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Real Estate Services by Jon Griffith

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Real Estate Update as of March 2015

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Inventory is down, and as long as demand driven by re-bound buyers (people who sold their homes during the mortgage crisis who can now qualify) are taking advantage of low interest rates remains the same, that only means prices increase.

March showed us more closings than any other single month in the entire year 2014 and pending sales are also up.

As always, the media is behind the 8-ball on reporting and only now will be telling us that the real estate market is hot. If a home is priced right, it goes rather quickly, and this is coming from first-hand experience in the trenches with buyers who are having a hard time negotiating contracts with sellers. Sellers control the market right now.

If you want it, you need to be able to jump to action quickly, which means you need your financing in place before you even think about buying.

Please Reply with Remove in the Subject Line IS INEFFECTIVE

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Spam is a serious problem.  If you send bulk e-mail to people who have never heard of you, nor expressed an interest in your products or services, then you’re simply being a pest, and you’re breaking the law.

I’ve seen on more than one occasion someone implement the old “reply with remove in the subject line” method.  The problem with this is that the e-mail address that your “remove” system is going to verify against is the one that I’m sending my reply from.  In many cases, it’s not the e-mail address that you used to send the message in the first place, because I’ve chosen to forward mail from multiple addresses to one location.

The “remove” method is ancient in digital years.  It’s also impossible to know if you’re actually using an automated script to remove addresses, or if you’re manually removing them when you get a message that says “remove” in the subject line.  The latter method is a joke.

The Right Way

Whatever you’re using to send bulk e-mail should provide a link at the bottom of your messages that allows for single click un-subscription.  When you send me something I don’t want, I should not be expected to do any work to eliminate future mailings.  I shouldn’t have to be inconvenienced by your system’s antiquity by forcing me to write YOU an e-mail to ASK you to stop sending mail that you weren’t supposed to send me in the first place.

If I can’t one-click unsubscribe from your message, I can guarantee I’ll never use your services.


9 Ways to Prevent Foreclosure

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Reinstatement

Bring your loan current.  Contact your lender, let them know you’re going to get caught up, and you’ll be able to remove the Notice of Trustee’s Sale and your home won’t go to auction.  Make sure you and your lender are on the same page, and that you get everything in writing.

Forebearance

Contact your lender and work with them to come to a temporary repayment plan.  Keep in mind that this also needs to be in writing.  Bank collectors are not friendly people and what comes out of their mouths is usually not true.  Forbearance is a temporary solution, and it will ultimately benefit the lender over you, but for now, it may relieve a cash-flow problem.

Refinance

Find a better deal.  The ability to do this hinges on your ability to qualify, and the value of your property.  If you owe more than it’s worth, you won’t be able to refinance without bringing the new loan to value ratio within an acceptable range.  This will mean coming out of pocket to bridge the gap.  Not many people can do this, so it may not be an option for you.

Loan Modification

It’s possible, but not likely.  Over 60% of those who attempt to modify don’t even qualify.  The rest manage to arrange something with the lender, but rest assured, it will be in the banks best interest, not yours.  Loan modification doesn’t usually solve the long term problem.  Prinicpal modification is extremely rare.  Don’t bet on it.

Sell the Property

If your payments are too high, sell the house.  If the home is worth more than you owe, you’re going to solve a huge financial burden in your life and you’ll have some cash left over.  Most people in this situation don’t think to down-size, but if you have equity in your home, and your income is such that you’re headed towards financial difficulty, sell the house.  Downsize and live within your means.

Rent the Property

Renting out your property may be a good option for you, but I would encourage you not to carry unnecessary risk in your life.  Renting out, while you’re renting, is a risky proposition because there are costs associated with being a landlord.  If you’re in foreclosure, you still need to be current with your lender to stop the auction process.

Short Sale

Even if you owe more than the property is worth, you can sell the home.  Most lenders will allow this to avoid the extensive costs of foreclosure.  It’s in their best interest to do so, and if you haven’t caught the tone of this message, I’ve been quite clear about the banks.  They typically only do what’s in their best interest.

Deed in Lieu

This is when you voluntarily hand over the keys to your house, much like when you voluntarily hand over the keys to your car.  The problem with this is that it doesn’t solve the problem.  When you hand it over, the bank, who is not in the real estate business, will have to pay the associated costs of selling the house, and that means that every penny that doesn’t cover your loan is a penny they’ll chase after legally.

Bankruptcy

Stupid.  Bankruptcy is something that you should only consider if you’re forced into it. It will slow the process down, but it will not prevent foreclosure.

Another Credit Card Company Scheme

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Credit card SEO Agency companyes come up with any and every desperate attempt to keep you as a “customer.” They do not treat you like a customer, however, and you’re the one who pays their bills with outrageous interest rates and risk of fees that your mother would be ashamed of.

The most recent interaction with a credit card company happened today when I noticed that my card company had boosted my rate from 12% to 25% for the second time. I pay my bills on time. With interest rates doubling, so do monthly interest charges. Their software is designed to work in their favor regarding statement dates and due dates.

To save you hours of frustration, do yourself a favor. Pay cash for things you buy. Reward points are not worth it, and this has been proved with statistics that show that consumers will spend on average 12-18% more using a credit card than they will using a debit card or cash.

The Scheme of the Day

If I enroll in a new program at the credit card company, which they say is completely free, I have the opportunity to be credited up to $550.00 just for making my payments on time. The trendy company names program lasts 8 months, and I have to make on-time payments every month for those 8 months. After this period, I will receive a credit of 10% of my balance up to $550.00 no later than 3 months after the program ends.

What do I see here? I see a credit card company desperately trying to lock me into an account that I cannot close. I see a scheme to force me to hold a credit card for at the very least, 8 months, and possibly 11 months. I’m sure that the cc company has researched the behavioral habits of overspending due to credit cards, and the increased likelihood that a card holder with a zero balance will soon become a card holder with a balance.

My representative was very short with me as I asked questions that slowly revealed the truth in the program. Sure, the program is free, but it’s worth more to me to not take on any risk at all.

The Myth of Tax Deductions

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Math doesn’t lie. When you add 1 + 1 you get 2. Subtract 1 from 2 and you get 1. Big surprise right? One of the most common things that I hear people mention when it comes to owning real estate is how important tax deductions are to their financial health. If you employ simple mathematics to this myth, you’ll see how ridiculous the logic is that tell you tax deductions make sense, because they don’t.

Let’s say you owe the bank $100,000.00 with an annual interest rate of 5%, and your income is $30,000/year. 5% of $100,000.00 is $5,000.00. That means at the end of the year, when you file your taxes, you’ll be able to reduce your taxable income from $30,000.00 to $25,000.00.

On a $30,000.00 annual income, you fall in the 15% tax bracket. $5,000.00 of your annual income was paid to the bank, and you’ll never see it again. The real savings to you in this example, since your tax bracket is 15%, is 15% of $5,000.00 which is $750.00.

In short, you spent $5000.00 to save $750.00. Your net result is a loss of $4250.00 in real cash. If you think that keeping your home mortgage means that you’ll benefit because you’ll be able to take a write-off, I’d be happy to pay you $750.00 as soon as your check to me for $5000.00 clears the bank.

Cash is King: Lower the Rate

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(Note: I’ll preface this by letting you know that a credit card is the devil.)

Today, while using a credit card that I usually use, that I’ve had for over 10 years, which has a limit over $20,000, to pay an important bill, I was declined.

What?  Declined?  How can that be?  Here’s how.  My credit card company (AT&T Universal Card), in their infinite wisdom, made an executive decision to tighten my credit line to the balance on my account.  In a time when Cash for structured settlements
is king, and required to continue moving the parts of the machine that allow me to make an income, the last thing you want to have happen is this, as it completely eliminates your cashflow.  When I asked them why, they told me they ran a check on my credit report.  Why would they do that?  I don’t believe they did it.  I think they’re just telling us that and the real story is that they’re scared to death that they’re too exposed.  That’s fine and dandy and all, and they have every right to do so, but let’s be reasonable here!  No letter, no phone call, no notification at all.  Ask forgiveness instead of permission right?  Get this…I was paying my AT&T phone bill with my AT&T credit card!

As a 100% commissioned sales person, my income depends on the closing of the next sale.  Expenses that have a return on the investment, such as placing sign posts, sending out cards, subscriptions to various marketing services, and oh yeah, my monthly cost to the brokerage, are typically floated on my “business line of credit,” or, the credit card that I choose to use to fund my operations.  Whether it be a small monthly fee to DocuSign, or my brokerage fee, the credit card is a critical cashflow tool that makes it much easier to manage my monthly expenses.  One payment at the end of the month, easy to track, no problem.

Closing a sale results in me paying off the balance in its entirety at which point I realize my profits and recover my operating cash.  Due to the recent (pardon my french) banking bullshit that we the little guy have been forced to feel through the disgusting practices of some extremely greedy people at the top, many of us are no longer able to pay the very bills that we need to pay in order to continue making money.  How can a credit card company cut off my purchasing power…the very line of cashflow that I need to generate income?  Well, they can and they do.  But that’s just one part of the story.  The interest rates that credit card companies charge are yet another piece of this idiotic puzzle.

Interest Rates are Criminal

After a long phone call, I was able to get my rate reduced from a criminal 29.99% to 12%.  Others have not been so successful.  One colleague recently called the credit card company to have her rate reduced and instead, they eliminated 90% of her purchasing power.  They dropped her from $20,000 to $2,000, and didn’t even giver her a rate reduction.  I was rather shocked to find that I had been increased to a criminal rate.  I’m tempted to never pay them back at all, but that would not be the right thing to do.

I’m not sure how I managed to get the rate reduced, other than being good at sweet talking the operator, but I did get it reduced, and thankfully, they also went back 6 months and credited me the difference of 29.99% and 12% because I had overpaid unjustly.  Missing a payment by one day will screw you so hard your head will spin, and they usually just apologize at you and say there’s nothing we can do.  “You’ll have to contact Experian,” they say.  “They’ll be able to show you why we made the decision.”  No maam, they will not.  They will not be able to show me why your credit card company decided to limit my purchasing power.  They will not be able to show me why my rate cannot be reduced to retain my future business.  All they can do is show me my credit history.  They have no idea how to read your mind anymore than I do.  I have no idea what your executives were deciding when they made the call to cut off my cashflow.

$1000.00 at 30%

I’ve written about this before, but there’s no doubt that it needs to be known by all who use a credit card (which I will reiterate takes extreme financial discipline, which most people don’t have.)

A card with a balance of $1000.00 usually requires only a minimum payment of $15.00/month.  You can buy that new laptop for only $15.00/month right?  Not so fast.  Let’s assume you pay $25.00/month instead of the minimum of $15.00.  At 29.99% annually, you will be paying somewhere around $4300 for that $1000.00 laptop and it will take you 15 years to pay it off. CRIMINAL!  If you fall into this trap once, that’s okay, get yourself out as fast as you can.  If you fall into it more than once, you’re an idiot.

The real lesson to learn about finances is that when you owe someone money, you become enslaved to them and the freedom to experience life as you were designed to experience it is virtually eliminated.  If you can, at all costs, and all interest rates, avoid credit cards entirely.