Insider News: What´s Really Happening in Real Estate (For Release Amazing Shifts in the Law -- But Not Published Anywhere!! By: Barry A. Burnett, GRI, SRES, RECS, Golden R Broker/CEO of Barry Burnett Realty, Inc., Burnett Commercial Properties Former Political Affairs Chairman, 1997 818-842-2611, 800-818-SOLD, www.BarryBurnett.net Also on Facebook and Twitter -- Want to "follow" me? In this Issue: Fed and Treasury Suspend Banking "Deposit Regulations" Inventory Shortage ? A Red Herring Interest Rates Commercial Market Cash is King Conclusion Fed and Treasury Suspend Banking "Deposit Regulations" Let´s face it, the American Banking System IS Bankrupt. Old Law required banks to return borrowed funds from the Fed when delinquencies were posted. The Fed is now not requiring the banks to return borrowed funds because there is no liquidity with which to return it! The Department of the Treasury, which regulates banks, is no longer requiring banks to foreclose on delinquent loans as rapidly as regulations actually require. For Example, the old banking regs require a loan to be posted on their books as delinquent at 4 months and begin foreclosure processing and consumer negotiation immediately; now borrowers/homeowners are frequently up to 14 months delinquent (not a single payment to the bank in all that time!) before they even receive a single communication from the bank. By the time banks post intent-to-foreclose notices to the borrower, about one third of the properties have already been abandoned and another third have been vacated by the owners, who have cut their own costs by moving elsewhere and renting out the property. Unfortunately, most of the tenants only become aware of a foreclosure when the final notice is posted on their door and they are told to move! The Fed and Treasury are allowing banks to post delinquencies on their books to stockholders differently than their old regs also. Now, the delinquency appears on the balance sheet as a Loss/Write-off of capital assets. Yet, when the property is sold, it is posted on their balance sheet as Profit. Remember when you became outraged that BofA, Citi, and other huge Banks paid massive bonuses to their management for their profits?! The newest international "Shell Game" is the biggest financial fraud in the history of the world! It is a Government sponsored, Government initiated, Government protected scam of the Taxpayers and International Investors. Inventory Shortage ? A Red Herring The What sales can close? Regular equity Sellers are about 25% of the visible inventory, and foreclosures/REOs are the balance. But there is an invisible or "Shadow" inventory of over 3.8 Million homes in the Why? Again, the Fed and Treasury have suspended banking regs. Old regs required assets be made current and required the swift sale of REOs after the banks posted cash deposits, new regs allow banks to carry the REOs without posting cash reserves. Therefore, they are kept indefinitely. What does this mean to you? Banks are withholding REOs from the market, forcing a low inventory/supply against current demand. Usually, multiple offers over list price is the result. EVEN in this economy! First-time Buyers are scrapping for the $8,000 Tax Credit, currently scheduled to go away November 30th. Be ready: there are some great deals in houses and condos; don´t be afraid to offer over list price because the price is still way below the previous market and often lower than actual replacement cost; get preapproval right away; have your Realtor (us) pop you emails as new listings trickle in. Interest Rates They´re still down, but Fed Chair Bernanke is threatening about a coming inflation. Indicators are mixed, but as long as unemployment nationally remains so enormous it is not likely that rates will skyrocket. They will likely bobble around until after New Year´s. Then, we´ll see. Commercial Market Still in freefall, most commercial properties are selling for increased returns to the investors, higher cap rates. However, commercial loans are extremely difficult to obtain without loads of cash down and cash reserves. Expect your bank to do a last-minute blind side ? they will require you put more down payment, virtually wiping out your reserves (they have all of your financial reserves anyway, so they know how much they can hit you for) at the 11th hour when they know you´re stuck. Don´t make the mistake of thinking banks are your friends. Your banker may be, but his company most certainly is not ? we go through this all the time3; Cash is King Cash purchasers hold the only trump card in a multiple bid environment like now. Commercially, it is the way to truly steal opportunities for yourself. If you don´t have all-cash yourself, see who can lend it to you short-term. Here´s why: buy your deal all-cash at a discounted price, then refinance it immediately at current value, returning your backers´ cash for a profit to them, and everybody wins. Conclusion Buying a home? If it´s for your own residence and your job is stable, go right ahead. Don´t hesitate, even if you have to overbid and work the system. If you´re staying there for any length of time, you will later realize what a good value this was. Buying an investment? Use caution, but extraordinary opportunities are available for the brave and the knowing. It´s a great time for 1031 Exchanges and excellent time to reposition your portfolio, especially if your needs and plans have changed in the last 3 years. Please call, email, or send us a note on Facebook for no-obligation advice and access to our sources. Copyright 2009 Barry Burnett Realty, Inc. Readers may post in full with full citation of authorship. Partial use by permission only, with full attribution. |