Last week, I shared why I believe America’s economic situation will get worse beforebefore getting better and exhorted everyone to begin planning to survive the upheaval.This week, part of what I want you to know is WHY foreclosures are going throughthe roof while the loan modification program is going largely unused. Is it becausehomeowners are not applying for the loans? Nope. Watch this video.

Is your blood boiling yet?

Here is the truth: America’s economy is in trouble and it is affecting all of us. But here iswhat you need to know about buying or selling real estate in this market. Buyers: Don’t let a fear of the market keep you from purchasing a home, just buy in the smartest way
that you can. Buying is still smart in this economy if you believe that you will be in your home long term. Purchasing with the idea that you will turn the house in under 5 years is not a good idea unless you really do need to move.

If you know that you will need to buy a home within the next 2 years, it will be better foryou to make the move now if you can. Why? Because mortgage restrictions are gettingtighter and tighter. Prices are going down, but increased restrictions on mortgages may prevent otherwise qualified buyers from purchasing in the future.

Here is how to purchase now and still be ahead of the market. When you decide to buy, take into account any future price reductions you think may still happen. For instance, if you think prices may fall another 10%, make your offer between 10% and 12% below the list price.

Sellers, there are things you can do when listing your home. The first is to negotiate a better deal on the commission with your agent. Many agents just won’t budge on this, so just find one who will…or call me! There are many ways to structure a listing contract. When you are close to being upside down on your mortgage, the last thing you need is an agent whose only concern is to squeeze every penny you have out of you.

If you are already upside down, please don’t do what 75% of all Americans are doing right now which is simply walking away. The banks are the bad guys in this economy, but homewoners who walk away without trying to work with an agent on a short sale only add to the economy’s woes. One cultural value Americans need to return to is that of caring how our actions affect others. So, call an agent…or me!

Homeowners with some “head room” on their mortgage’s pay off amount should consider pricing their home right at market value in full knowledge that buyers will offer less. You have to know up front what your bottom line really is. And if that bottom line is not flexible, then you must be willing to let your home remain on the market for the long term.

I know money is tight, but minor fixes to your home will increase its marketability and value. Simple things like cleaning the carpets, removing the clutter, painting and simply keeping the yard looking nice can raise the value by up to $10,000. Make the effort. It will pay off.

Jack was wrong! Not only can we handle the truth, and keep our lives as sane as possible, but we can use the truth to our advantage.

In 30 States, mortgage companies can force what is known as a “deficiency judgment”. This means that the homeowner still owes the difference between the mortgage’s payoff amount and the amount the mortgage company received from either the sale of the home or a deed in lieu executed by the homeowner.

The former homeowner always owes the taxes on the difference, but more and more mortgage companies are going after mortgagees for the deficiency amounts. 

From Articles.DirectoryM.com: “Even if the bank accepts a “deed in lieu of foreclosure” they can still get a deficiency judgment against the borrower. The borrower is the one responsible for the mortgage or deed of trust payments and he may or may not be the homeowner. If the homeowner has a co-signer, the co-signer will be as legally responsible as the borrower to pay back the deficit due. Depending on whether the foreclosure is judicial or non-judicial, and the specific terms of the mortgage, the bank may not be able to seek a deficiency judgment. These laws vary state-by-state and should be reviewed carefully to determine which applies to the reader.”

PLEASE…Always speak to a real estate professional when deciding what to do. If you walk away, do so in full knowledge of the consequences.

I try to look for good news when I write these articles, but good and encouraging news stories are  getting harder to find. It is because of this that we all need to find ways to make it through the next few years.

One way to do this is to go ahead and buy a home while the prices and mortgage rates are low. Now, I realize you’re probably thinking that I’m just saying this because I’m a Realtor. There is no doubt that a rise in the gloomy market sales would benefit me. But I really am telling you the truth about this being a good time to buy. And remember, if you buy before the end of May, you will get to take advantage of the Buyer’s Tax Credit.

If you own your home, hang onto it unless you 1) absolutely need to move or 2) cannot make the payments. If you need to move, make sure you use a Realtor to list your home who will help you by cutting a deal with you that is more in favor of you than him or her. There are Realtors who will work with you on commissions and other costs. I am one of those and one of the few.

And if you cannot make your payments, a Realtor may be able to help you stay in your home. If you are struggling, you really need to talk with me because I can show you what to do and will tell you what will work in your situation.

Real estate aside, there are other things you can do right now to cut your living expenses beyond the trite advice of turning off lights when you leave a room and making sure to insulate around doors and windows. Your electric bill is likely a big chunk of your budget. You can cut the cost of electricity with a gadget that stops “vampire energy”. What is vampire energy? It is the use of electrical power when your appliance is shut off. Many people do not know that appliances left plugged in continue to use electricity. A “smart strip” stops this by totally disconnecting turned off appliances. The cost is between $30 and $45, but the savings can be substantial.

Programmable thermostats also save money by regulating temperatures automatically. They don’t cost a lot, but will put money into your pocket over the long haul.

Unemployment is one of the worst things that can happen to a family. So, if you find yourself in this position, there are some things you can do to affect your outflow of money. Being unemployed means you probably have more time on your hands which makes this a perfect time to learn to cook from scratch. Purchasing ingredients to make meals rather than buying pre-made meals can cut your grociery costs by as much as one-third to one-half.

Additionally, if you purchase large sacks of wheat and rice in their grain form and a grinder, you can make delicious bread, pasta, crackers. This may seem somewhat drastic, but it really isn’t if you consider that a 50 pound bag of wheat is less than $40. Bags of rice from Sam’s Club is around $50. Fifty pounds of grain can feed a family for a long time.

Consider purchasing a whole beef animal with a bunch of friends from a local farmer. He will charge you a lot less than the supermarket for the meat, but you will have to have a local meat cutter process it for you. Still, the cost will be less.

With all that extra time on your hands you can get into food preservation. For under $100, you can get a food dehydrator. Go on http://www.dehydrate2store.com/ to see how easy it is to start preserving and storing food. Food savings can be substantial by doing this.

Read The 2 Secrets of Wealth Creation. In it, I show people how to use gold and silver to secure their future.

Being a Realtor is not my main purpose in life. It is a way for me to help people live the life they want. Sometimes we have to change the means we use to get to the life we want. It is helping people learn how to get around their roadblocks that I like the most. I hope this article has inspired you to start thinking about living a good life in a different way than you are used to. In the future, I will share more tips and strategies.

It’s likely closing time for these chains in 2010
Struggling retailers may have to shutter outlets to weather the downturn

Promising Outlook for Commercial Real Estate Worldwide in 2010
Worldwide, 2010 looks promising for commercial real estate investment across most markets, and Asia offers the best opportunities

Locking Loans Ahead of Treasury Auctions and FOMC Statement
Reports from fellow mortgage professionals indicate lenders have passed along better rates this morning.

FHA Keeps Promise. Continues to Crack Down on Lenders
On January 20, the Federal Housing Administration (FHA) announced that its plan to shore up the agency’s capital reserves included stepped up enforcement of its rules and increased supervision of its lenders. Yesterday it released details of the first crackdown. Four mortgage lenders were notified that they were immediately and permanently removed from obtaining FHA approval for loans. Three others were also penalized.   

CBO Says Jobless Rate Won’t Turn Down Until Mid-Year
CBO expects that the unemployment rate, now 10%, will rise before turning down in the second half of the year, averaging 10% in the last three months of 2010.

This information is being written for a cause. It is information to make you more savvy about your pocket book. What do I mean by that? There are only 2 really valuable assets people can have and one of them is NOT a savings account at your bank. Savings accounts are useless because of the low interest rates. I know you likely understand this, too. It’s why I don’t have a savings account.

Let me explain the first valuable asset before moving on to the second one because the second most valuable asset will astound you! The first really valuable asset you can have is real estate. Look all over the internet and you will find millions of websites ready to teach you how to buy and sell real estate to make a fortune. That is one way to go and most people understand that. After all, “home” is a most basic survival need.

You don’t have to be an investor to use real estate as a hedge against inflation. Advice: Plan future security by simply finding a home you love and live in it for 5 or more years. The longer the better. Our grandparents often chose a home and lived there for life. By the time they retired, they had a secure nest egg since their homes were likely paid for and the value had increased over their lifetimes.

In recent years, home owners have sucked the life out of their homes’ equity with home equity loans. This is a bad idea. The equity in your home is not there for paying off bills, making large toy purchases or going on vacation. It is there to secure your future. When you get an equity loan, you have reduced your future to rubble.

There is another, better way to create wealth for retirement, college fund for children, and your personal disaster fund. It is through commodities. Now don’t stop reading… Hang in here with me because I’m going to explain something that took me decades to understand. Why did it take that long? Because I had absolutely no interest in learning the complexities of stocks, bonds, mutual funds. These are only a form of gambling. And I regarded commodities the same way because commodities are usually traded in the stock market. I bet you’re a lot like me. But then one day, my son explained something about gold and silver and I “got it”! Now, I want you to have the opportunity to “get it”, too.

First, let’s start by reviewing what you already probably know. Stocks and currencies are easy to buy and sell. Most people lose money investing/gambling in stocks and currencies because of how quickly the market changes. The old axiom was for peole like me, who are not “day traders”, to just put money in and don’t look at it again. Well, this doesn’t work, does it? A whole lot of people put money into IRAs that were tied to mutual funds that were tied to stocks and now those people have lost not only the money they thought was accumulating, but also many lost the original money they put into the IRA. It is plain this strategy doesn’t work. And for me, a person with no money in the stock market, this was a good lesson and I was glad I never got involved in the stock market.

Commodity trading is just as dangerous and not something I recommend. So, why did I just say commodities can help you create wealth for retirement, college fund for children and your personal disaster fund? It is because only a particular type of commodity is what I’m talking about.

Let me explain commodities so you will have the same epiphany I had. What is a commodity? It is the stuff that comes out of the ground - pure and simple. All kinds of stuff comes out of the ground. The ingredients that make food is a commodity: Wheat, corn, oats, soybeans, etc. Oil is a commodity. Gold, silver and platinum are commodities. Here is a little secret for you to mull over: The truly wealthy people of the world are more heavily invested in commodities than anything else.

Most people can’t store commodities like grain and oil. That is why the best commodities are precious metals especially gold and silver. Ta-dah! The kind of commodity I’m touting here is gold and silver. The average person can create wealth by acquiring lots of gold and silver over time since gold and silver comes in the form of coins and everyone can store these.

Why is gold and silver such a good asset? It is because gold and silver has something called “intrinsic value”. Intrinsic value is different than “monetary value” in that the intrinsic value never changes, but monetary value does. Monetary value is always based on a currency and currencies always change in value, but the intrinsic value never changes.

Let me show you how this is true. In 1963, 1 gold coin would have purchased a nice, good quality suit. The monetary, or dollar value of a suit in 1963 was less than $100. Today, the monetary value of the same, excellent quality suit is almost $1,000. One gold coin will still buy you a good quality suit.

Example 2. In 1963, 2 silver coins would fill your car with gas at $.29/gallon. Today, 2 silver coins worth roughly $20 each will still fill your car with gas at $2.50/gallon or about $40 per tank.

See what I mean? The cost of men’s suits and gas for cars has risen, but the value inherent in gold and silver coins has remained the same. Do you understand that this means if you start buying gold and silver today, you will never have to worry about rising prices? This is an astounding piece of information that is never taught in schools, colleges or anywhere else for that matter, except in TV ads!

It is true that you can’t use silver coins to pay for gas or gold coins to pay for a suit because merchants no longer accept metals. However, the values still remain the same. To buy your suit for 1 gold coin or your gas for 2 silver coins, all you would need to do is visit the coin dealer, sell your coins to him for dollar currency and go buy your suit or gas. Advice: Don’t spend your hard-earned gold or silver.

My philosophy is this: Own a home where you can do as you please (grow food in or on the ground such as vegetables and chickens) AND have a supply of gold and silver coins. If you do this, you will be set for the rest of your life.

Most people don’t know the 2 simple rules of wealth (own your home and have a supply of gold and silver coins). They think securing their future is difficult and costly because the “system” has taught them this. It is not true! It is possible to own a home and acquire gold and silver coins so that when you reach retirement age or have a catastrophic even in your life you will not have to worry.

This is what your savings plan should look like if you’re desperately poor: Set aside $5 per week. That is one McDonald’s meal. At the end of the month, you will have $20. Go buy a .999 fine silver coin with it. Today, January 26, 2010, silver price is $16.86. That means you will have a few dollars left over to add to next month’s silver purchase.

Those with more money than a desperately poor person can institute the purchase of silver more easily on a monthly basis buy buying 5, 10, even 20 silver coins each month. Then, keep adding silver coins every month until you’ve saved about 65 coins. Next step: Convert the silver coins to one gold coin and start the process all over again. The reason to convert to gold is to keep from using up space storing coins.

There is a perk to owning gold and silver. You get to see it and touch it. It is not just a number on a monthly statement. It has REAL value that you get to control simply by deciding how much you want to own!

This is my passion…Teaching people how to have the life they want in these 2 simple ways: Homesteading and owning money that truly IS money! That is why I am a Realtor. I can help people get halfway to their goal of having a secure existence. Thus, the reason for this article.

Being a Realtor,  I, too, have been stumped. What stumps me is how to connect with people. The old way of connecting with people who need to buy or sell a home is less effective now. Connecting used to mean marketing. And marketing used to mean newspaper ads, cold calling on the phone, and radio and TV ads. No longer.

Even the NAR realizes the old way is ineffective.  But, I had to prove it for myself because I’m hard-headed. So, last year, when I moved to the new Brokerage and had to give up all my listings, I was essentially starting from scratch. The first thing I did was start with newspaper ads and post cards.

I discovered that what the experts say is true. The post cards have been more effective than the newspaper ads. Newspaper: Passe’. I needed to learn some new tricks. That is why I now have the new website,  Get-Out-Of-The-City.com and this blog.

Let me tell you after all the work of getting this set up, I learned just today that websites are now ineffective and becoming passe’. Oh, yippee! More late nights to come!

However, I am glad to now know what many competitors do not and will set my feet on the new path. Hmmm….That will be 3 news paths in just the last 6 months. Don’t let anyone tell you the world is not speeding up and spinning out of control.

The Facebook posting seems to be doing well. And my Twitter posts are being watched by more people every day.

I think I’m going to actually enjoy this new paradigm because as much as clients don’t like being “sold”, I don’t like selling. This way, I just get to make friends. And if some of them happen to need to sell or buy a home, that will be icing. The best thing is having the relationships.

This pivotal time could turn out to be wonderful thing.

FHA plans to require borrowers to produce more cash for down payments
The Federal Housing Administration plans to increase the amount of up-front cash paid by all new borrowers and to require higher down payments from those with the poorest credit, according to agency officials

and

FHA Increases Upfront MIP Fee; Raises Credit Score Requirement; Reduces Seller Concessions
As promised in December, the Federal Housing Administration has announced the details of changes intended to strengthen its capital reserves which were reported to be headed into dangerously low territory late last year

may be causing buyers some consternation.

Buyers with poor credit will be the most impacted in the short term, but in the long term, buyers will be helped if FHA’s tactic works. Why is this? It is because the market will tighten up again, the dollar will strengthen and home prices will stabilize. This will make it possible for buyers with poor credit to establish good credit and will also give them time to save money for the down payment.

We must not think that the Aermican dream of homeownership is dead. In the early days of America, buyers bought homes with cash. There were far less mortgages in those days. And we may be headed there again.

It wasn’t until after WWII that the mortgage expanded to what we see today. So in the long run, buyers will find themselves in a better position than their parents in that the current economy will have forced them into frugality and saving, habits that will allow them to pay cash for homes or pay larger down payments  and have less mortgage to pay off.

Every downturn has a benefit and I believe this future benefit to buyers will be significant.