How To Help Buyers When Down is Up

Foreclosures grab the headlines, but they’re not the only reason why the housing market is stuttering. A recently released report from investment research outfit PIMCO outlined several often-overlooked factors hobbling the recovery of the real estate market:

• High and rising down payment requirements.  PIMCO calculates that the current 20% down payment threshold requires $39,667 for a median priced home. That $39,667 is twice the current national savings rate. Most buyers just don’t have enough for a down payment.
• First time buyers have too much debt. The average student debt for a bachelor’s degree is about $23,118…and starting salaries for recent college grads are down 10%, reports PIMCO, drawing from publicly available sources. The current generation of first-time buyers can’t save that 20% down payment because they’re earning less and already paying back a down payment’s worth of student loans.
• Retirees are likely to dramatically downsize their houses in sync with reduced retirement income.  Investment income is down and Social Security is threatened: many retirees can’t or won’t spend their golden years supporting a house. They’ll rent.

These trends are likely to reshape how Americans sell real estate. For the immediate, here are several  tactics for helping potential buyers. Align your interests with those of your buyer. Abandon the old ‘seller vs buyer’ mentality. Today, it’s about understanding the barriers that stand between your house becoming theirs.

• Throw in furnishings. Grills, patio furniture, lawn equipment, a snowblower,  kids’ play equipment, even area rugs, spell savings to cash-strapped buyers. Instead of reducing your price, bulk up the freebies, and estimate the amount of cash that won’t be coming out of your buyers’ pockets.
• Take your time. A buyer in hand is worth two in the web.  If an genuinely interested buyer needs time to assemble a down payment, can you wait? 
• Understand the complications of buying today, mortgage trends and the lending landscape in your area.

Photo courtesy of morguefile contributor mensatic

ForSaleByOwner.com's Predictions for the 2010 Real Estate Market

ForSaleByOwner.com not only helps connect sellers and buyers through a host of real estate tools and resources, but we are also relied upon by the real estate media to share our thoughts and opinions on the real estate marketplace.

As such, we developed our "Top 10 Predictions for the 2010 Real Estate Market" and shared it with reporters throughout the country. As consumers have become more educated about real estate, we'd like to share our thoughts with our blog followers.

Among our predictions are an increase in sales volume, a decrease in home prices, another increase in buyers using the Internet to search and successfully find their next home, and more home sellers using Internet-based resources to price, market and sell their home without the expense of paying commissions to a real estate broker.

We feel that the behavior of the real estate consumers will continue to change in 2010. More real estate data and information is available through numerous online resources and consumers will rely more on the Internet than real estate agents to buy and sell their homes. Sellers will resist paying real estate commissions and will instead look to ‘by owner’ selling alternatives, especially as falling home prices are motivating sellers to retain as much of their home value as they can as they sell their house.

ForSaleByOwner.com’s Predictions for the 2010 Real Estate Market

1. Overall homes sales – existing home sales and financially distressed homes – stabilized and slightly increased in 2009. Mortgage rates should remain low in 2010 and the extension of the first-time homebuyers tax credit should help the housing market. Prediction: In 2010, all home sales should see a slight increase in volume of 1-2%.

2. The median home sales price was $221,900 in 2006 and fell to $219,000 in 2007 and $198,100 in 2008. Median home sales decreased again in 2009 and will likely end up in the mid $170,000 range. Foreclosed properties and other distressed sales, with their severely discounted prices, helped to lower the median home price in 2009. Prediction: Distressed properties will continue to dominate home sales in 2010 and will keep pricing pressure on homes and they will fall approximately 4-6%.

3. According to the National Association of Realtors (NAR) 2009 Profile of Home Buyers and Sellers report, 36% of buyers found the home they purchased by first seeing it online and 36% of buyers found the home they bought through a real estate agent. The Internet and real estate agent as the sources for finding a home have trended in opposite directions annually since 2001, when 48% of buyers found their home through an agent and just 8% found it on the Internet. Prediction: In 2010, for the first-time ever, more people will find the home they purchase by seeing it first on the Internet compared to those who first learned of the home through a real estate agent.

4. Due in part to the $8,000 tax cut for first-time homebuyers, first-timers comprised nearly 50% of all home sales in 2008. Prediction: The extension of the $8,000 tax credit to June 2010 will attract more first-time homebuyers into the market and they will continue to be the most common type of homebuyer in first half of 2010.

5. According to NAR, 90% of all buyers use the Internet as part of their home search, up from 87% in 2008, 84% in 2007 and just 71% in 2003. Prediction: In 2010, more than 90% of all homebuyers will use the Internet to search for a home.

6. According to NAR, home sellers who sell their home “by owner” sell their home in six weeks while those who sell it through an agent sell the home in 12 weeks. NAR also discovered that the “by owner” seller achieves a sales price that is 97% of their asking price, while an agent-assisted seller gets 95% of asking price. Prediction: In 2010, “by owner” sellers will continue to sell their home quicker and for closer to asking price than agent-assisted sellers.

7. In 2000, there were 756,000 members of the National Association of Realtors. As the housing market boomed in the early part of the decade, its membership grew to a peak of 1.37 million members in 2006. People have left the profession as the market declined and NAR’s membership now stands at 1.13 million. Prediction: There will be fewer than one million real estate agents in 2010 due to increased competition for listings and as the Internet makes it easier for people to sell and buy homes without an agent.

8. Real estate agents have historically lowered their commission rates during a seller’s market and increased their rates during a buyer’s market. Prediction: Real estate commission rates have been approximately 5.2% the past couple years and will rise closer to 6% in 2010.

9. As home values have declined, more homeowners have realized that paying commissions to get their home sold decreases the amount they receive even further. Prediction: More home sellers in 2010 will explore other alternatives to paying commission and will choose to sell their home “by owner” to retain more of their home’s value.

10. Studies from Northwestern and Stanford universities have found that people who sell their home “by owner” are as effective as agents in maximizing the sales price of their home. Consumer Reports magazine found that “by owner” sellers get closer to their asking price than agent-represented homes. Prediction: More home sellers in 2010 will utilize Internet-based tools and information to compare recently sold homes and price their home more effectively.

Industry Data Shows FSBOs Sell Quicker & Closer to Asking Price than Agent-Represented Homes

Tucked away in an annual report from the National Association of Realtors (NAR) were statistics and data that compared selling through a real estate agent versus selling "for sale by owner." The findings would make any real estate agent cringe and any home seller gain more confidence in selling their own home.

NAR's report (The 2009 Profile of Home Buyers and Sellers) found that people who sell their home on their own are able to sell it, on average, in six weeks, while it takes an agent double that time (12 weeks) to sell a home (see above image). The report also found that “by owner” sellers received 97% of their asking price on average, while those represented by an agent got 95% of their asking price on average. Considering that the goal of any home seller is to sell a home for as much money as possible and as quick as possible, this report is strong evidence that selling "by owner" is a smart choice for home sellers.

In addition to selling quicker and for closer to asking price, selling FSBO also allows the home seller to save on commission. Real estate agents typically charge a commission equal to 6% of a home's sales price, or $18,000 on a $300,000 home. As home prices have fallen, more sellers are quickly realizing that real estate commissions are costing them more of their home's value.

ForSaleByOwner.com has seen double digit growth in the second half of 2009 and our extensive real estate resources & tools help customers price, market and sell their home in an effective and cost-saving manner. Use our "Home Seller's Checklist" to learn how to become a "for sale by owner" home seller.

Driven By First-Timers, Home Sales Show Dramatic Increase

New data from the National Association of Realtors found that in the month of September, which is the latest data available, existing home sales increased 9.2% from September 2008. While this is great news for the housing market as this is the highest increase we've seen in two years, the increase is likely due to the fact that the $8,000 tax credit for first-time home buyers is expiring November 30 and these buyers are racing to close on their home sale. In fact, early estimates are that first-timers have comprised 45% of all home sales thus far this year.

Unless the tax credit is extended, we suspect that October and November figures will also show increases and that we'll see a noticeable drop in December.

Home sellers, especially with homes geared for first-timers, should keep close attention to housing news regarding the tax credit. We'll keep you informed here as well, but we've found that the most successful "by owner" home sellers are aware of the latest news affecting the housing and mortgage industries. Not only because buyers are more confident working with such knowledgeable sellers, but because sellers who are aware of the latest trends are more likely to market and accurately price their home to attract qualified buyers.

Selling For Sale By Owner - Yes you can!

You - anyone - can sell their home "by owner". I had a conversation with someone this week and they said "I thought you had to use an agent" to sell your home.

FACT: Every consumer has the right to buy and sell property without using a real estate agent.

Sadly, many consumers are mislead to believe there is some special law or policy which states they have to use an agent during the buying and selling process. Ten (10) years ago, information was controlled by agents which lead people to believe they had to work with them. Today, the internet and easy access to every key piece of information to help you - the consumer - buy and sell property is at your finger tips.

About 4 years ago, an independent study (Real Trends) found out about only 50% of consumers were aware of the For Sale By Owner method of selling their home. I hope during the past 4 years this has improved and made more people are aware you have the right and greater opportunity to sell via the For Sale By Owner method.

Every consumer has the right - and more tools today - to sell and buy your home and to save a lot of money. Empower yourself. Empower your friends and neighbors. Make sure they know they have a powerful choice to make which can provide them financial independence by selling For Sale By Owner.

$3.9 Billion... and Counting

If you follow the real estate industry in any fashion, you probably know that last year the Federal government introduced a $7,500 tax credit for first-time home buyers and increased it to $8,000 for those who purchase their first home this year prior to December 1st.

According to the government's Interim Results of the 2009 Filing Season, $3.9 billion in first-time home buyer tax credits have been claimed on more than 567,000 tax returns. Incidentally, if you bought a your first home anytime after April 8, 2008 and have not claimed the tax credit, I'd recommend that you contact an accountant to determine you eligibility and file an amended return to get this free money. (you can also click here for eligibility requirements)

It will be interesting to see how these figures grow this year and into next year's tax season, as first-time home buyers account for roughly 40 percent of all homes sold. Last year there were 4.9 million homes sold and this year will be less but still probably north of 4 million. Not every first-time home buyers will be eligible for the tax credits -- due to the tax credits' income thresholds and because it applies only for purchases made in the fist 11 months of 2009 and roughly last 9 months of 2008.

But we can assume that since most first-time home buyers are under the income thresholds ($95K for individuals and $150K for joint filers) and will time their closings to occur prior to December 1st, it is easy to assume that the $3.9 billion in claimed tax credits is only the beginning.

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Mortgage Rates Hit New Record Lows

The Associated Press is reporting that interest rates on 30 year mortgages have fallen to their lowest level in the history of Freddie Mac tracking mortgage rates, which was back in 1971. The average rate on a 30-year fixed-rate mortgage was 4.78% this week, down from 4.85% the prior week and down more than a full percentage point from a year ago.

Using this mortgage calculator, we can see what this means for prospective home buyers, and those with higher mortgage rates who are considering refinancing. (If you do qualify for refinancing, by all means this is a great opportunity to do so.)

Let's use a $200,000 mortgage to see how today's low rates affect a monthly payment:

In this scenario, the cost of a monthly payment over the past year has dropped by more than $120. Over a year's time, that's $1,400+ in savings and, during the course of the 30 year loan, nearly $45,000.

It is anyone's guess how long today's low rates will last, and if it will help stimulate home buying activity. But there's a lot of favorable things happening for prospective buyers. We have record low mortgage rates, home prices that are at 2003 pricing levels, an $8,000 tax credit for first-time home buyers and a large inventory of available homes.

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The $8,000 Home Buyer Tax Credit

In an attempt to help stimulate the housing market, the Federal government recently enacted a new Home Buyer Tax Credit for first-time home buyers who purchase a principal residence. The tax credit is equal to 10% of a home’s purchase amount or $8,000, whichever is less.

A tax credit is direct dollar-for-dollar reduction in what a taxpayer owes in taxes. A person who owes $8,000 in income taxes and is eligible for the full $8,000 home buyer’s tax credit would owe nothing in federal taxes.

In order to qualify for the tax credit, the buyer has to meet the following general parameters:

• Be a First-Time Home Buyer: The law defines this as a buyer who has not had ownership of any principal residence in the past three years.
  
  
• Buy a Principal Residence: Any home that will be used as a principal place of residence will qualify, including condos, newly constructed homes and manufactured homes. The home will also have to be purchased by December 1, 2009. (the tax credit is also retroactive to purchases made on or after Jan. 1, 2009)
  
  
• Meet Certain Income Thresholds: In order to qualify for the full $8,000 tax credit, a single taxpayer cannot have a modified adjusted gross income (MAGI) that is greater than $75,000. For married taxpayers who are filing a joint return, the MAGI limit is $150,000. For those with higher incomes than these thresholds, the tax credit is reduced and is phased out completely for single taxpayers with a MAGI of $95,000 or more, and for married taxpayers with a MAGI of $170,000 or higher.
  

The District of Columbia also offers a first-time home buyer tax credit, but a taxpayer can only choose this local tax credit or the Federal tax credit.

Home buyers are becoming more aware of this tax credit and are using it to minimize to offset the costs of a home’s down payment. Sellers should also be aware of this tax credit, so that they can relay this important information to prospective buyers.

For more information about the home buyer’s tax credit, ask your accountant or visit http://www.federalhousingtaxcredit.com.

Follow me on Twitter @ http://twitter.com/FSBO_Guy

The Root Causes of the Underwater Homeowner...Part II

Earlier today I put out a Tweet (follow me @ForSaleByOwner) to pass along a news story about a real estate broker who apparently has been smashing the yard signs of a former employee-turned-competitor. As you can see in the video, the broker was arrested for destruction of personal property and should rightfully be held responsible for his acts.

But my attention was also focused on the other party, a Realtor who apparently works for a real estate company that promises buyers the opportunity to buy homes with only a $500 downpayment.

As I wrote in an earlier post about the root cause of the underwater homeowner, the median downpayment of a home bought in 2008 was just nine percent. For first-time home buyers, it was just 4 percent. Financial advisors suggest that buyers make at least a 15-20% down payment. So, I questioned, who has been planting the idea in so many people's minds that it's a good idea to buy a home with hardly any downpayment (29% of all buyers, by the way, put 0% down)?

Maybe it's real estate agents with businesses like 500downpayment.com? Telling people that they can buy a home with such low down payment amounts puts these folks on the path to heavy debt and, as we're seeing across the country, foreclosure and bankruptcy. The real estate commission structure is designed so that it rewards any and all real estate transaction, no matter if the buyer can actually afford the home or not.

Sadly, as long as the commission structure is maintained whereby it rewards even sly real estate sales tactics, far too many unsuspecting Americans will continue to be put in situations where they don't have the financial means to pay for their homes.

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Real Estate Commissions Totaled $46.6 Billion in 2008

Commissions paid to real estate agents and brokers totaled $46.6 billion in 2008 – a $12 billion decrease from 2007 levels -- according to an analysis performed by ForSaleByOwner.com. The nationwide average commission paid on a home sold through a residential brokerage during 2008 was $12,600. Sellers in the West paid the most to get their homes sold ($16,230), followed by home sellers in the Northeast ($15,500), South ($11,050) and Midwest ($9,540).

The cost of paying real estate commissions has clearly been magnified by declining home values. With home prices falling across the country, losing another five-plus percent in the form of a real estate commission is simply a luxury that today’s sellers cannot afford.

The National Association of Realtors recently found that people who sell their home themselves sell quicker and for closer to asking price than agent-assisted sellers. Agents do provide some convenience but, with commissions averaging $12,600, selling ‘by owner’ is a much more cost effective approach to getting a home sold.

A recent survey from the National Association of Realtors found that people who sell “by owner” get closer to their asking price and sell quicker compared to those who sell through an agent. The trade association found that those who sell without an agent receive 97 price of their asking price, while those who sell with an agent receive 96 percent of their asking price. The trade association also found that a home sold through an agent takes 10 weeks, while it takes just six weeks to sell a home “by owner.”

In addition, separate studies from Northwestern University and Stanford University found that FSBO sellers are as effective as agents in maximizing the sales price of their homes. After commissions are factored into equation, the studies reported, sellers who sell “by owner” actually save more money, and retain more equity, than sellers who sell through agents. The September 2008 issue of Consumer Reports magazine also reported that FSBO sellers are more likely to get their asking price while agents deliver, on average, a sales price that is $5,000 less than the original asking price.

http://www.forsalebyowner.com

The Root Causes of the Underwater Homeowner

The Wall Street Journal is reporting today that, as of the end of 2008, a disturbing 20% of all U.S. homes that have a mortgage on them were "underwater." That means that when the New Year's Eve Ball dropped in Times Square, there were more than 8.3 million homeowners throughout the country that owe more on their mortgage than their home is worth.

Experts agree that this 8.3 million figure has climbed since that time.

But how did we get here? Declining home values have received much play in the media as the reason why so many are underwater, but declining home prices only tell half of the story. Considering that a mortgage is simply a home's sales price minus its down payment, we can accurately state that mortgages are more likely to become underwater whenever a smaller down payment exists.

A 2008 report from the National Association of Realtors provides us with critically important statistics about down payment amounts (click on the above image for complete information). According to the National Association of Realtors:

• The median down payment amount for all home buyers is ONLY 9 percent;
• The median down payment amount for first time home buyers is ONLY 4 percent;
• 29% of all home buyers put 0% down to buy their home; and
  
• 34% of first-time home buyers put 0% down to buy their home.

Such low down payment amounts, coupled with decreasing home prices, are the reasons why there is such a large percentage of home owners who are underwater. These folks obviously made a bad decision to leverage themselves so greatly, but a fundamental question is, "Who was advising them to buy homes that they couldn’t afford?"

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Home Prices Drop 18.2 Percent

The Standard & Poor's/Case-Shiller U.S. National Home Price Index fell 18.2% in the fourth quarter of 2008 from the fourth quarter of 2007, which represents the largest drop in the Index's 21-year history. Home prices are now at levels last seen during the third quarter of 2003.

The peak of the Index was the summer of 2006, and the 20-city index is now 27% below those levels.

Below are home price changes as tracked by the Standard & Poor's/Case-Shiller U.S. National Home Price Index:

	Dec. 2008	Change from Nov.	Change from Dec. 07
Atlanta	113.87	-2.30%	-12.10%
Boston	153.05	-1.30%	-7.00%
Charlotte	122.41	-2.50%	-7.20%
Chicago	137.16	-3.00%	-14.30%
Cleveland	105.21	-2.10%	-6.10%
Dallas	115.63	-2.30%	-4.30%
Denver	125.74	-1.50%	-4.00%
Detroit	80.93	-3.00%	-21.70%
Las Vegas	131.4	-4.80%	-33.00%
L.A.	171.46	-2.50%	-26.40%
Miami	165.01	-2.70%	-28.80%
Minneapolis	127	-4.60%	-18.40%
New York	183.5	-1.70%	-9.20%
Phoenix	123.93	-5.10%	-34.00%
Portland	158.5	-2.50%	-13.10%
San Diego	152.16	-2.10%	-24.80%
S.Fran	130.12	-3.80%	-31.20%
Seattle	160.19	-3.60%	-13.40%
Tampa	156.04	-3.00%	-22.00%
Washington	176.34	-2.20%	-19.20%
10 cities	162.17	-2.30%	-19.20%
20 cities	150.66	-2.50%	-18.50%
Note: index=100 in 2000 Source: S&P, Fiserv, USAToday Follow me on Twitter @ http://twitter.com/FSBO_Guy

Thoughts on the Commission Escrow Act

A new law has gone into affect in the State of New York (that's NY's Capitol building at left) that protects the commissions of real estate brokers. Known as the Commission Escrow Act, the law ensures that brokers will be paid the commission that the seller & broker both agreed to when they signed a contract known as a listing agreement.

Seems logical that a seller should pay a previously agreed to commission amount, right? Well, not in all cases. Many times a buyer learns of the property because of the word-of-mouth spread by the owners or due to their networking skills. Telling fellow parents at P.T.A. meetings or at your son's Little League games is a great way to find a buyer. Why should a seller have to fork over a 6% commission ($18,000 on a $300,000 home) if it was them who found a buyer in the first place?

There are plenty of other legitimate reasons why a seller doesn't feel that the broker has earned the commission. The number of Realtors in the U.S. has increased from 756,000 at the beginning of the decade to nearly 1.2 million today and, as many agents will be the first to admit, the industry is chock-full of people who act in a less than professional manner. The Commission Escrow Act protects even these people at the expense of the seller.

At the recent Inman Connect real estate conference in New York City, there were calls for tougher standards in the licensing of real estate agents. Let's hope that the industry moves in this direction in order to safeguard the financial interests of real estate sellers and buyers.

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President Obama and Real Estate

"Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age. Homes have been lost; jobs shed; businesses shuttered." - Barack Obama, Jan. 20, 2009

During today's inauguration speech, President Obama referred to the foreclosures that continue to strike so many American families. Now that he is charge of the economy, the country will be watching closely to see what policies he will implement to help fix the housing crisis.

There's been talk about the U.S. Treasury Department buying mortgage backed securities, which would allow Fannie Mae and Freddie Mac to offer mortgages as low as 4.5 percent. The idea is that such low mortgage rates would prompt more people to buy real estate. But there's been questions about this proposal, such as who exactly would qualify for these low rates and whether the rates would be available for mortgage refinancing.

Obama also supports a moratorium on foreclosures. Now that he has taken the presidential oath and foreclosures had a record increase in 2008, we can expect that he will release details in the coming days or weeks.

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Top Tales Spun By Realtors Revealed

Considering that real estate agents and brokers make make money whenever a client sells or buys a home or piece of property, it stands to reason that it is in the industry's best interests to motivate the American public to buy and sell as much as possible.

Enter the National Association of Realtors, which is a lobbying organization whose stated purpose is to "help its members become more profitable and successful."

I suspect that the average American doesn't realize the true motivations behind NAR's numerous marketing campaigns and statements to the press. Indeed, the lobbying group frames their crafty work with references to "the American dream" and "financial security" so that people continue to engage in real estate transactions. As the housing market started to cool and slow down, NAR stepped up its public relations efforts to thwart the public's perception that home sales and prices were declining.

A new series of print and online articles by the Wall Street Journal shines the spotlight on the half-truths and falsehoods spread by former NAR Chief Economist David Lereah. Here's some of the Top Tales that Mr. Lereah spun while to help NAR push its agenda of helping Realtors become "more profitable and successful."

January 2006
Lereah’s forecast: “The market is in the process of normalization.”
Actual sales: Fourth-quarter sales fell at an annual rate of 12.6% to 6.94 million annualized.
Lereah’s post-mortem: “The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead.”

April 2006
Lereah’s forecast: “Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau.”
Actual sales: First-quarter sales fell at an annual rate of 8.6% to 6.79 million.
Lereah’s post-mortem: “This is additional evidence that we’re experiencing a soft landing.”

July 2006
Lereah’s forecast: “The market should even out just below present levels.”
Actual sales: Second-quarter sales fell at an annual rate of 6% to 6.69 million.
Lereah’s post-mortem: “The market is stabilizing.”

October 2006
Lereah’s forecast: “We expect sales activity to pick up early next year.”
Actual sales: Third-quarter sales fell at an annual rate of 22.2% to 6.28 million.
Lereah’s post-mortem: “This is likely the trough in sales.”

January 2007
Lereah’s forecast: “The good news is that the steady improvement in sales will support price appreciation moving forward.”
Actual sales: Fourth-quarter sales fell at an annual rate of 2.3% to 6.24 million.
Lereah’s post-mortem: “It appears we have established a bottom.”

NAR's new Chief Economist has continued the practice of issuing overly rosy statements, and the organization has launched a new print and television campaign. So the next time you see one of these ads or hear a Realtor speak, remember that their mission is to be "profitable and successful."

Follow me on Twitter @ http://twitter.com/FSBO_Guy

What's Ahead in 2009 For Real Estate?

It's pretty safe to say that 2008 will be remembered as a very painful year in real estate. Headlines have screamed about declines in home prices and fewer homes being sold, and many people follow the real estate market closer than they do their favorite sports team.

Today ForSaleByOwner.com issued its 2009 Real Estate Predictions where, among other things, we are forecasting a continued slide in home sales & prices, fewer people in the real estate agent & broker profession, an increase in real estate commission rates, and increased competition within the industry.

We also predict that next year we're going to see a "tipping point" where, for the first time ever, more people will be finding their next home by seeing it first on the Internet... instead of finding out about the home from a real estate agent. Industry stats for 2008 show that 32% of buyers found their home on the Internet (up from 2% in 1997), and 34% found it because a real estate agent showed the home to them (down from 50% in 1997). We think that 2009 will be the year where the industry's own statistics show that the Internet is more effective in helping people find the homes they want to buy.

We got other predictions as well. Check them out here.

http://www.forsalebyowner.com

Our Announcement.... continued

Yesterday's announcement has surely gotten the attention of many people out there in various blogs. I wanted to pass along a couple of them, just so you can read the thoughts of some bloggers:

U.S. & World Report "Home Front" blog

NAR Wisdom blog

FBS Blog

Agent Mag Genius blog

New Mortgage Assistance Help

The federal government and the mortgage industry are expected to announce today a new initiative to help homeowners facing foreclosure. As reported in this U.S.A. Today article, the program wil speed up the process of renegotiating delinquent loans held by Fannie Mae and Freddie Mac -- which owns or guarantees about half of all U.S. home loans.

As it appears from this initial report, the new plan will strike at the heart of the problem for many Americans -- falling behind on their mortgage payments to the point that foreclosure notices have begun to arrive in their mailboxes.

Far too often, homeowners who fall behind in their payments simply don't contact their lender to explain their financial hardship. This is probably the absolutely worst thing a delinquent homeowner can do because, to the surprise of many, lenders will work with that homeowner and put them on a payment plan and/or renegotiate their mortgage. This can be a lengthly process and the initiative announced today will hopefully speed up this process so that affected homeowners can not just stay in their home, but also work out a manageable monthly mortgage payment with their lender.

For those out there that are facing hardship, I would recommend that they call Hope Now. This alliance of mortgage lenders provides free consultation services and can help homeowners prevent foreclosure. Hope Now can be contacted at 1-888-995-HOPE.

A Breach of Ethics?

I spoke with a number of ForSaleByOwner.com customers from various markets this week, and was alarmed at the number of people who have had the shared experience of real estate agents not acting in the best interest of buyers. What's going on, it seems, is that agents are increasingly not showing FSBO listings to their clients, even if such listings fall under the parameters and price range sought by them. This is even happening in situations where the "for sale by owner" has put their home on the M.L.S. and has advertised that they would pay a commission to an agent who brings a buyer.

Incredibly, such housing discrimination is not considered an illegal practice. It is, however, against the National Association of Realtor's code of ethics. The first code list under its Duties to Clients and Customers reads as following:

"When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS^® pledge themselves to protect and promote the interests of their client." (click here to read NAR's Code of Ethics)

Agents who refuse to show FSBO listings are engaging in a deceptive practice that's far from protecting and promoting the best interests of their clients, who undoubtedly wish to see all homes on the market. Rather, they are trying to protect the interests of those agents & brokers who view FSBOs as a threat to their livelihood.

Let me be clear that there are many quality real estate agents who do indeed show their clients homes that are being sold "for sale by owner." It's the minority of agents that are doing otherwise, and their acts threaten to tarnish the reputation of all Realtors throughout the industry.

Nationwide, it's estimated that FSBO listings account for more than 20% of all listings on the market. For agents to ignore such a large segment is not only anti-consumer. It's impeding the sale of homes that is so critical to the healing of the current housing crisis.

Fannie Mae and Freddie Mac

While I was enjoying watching Brett Favre and my beloved New York Jets win their season opener, it's good to know that the government was hard at work helping our housing market. As you've heard by now, yesterday Treasury Secretary Henry Paulson (pictured) announced a takeover of mortgage giants Fannie Mae and Freddie Mac.

Together, Fannie and Freddie own or guarantee more than $5 trillion in mortgages. Their survival is crucial to the health of the U.S. housing market and, indeed, the entire economy. The takeover is designed to help lower mortgage rates and make it easier for people to get or refinance mortgages. John McCain and Barack Obama today each announced their support for the government's action, and the market responded by sending the Dow Jones up 290 points.

The real test, of course, is seeing whether this will translate into more home sales and an increase in mortgage approvals. The nation's housing inventory level currently stands at 11.2 months, far above the 6 month inventory level that represents a health housing market.

It will take a combination of increased mortgage availability and greater home buyer confidence to lower inventory levels, and in a few months we'll know whether the government's action will produce this intended result.