If you’ve been following the national news recently regarding the bankruptcy of Lehman Brothers, the stock market getting hit and Fannie and Freddie being taken over by the government, these are all the classics signs of the bottom of a market correction.

Right now, we don’t have so much of a real estate problem as we do a banking one. Prices have mostly stabilized across the country and in the short sale and foreclosure market we’re seeing multiple offers. Although I do believe there are a couple more banks in trouble and there’s not yet a full complement of mortgage products to satisfy all the buyers in the market, trust me that will get sorted out. For thousands of years lending money has been one of the most profitable businesses in the world. Banks make money by lending; not by deposits. So they will figure out ways to package loans and get cash into the hands of consumers. I believe this is the final cleansing process and in the next six months we’ll start to come out on the other side of this.

Make sure your clients don’t get caught in the “cudda shudda wudda” of taking advantage of this market. Make sure all your investor clients are fully aware of all the deals that exist and if there’s any way possible, see if you can pick up one of these real estate deals as part of your own investment strategy. We won’t know what the bottom is until after but I believe it’s pretty close. Keep your head down working hard.

It’s a good life!

Brian

One observation I have of our society at large today is the extraordinary lengths to which people go to avoid pain at all costs. It seems as though any discomfort must be remedied immediately. As markets tighten and the fed rushes to change rates, people feel the pinch and the government sends out billions in rebate checks, and the many borrowers who overextended themselves begin to use their house as an ATM, it can seem like the only solution to search for a bail out.

The real estate business is going through a time of challenge and stress but it’s part of the natural order of things. Prices go up, prices flatten out. There’s no inventory followed by too much of it. I’ve always said it’s a good life; not a great life. Sometimes we have to realize that part of this life requires us to endure discomfort and persevere through tough times, feel fear and all we can do it suck it up, put one foot in front of the other and do the best we can for that day.

Don’t look for someone else to solve your problems. Don’t wait for the market to correct. Don’t expect a government program to bail you out. As you persevere and push through you’ll be strong, better and more resilient on the other side. You’ll have a better business and be more equipped for life.

It’s a good life!

Brian

Have you ever noticed when the Fed cuts rates and there’s such a big deal about it in the media that many times it doesn’t show up in a reduced mortgage rate? The only problem with this is that the typical consumer thinks that the Fed rate and the mortgage rate are the same.

It’s a good thing to always be prepared to let your clients know that the Fed rate is the rate at which banks borrow money; not the rate at which they loan money.

Right now, what the market needs is not another rate cut but a loosening of the mortgage restrictions so that more folks can qualify for a home. But don’t worry…every time the market goes through a correction and banks get scared tightening up their lending criteria they eventually loosen up the purse strings again. It’s a gradual process and not one you’ll particularly notice but trust me, banks need to lend money to make money. So folks with decent credit and a good job who may not have large down payments will be able to get back in the game very soon. The recent legislation to expand the conforming loan amounts will certainly help entry level buyers in the more expensive states.

Once first time buyers can buy, move-up clients can sell and the high end will loosen up as well. This is all a very predictable cycle that’s been happening for over fifty years. Stay the course, build your business…there are plenty of opportunities out there.

It’s a good life!

Brian