logic, can they? You grab a sheet and draw a line down the middle. On the left you go through all the benefits they’ve agreed to. You said it would be relieve their stress, be easier, save money, be fun to use, pay off quicker, be higher quality, etc. You know your product better than anyone else. You should easily be able to spout off 7 or more. Have them name the reasons against it and for God’s sake don’t help them. Agree with them on the points they make. Usually they will get stuck at 3 maximum if they even get that far which they rarely do. There’s only a few reasons against like cost, already own a product of the same type, etc. Tally them up and it generally shows something like 9-2. Close again. Mr. Prospect it seems obvious from this, why don’t you get it? Be quiet and let them speak next.

All that’s left from this article is to use it. Turn this knowledge into wisdom through experience.