Monthly Archives: December 2016

The Benefits of a Real Estate Auction

Many situations occur that are tailor-made for a real estate auction, but most, if not all, would fit under the category “time is of the essence.”

Property A is sold, and on the strength of this sale, your client purchases Property B. Now sale A develops problems in escrow and the sale cannot close. The client is now in a state of hysteria since his only hope of closing on Property B in 60 days is by closing on Property A. What do you do? Auction Property A and arrange a sale date well in advance of the closing date on Property B, stipulating that part of the terms and conditions of the real estate auction is a quick closing. This can only be accomplished with a real estate auction.

A type of situation which dictates the advantage of a real estate auction is the high divorce rate and the need to dispose of the real estate quickly. Often neither party can afford to hold a property that they previously owned as husband and wife.

When a partnership dissolves, the situation often demands an immediate sale of the assets, including the real estate. Private negotiated marketing cannot guarantee a sale within a set, short time period. A real estate auction can.

Heirs to an estate that involves real estate are usually highly motivated for a fast sale. Most states encourage a real estate auction as a method for generating the highest price in the shortest period of time. Illness, or the need for immediate cash, or the inability of the owner to hold and maintain the real estate is another reason you should recommend a real estate auction. Holding costs can be crippling. All too often, the carrying or holding costs during a private negotiated marketing effort won’t be recovered in a higher selling price. Instead the price is reduced. Therefore, the sooner a property sells, the greater the bottom line dollars in pocket for the seller.

An exchange being held up waiting for a buyer on one of the legs – auction it. The real estate auction can also work especially well in a “Bull Market”. The law of supply and demand, where the demand exceeds the supply, is an ideal market to expose the real estate to competitive bidding to get the maximum return. The real estate auction is highly desirable in overbuilt or stagnant markets, where no reading exists on how low prices will fall or how long the market will stay overbuilt.

The private negotiated method and auction marketing method are different. A real estate auction can most generally guarantee a sale within a short period of time, and the attention is directed to the property being auctioned. Private negotiated marketing can’t accomplish this.

Clearly, real estate auctions offer owners of all types of real estate advantages that are not available with private negotiated real estate firms.

All of us in the real estate profession are salespeople first and foremost. Let’s forget for a moment the fancy titles and diplomas we have earned during our years in the business. The bottom line of success in our profession is still determined by our ability as salespeople. We constantly look for sellers so we have more listings. Our next step is to find the buyers.

A professionally managed real estate auction is a method of marketing that will find the buyers crawling out of the woodwork, and it is this benefit that will enable you to gain additional sales by offering your clients the real estate auction marketing option.

Foreclosure Real Estate

With changes in the homeowners’ financial situation like divorce, medical emergencies or losing a job, being able to pay their monthly mortgage payments have become difficult. If their financial situations do not change for the better, a foreclosure is usually imminent. When creditors such as banks repossess a real estate property it is usually through a legal foreclosure proceeding.

Foreclosure real estate properties are often sold based on amount of the owed debt. Depending on the state, most foreclosure real estate properties are auctioned in a foreclosure sale. In foreclosure auctions, the highest bidder wins. When the foreclosure real estate property did not interest any buyer, the creditor usually receives the title to the foreclosure property. These foreclosure real estate properties are now termed as “real estate owned”.

Since foreclosure real estate properties are cheaper compared to brand new homes, they present much potential and possibilities. Aside from this, foreclosure real estate properties have been growing in number during the last couple of years mainly due to the rising cost of living, increasing interest rates and other economic factors. This means more foreclosure homes to choose from.

There are many real estate brokers engaged in selling these foreclosure real estate. Usually obtained from foreclosure auctions, these brokers still offer these foreclosure real estate properties are still sold at great deals. Some of the foreclosure real estate properties are REOs that have been entered into listings contract to attract more potential buyers. A foreclosure listing is usually compiled by these real estate brokers and contains all foreclosed properties available for sale.

Buying foreclosure real estate from either banks or brokers is a good idea. This ensures that the property is clear from any more liens, claims or other encumbrances. Foreclosure real estate attracts two kinds of buyers: investors and people looking for homes for personal use.

Real estate investors can use the foreclosure real estate as rental properties or fixer uppers that can be sold again for a considerable profit. Investing in foreclosure real estate has been known to be very profitable. The key is buying foreclosure real estate that is basically marketable.

First time home owners have also started tapping the foreclosure real estate when looking for a home. These home buyers could look for available foreclosure real estate easily and conveniently with the use of foreclosure listings. The advent of the internet has even made it easier for all buyers. Foreclosure listings can be accesses via the internet for just a small membership fee.

What’s Happening In Real Estate

  1. Analysis of Today’s Market
  2. Update On Gold
  3. Real Estate Prices In South Florida
  4. Real Estate Nationwide
  5. Yield Curve Is Still Inverted
  6. What this means to you
  7. Analysis of today’s market

As an analyst of the economy and the real estate market, one must be patient to see what unfolds and to see if one’s predictions are right or wrong. One never knows if they will be right or wrong, but they must have a sense of humility about it so that they are not blind to the reality of the marketplace.

In March of 2006, my eBook How To Prosper In the Changing Real Estate Marketplace. Protect Yourself From The Bubble Now! stated that in short order the real estate market would slow down dramatically and become a real drag on the economy. We are experiencing this slowdown currently and the economy I feel is not far from slowing down as well. History has repeatedly shown that a slow down in the real estate market and construction market has almost always led to an economic recession throughout America’s history.

Let’s look at what is happening in the following areas to see what we can gleam from them: Gold, Real Estate in South Florida, Real Estate Nationwide, Yield Curve/Economy and see what this means to you:


  1. Gold

If you have read this newsletter and/or the eBook, you know I am a big fan of investing in gold. Why? Because I believe that the US dollar is in serious financial peril. But gold has also risen against all of the world’s currencies, not just the US dollar.

Why has gold risen? Gold is a neutral form of currency, it can’t be printed by a government and thus it is a long term hedge against currency devaluation. James Burton, Chief Executive of the Gold Council, recently said: “Gold remains a very important reserve asset for central banks since it is the only reserve asset that is no one’s liability. It is thus a defense against unknown contingencies. It is a long-term inflation hedge and also a proven dollar hedge while it has good diversification properties for a central bank’s reserve asset portfolio.”

I agree with Mr. Burton 100{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b}. I believe we will even see a bubble in gold again and that is why I have invested in gold to profit from this potential bubble (Think real estate prices around the year 2002 – wouldn’t you like to have bought more real estate back then?)

I had previously recommended that you buy gold when it was between $580 and $600 an ounce. Currently, gold is trading at around $670 an ounce up more than 10{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} from the levels I recommended. However, gold has some serious technical resistance at the $670 level and if it fails to break out through that level it might go down in the short-term. If it does go down again to the $620 – $640 level, I like it at these levels as a buy. I believe that gold will go to $800 an ounce before the end of 2007.


  1. Real Estate in South Florida

Real estate in South Florida has been hit hard by this slowdown as it was one of the largest advancers during the housing boom. The combination of rising homes for sale on the market, the amazing amount of construction occurring in the area and higher interest rates have been three of the major factors of the slowdown.

For every home that sold in the South Florida area in 2006, an average of 14 did not sell according to the Multiple Listing Service (MLS) data. The number of homes available for sale on the market doubled to around 66,000, as sales slowed to their lowest level in 10 years.

Even though home prices were up for the year of 2006, the average asking price for homes in December was down about 13 percent compared to a year ago. From 2001 to 2005, the price of a single-family home in Miami-Dade increased 120 percent to $351,200. This is also similar to what happened in Broward County. The problem is that wages during that time only increased by 17.6{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} in Miami-Dade, and 15.9{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} in Broward, according to federal data. This is the other major factor that is contributing to the slowdown – real estate prices far outpaced incomes of potential buyers of these homes.

Another factor that helped drive the South Florida boom in prices was high growth in population in Florida. From 2002 to 2005, more than a million new residents moved to Florida and Florida also added more jobs than any other state. However, the three largest moving companies reported that 2006 was the first time in years that they had moved more people out of the state of Florida than into it. Also, school enrollment is declining which could be another sign that middle-class families are leaving.

By far though, the area of South Florida real estate that will be hit hardest is and will continue to be the condominium market. Due to their lower prices than homes, condos make financial sense in the South Florida area. However, the supply of available condos has tripled over the past year and it will get worse before it gets better. More than 11,500 new condos are expected this year and 15,000 next year with the majority of them being built in Miami.

As a result of the oversupply, asking prices for condos are down 12{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} in 2006 in Miami to $532,000. And incentives are substituting for price cuts. These incentives include paying all closing costs to free upgrades and more.

The last point to think about affecting South Florida real estate is the escalating costs of property insurance and property taxes. These increasing costs are putting more downward pressure on real estate prices.

My strong belief is that we are only starting to see the slowdown of the South Florida real estate market and that prices will continue to fall. Due to the fact that many real estate investors are pulling out, where are the next wave of buyers going to come from at these current prices? Unless a serious influx of new, high paying jobs enter the South Florida area, real estate prices, just like any asset that falls out of favor after a large runup only have one way to go… down.


  1. Real Estate Nationwide

A report released last week from the National Association of Realtors showed that in the last three months of 2006 home sales fell in 40 states and median home prices dropped in nearly half of the metropolitan areas surveyed. The median price of a previously owned, single family home fell in 73 of the 149 metropolitan areas surveyed in the 4th quarter.

The National Association of Realtors report also said that the states with the biggest declines in the number of sales in October through December compared with the same period in 2005 were:

* Nevada: -36.1{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} in sales

* Florida: -30.8{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} in sales

* Arizona: -26.9{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} in sales

* California: -21.3{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} in sales

Nationally, sales declined by 10.1{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} in the 4th quarter compared with the same period a year ago. And the national median price fell to $219,300, down 2.7{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} from the 4th quarter of 2005.

Slower sales and cancellations of existing orders have caused the number of unsold homes to really increase. The supply of homes at 2006 sales rate averaged 6.4 months worth which was up from 4.4 months worth in 2005 and only 4 months worth in 2004.

Toll Brothers, Inc., the largest US luxury home builder, reported a 33{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} drop in orders during the quarter ending January 31.

Perhaps most importantly, falling home values will further decrease their use of mortgage equity withdrawal loans. In 2006, mortgage equity withdrawal accounted for 2{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} of GDP growth. Construction added 1{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} to last years GDP growth, so the importance of these factors are to the health of the US economy are enormous.

The other concern is sub-prime mortgages. Today, sub-prime mortgages amount to 25{758ef9c3a59a2e92c7282251853d55198862a407615a6e71a7a76bc80b23693b} of all mortgages, around $665 billion. Add to this the fact that approximately $1 trillion in adjustable-rate mortgages are eligible to be reset in the next two years and we will continue to see rising foreclosures. For example, foreclosures are up five times in Denver. These foreclosed homes come back onto the market and depress real estate values.

The Guide To Real Estate Investing

Have you ever wondered if there was one resource for people interested in real estate investing, like the Guide To Real Estate Investing book? There are several of them, although none have exactly that title. I’ve read many of them, and I will give you my recommendations in this article.

When you’re looking for a comprehensive guide like the Guide To Real Estate Investing book, you need to understand that there is not one single book that will be all things to all people. Different investors will be looking for different information, depending on the type of investing they’re interested in. If you’re interested in residential income property, the Guide To Real Estate Investing book you choose will be different than if your interest is in commercial real estate or apartment complexes.

In other words, there isn’t one, definitive resource known as the Guide To Real Estate Investing book.

My experience and expertise are in residential real estate, such as single family homes and duplexes. Therefore, this discussion will focus on the Guide To Real Estate Investing book for that type of investment real estate.

Two of the best books I have read on residential income property, both of which could be seriously considered as the Guide To Real Estate Investing book, are Steve Cook’s “Wholesaling For Quick Cash” and “The No-Nonsense Real Estate Investor’s Kit: How You Can Double Your Income By Investing in Real Estate on a Part-Time Basis” by Thomas Lucier.

These books offer two different approaches to real estate investing, both of which are excellent. Steve Cook’s “Wholesaling For Quick Cash” is really a full-fledged real estate investing course, giving you a complete strategic plan for breaking into the world of real estate wholesaling. It qualifies for consideration as the Guide To Real Estate Investing book because it’s a self-contained investing philosophy and plan.

Lucier’s book, “The No-Nonsense Guide” is a book that gives you a complete, basic run-down of the important considerations when considering beginning real estate investing, as well as some complex and effective advanced strategies. This one is a sure-fire candidate for the Guide To Real Estate Investing book.

Of course, there are plenty of other excellent candidates for the Guide To Real Estate Investing book- these two are simply my favorites. If you have found a resource you think warrants consideration for the Guide To Real Estate Investing book, why not email me and let me know?

Education In Real Estate Investing

There are many people that are venturing out and searching for additional ways to make additional income. That is to be expected when it comes to real estate. Real estate has been a popular investment for many years. Many millionaires made their first million dollars in real estate. So it should come as no surprise that Real Estate Investing is being glamorized by celebrities like Donald Trump and various television shows that depict real estate investing as a big money maker.

Real Estate Investing can be all that celebrities and television program make it out to be, but it is not as easy as it looks. Real Estate Investing requires knowledge of different techniques that can be used when trying to buy, sell, negotiate or repair a house. Without this type of specialized knowledge real estate investing can be a monumental disaster.

Having laser specific knowledge can mean the difference between success or failure. Knowledge is what separates those that invest in real estate and those that talk about investing in real estate. The knowledge that is required is not difficult to master. In fact, just about anyone can be a successful real estate investor. I have seen people from all walks of life and educational backgrounds go on to be successful real estate investors. One man that I know and admire very well became a successful real investor despite the fact that he first had to learn how to read. It is possible for anyone to learn how to invest in real estate.

Who should learn more about real estate investing? Anyone that is considering buying property as an investment should become educated before doing so. Rentals, foreclosures, rehabs, lease options and various other techniques are tried everyday by real estate investors. In most cases however, only the investors who have taken the time to educate themselves will be successful.

Also, anyone that is considering buying or selling houses on their own (without a realtor) is at considerable risk of financial loss if they don’t get an education before venturing out into unchartered waters.

There are many different types of educational opportunities. One can always purchase books from the local bookstore to get some advice. There is also a large number of websites that cater to real estate investing. Some of these sites will sell home study courses that, in some cases, give a thorough, explanation, training and education on various real estate investing topics. One may also find coaching and mentoring online to help those that don’t believe they are quite comfortable enough yet to do real estate deals on their own. Some colleges and Universities have also started to teach real estate investing.