VallejoMarketWatch.com

More Millionaire Secrets From T. Harv Ecker...

1. Rich people believe "I create my life." Poor people believe, "Life happens to me."

2. Rich people play the money game to win. Poor people play the money game to not lose.

3. Rich people are committed to being rich. Poor people want to be rich.

4. Rich people think big. Poor people think small.

5. Rich people focus on opportunities. Poor people focus on obstacles.

6. Rich people admire other rich and successful people. Poor people resent rich and successful people.

7. Rich people associate with positive, successful people. Poor people associate with negative or unsuccessful people.

8. Rich people are willing to promote themselves and their value. Poor people think negatively about selling and promotion.

9. Rich people are bigger than their problems. Poor people are smaller than their problems.

10. Rich people are excellent receivers. Poor people are poor receivers.

11. Rich people choose to get paid based on results. Poor people choose to get paid based on time.

12. Rich people think "both." Poor people think "either/or."

13. Rich people focus on their net worth. Poor people focus on their working income.

14. Rich people manage their money well. Poor people mismanage their money well.

15. Rich people have their money work hard for them. Poor people work hard for their money.

16. Rich people act in spite of fear. Poor people let fear stop them.

17. Rich people constantly learn and grow. Poor people think they already know.

Did you buy the book yet?  I highly recommend it.

Preforeclosure TeleClass November 28th 7PM

Make sure to check out the upcoming teleleconference on "How to Buy Preforeclosure Homes 10% Below Market Value" next Wednesday November 28th at 7pm.  Click the link to the left to register and get the call in information.  I will be reviewing the various statees of foreclusre and the buying process from preforeclosure to trustee sale auctions.  This is one call that should not be missed!

Foreclosure Basics

No matter how you look at it, the business of buying and selling properties at or near foreclosure is not a happy one. However, it can be a mutually beneficial transaction for a willing investor and a distressed home owner.

Foreclosure is the flip side of the American dream of homeownership.  It's a home owner's worst nightmare, and can result in a lasting and devastating blow to personal finances. Foreclosure can wipe out the equity in a home. It can destroy personal credit for years and could mean uprooting a family from their neighborhood, friends, family and schools.

The Upside to Foreclosures

However, for a shrewd, and hopefully benevolent investor, Purchasing foreclosed properties can be a terrific real estate deal.

The hope is that both parties to the transaction win by profiting from a timely transfer of title -- which produces a good investment for the investor and divestment for the home owner -- and it might spare the home owner's credit rating before things get any worse.

The Downside to Foreclosures

Profiting from foreclosures isn't the no-brainer many assume it to be -- for each success story there are likely five horror stories. Every real estate transaction involves risk. While investors with the very best of intentions can help to reduce their risk, they cannot completely eliminate it.

The Three Types of Foreclosures

There are three ways to acquire distressed property, based on where the property lies in the foreclosure process. The three stages are as follows: pre-foreclosure, foreclosure and post-foreclosure.

• Pre-Foreclosures

  In the pre-foreclosure stage, investors will likely be able to do the most good for the distressed homeowner and for themselves. Pre-foreclosure is where further damage to the homeowners credit rating can be forestalled and the home may be transferred at a mutually-agreed-upon price before it is necessary to get the lender involved. The best potential leads to locate a property at this stage may come from attorneys, accountants, real estate agents or through business associates and friends.

• Foreclosure Stage

  In the next phase, when a property is at the foreclosure stage, the best way to identify a potential property is through the County Clerk's office. Find out where the notices of default are filed and determine how to sort through the general index to discover pending foreclosure sales. You may also be able to request that your address or e-mail address be placed on an advance notice list or a list of pending defaults. Title insurance companies may also be of assistance in this area by providing recorded information in exchange for the expectation of future business.

  The foreclosure process itself will vary from one state to the next, depending on whether it is a title or lien state, which determines whether a judicial or non-judicial form of foreclosure is involved. Judicial foreclosures pertain to mortgages, rather than deeds of trust, and take significantly longer to complete.

  Non-judicial foreclosures pertain to deeds of trust where a third party, called a trustee, handles the entire process in a matter of two to four months after a borrower has defaulted and stopped making payments. Once the property passes through either the judicial or non-judicial phase, it is then ready to be sold at auction to the highest bidder.

• Post-Foreclosure

  And last, at the post-foreclosure stage, the lender has already taken control of the property. The home is then in the possession of the lender's REO (Real Estate Owned) department, or in the hands of a new owner or investor who purchased the property at auction.

  Refer to the foreclosure notice to determine the name of the lender as well as the balance owed on the mortgage. Lenders are typically extremely willing sellers, because an REO on the books is an obvious sign of having made a poor lending decision. Both the overhead and losses involved with an REO -- reflected in both the added reserves a lender must maintain as well as any potential property management fees incurred -- means the bank is likely a willing negotiator.

  If the property ends up in the hands of a private investor, rather than with the lender, you may still be able to make an offer either on your own or with the help of a real estate agent. However, the price at this point may not be rock bottom.

A key investment decision to make is where to enter into the foreclosure process. It is critical that you identify one of the three aforementioned stages and become an expert in that particular process, which will help you to achieve the most success at becoming a long-term investor of distressed properties.

Green Home Tips

1) Turn down the thermostat. Lowering it by just one degree can reduce heating energy costs by about four percent.

2) Use ceiling fans in the summer AND winter. By reversing the direction of the blades, warm air is pushed down, helping to keep rooms warm in winter.

3) Conserve energy by purchasing major appliances with an Energy Star rating. Compared to a 1990 model, an Energy Star-qualified refrigerator would save enough electricity to light a home for more than four and a half months.

4) Repair leaky fixtures: one drop per second from a leaky faucet can waste as mush as 10 gallons of water each week.

5) Install low-flow showerheads, faucets, and toilets. Low-flow faucets reduce water consumption and the cost of heating water by as much as 50 percent; using a low-flow toilet can save Americans 2.1 trillion gallons of water and $11.3 million nationwide every day.

6) Choose carpeting, rugs, window treatments and other textiles made from natural fibers, such as cotton or wool, which are untreated and free of toxins, such as pesticides or chemical cleaners.

7) Ask for flooring products made from rapidly renewable resources, such as bamboo. Bamboo is one of the fasted growing plants in the world, requiring no replanting and little fertilization or pesticides.

8) Select solid woods harvested from sustainably-managed forests, when possible, for furniture or cabinetry, rather than pressed woods or composites that may contain formaldehyde or other chemicals that may be toxic and hazardous to your health.

9) Eliminate waste by choosing products that are biodegradable or recyclable. Consider the “lifecycle” of furnishings and accessories before purchasing: Are they made of materials that can be reused or recycled when the item eventually wears out or is no longer needed?

10) Recycle packing and shipping materials from any newly purchased items, and safely dispose of paint cans and other containers with contents that could potentially contaminate the ground or water supply. ::National Building Museum

(image copyright Keith Stanley, 2002)

How the Subprime Mess Helps You in Today's Real Estate Market

You may have been hearing a lot of news about the mortgage markets, real estate and Wall Street lately and I just wanted to shoot you this email to let you know what all this can mean to you...

The stock market has been fluctuating more than usual recently based on concerns that institutions invested in Sub-prime loans are hurting as a result of high delinquencies and foreclosures.  There is speculation that the mortgage delinquency problem may also be spreading into prime loans as well.  The dramatic ups and downs of the market are making investors nervous and have some politicians calling for Fannie Mae and Freddie Mac to buy these loans from struggling lenders.  Oversees markets are beginning to feel the effects too.

However, every cloud has a silver lining...

What this means to you the home buyer

Underwriting guidelines are getting more stringent. Simply put, one needs now to prove their income and may need to put 3-5% down. However,  zero down payment is STILL available!  Imagine that... having to actually verify your income and assets....kind of a make sense thing. 

Rates have risen over the past two weeks; yet, a mortgage can still be obtained in the 6-7 percent range - very low by historic standards. It is unlikely the Federal Reserve will raise rates in September.  In fact, CNBC was reporting this morning that the Fed is likely to cut rates...we shall see...

As a result of a return to normal underwrting standards many buyers are having a harder time qualifying. Consequently, home values have dropped across much of the area, making this the best buyers market seen in years!   Truly, you can have the pick of the litter when looking at homes and gain a variety of seller concessions.

Mistakes Buyers Make

1. Buyers don't clearly understand the roles and duties of real estate licensees, especially who represents whom in purchase transactions, and may wrongly misinterpret or rely on a licensee's actions as representing the buyer's interests alone.

2. Buyers may innocently disclose confidential and material information about their buying needs, financial abilities and negotiating strategies to sellers and their agents, especially when not aware of the roles of the licensees involved in a transaction.

3. Buyers think that sellers pay real estate commissions as well as other closing expenses and seller concessions.

4. Buyers think mortgage companies and appraisers protect and promote the best interests of the buyer.

5. Buyers fail to understand how critical it can be to carefully design contracting strategies and techniques in order to better negotiate with sellers and their agents.

6. Buyers don't appreciate the benefits they gain when they are entitled to receive the undivided loyalty and trust of the agent, and are usually uninformed about the service and loyalty limitations inherent with an intermediary, appointed licensee, dual agent or other limited service providers.

7. Buyers minimize the effect of competing buyers when preparing or negotiating purchase offers.

8. Buyers are usually unaware of the importance of personally attending and conducting thorough and independent physical property inspections, environmental audits and separate property appraisals as a condition of the home purchase.

9. Buyers do not comprehend the important value relationship between real estate services offered or provided and compensation obligations.

10. Buyers fail to recognize the long term value benefits of preserving and/or enhancing the buyer's equity position.

When Buying a Home is a Good Idea

The Best Investment

As a fairly general rule, homes appreciate about four or five percent a year. Some years will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region.

Five percent may not seem like that much at first. Stocks (at times) appreciate much more, and you could easily earn over the same return with a very safe investment in treasury bills or bonds.

But take a second look…

Presumably, if you bought a $200,000 house, you did not pay cash for the home. You got a mortgage, too. Suppose you put as much as twenty percent down – that would be an investment of $40,000.

At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $40,000. Your annual "return on investment" would be a whopping twenty-five percent.

Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase.

Your rate of return when buying a home is higher than most any other investment you could make.

Income Tax Savings

Because of income tax deductions, the government is subsidizing your purchase of a home. All of the interest and property taxes you pay in a given year can be deducted from your gross income to reduce your taxable income.

For example, assume your initial loan balance is $150,000 with an interest rate of eight percent. During the first year you would pay $9969.27 in interest. If your first payment is January 1^st, your taxable income would be almost $10,000 less – due to the IRS interest rate deduction.

Property taxes are deductible, too. Whatever property taxes you pay in a given year may also be deducted from your gross income, lowering your tax obligation.

Stable Monthly Housing Costs

When you rent a place to live, you can certainly expect your rent to increase each year – or even more often. If you get a fixed rate mortgage when you buy a home, you have the same monthly payment amount for thirty years. Even if you get an adjustable rate mortgage, your payment will stay within a certain range for the entire life of the mortgage – and interest rates aren’t as volatile now as they were in the late seventies and early eighties.

Imagine how much rent might be ten, fifteen, or even thirty years from now? Which makes more sense?

Forced Savings

Some people are just lousy at saving money, and a house is an automatic savings account. You accumulate savings in two ways. Every month, a portion of your payment goes toward the principal. Admittedly, in the early years of the mortgage, this is not much. Over time, however, it accelerates.

Second, your home appreciates. Average appreciation on a home is approximately five percent, though it will vary from year to year, and in some years may even depreciate.. Over time, history has shown that owning a home is one of the very best financial investments.

Wealth Building and Retirement Planning Seminar for Home Owners August 7th, 7-9PM

My sister-in-law and her 5 year old son are visiting for two weeks.  It has been a while since I have been around a child so young for so long.  Half of the time, I am calling my nephew my son’s name or worse, the dog’s.  He just smiles patiently at me and giggles.  “You mean Danny” he says.  I nod and say, “Yes, Danny, try not to grow up as fast as my other two kids…childhood is precious.”  Indeed it is…

Of course as, adults we don’t have the same luxury of time as children do. Remember when a day lasted forever?  Well, the next best thing to childhood is supposed to be retirement: the time we hold off into the future that should be filled with peace and tranquility, just like Danny’s days are.  Yet, many of us have barely begun to grapple with the financial issues and planning that is required to ensure a secure and prosperous retirement.

According New York University economics professor, Dr. Edward Wolf, among older households – those headed by people aged 47 – 64 years of age; fewer than half have employer sponsored pension plans, down two thirds from 20 years ago.  Dr Wolf also states that 40% of households headed by someone between the ages of 47 – 64 will not be able to replace even half of their income once they stop working and nearly 20% will have incomes below the poverty level. Moreover a 2006 study commissioned by the U.S. Chamber of Commerce shows almost 30% of those people currently in the work force have less than $10,000 saved for retirement and over half have less than $100,000 saved for retirement. 

Fortunately, I have teamed up with a terrific Financial Advising and Retirement Planning Company that is offering a groundbreaking seminar that could potentially double your retirement income, tax free, using just your current resources and income.  Douglas Andrew, author of Missed Fortune 101 and the Last Chance Millionaire, published by Time Warner Books, will be speaking at the Pleasanton Hilton Hotel on Tuesday August 7^th from 7:00PM – 9:30PM.  This seminar costs $99.00 per person.  However, if you call my office by Friday, July 27^th, I will provide you and your guest a complimentary ticket.  Because of my close working relationship with Mr. Andrew’s TEAM members, I can also offer tickets to your friends and co-workers, but only until July 27^th!

Please call my office at 707-649-5116 to reserve your seat.  We will be meeting at my office at 5:30PM in order to arrange car pools – you don’t need to drive! Please try and get work off early - it could be the difference between not knowing what the future holds and establishing a path to financial freedom. I look forward to seeing you August 7^th!

Writing An Offer: Concerns About the Property

Disclosures

Although you have toured the property, looked at the walls and ceiling, turned on the faucets and played with the light switches, you have not lived in it. The seller has years of knowledge about his or her home and there may be some things you want to find out about as quickly as possible. For this reason, you will require certain disclosures as part of your offer.

Basically, you want the seller to disclose any adverse conditions that may have a substantial impact on your decision to purchase the home. This would include any problems with the house, whether the property is in a flood zone, a noise zone, or any other kind of hazardous area.

If you have an agent representing you, this is almost automatic, but many states do not require individuals selling their own home to provide you with this information. Often they do not require banks selling foreclosed property to provide these disclosures, either. Obtaining these types of disclosures should always be a part of your offer, and time is of the essence.

Condition of the Property

The last thing you want when you assume possession of your new home is to find it in a total mess. Therefore, you should make it clear in your offer that certain minimum standards are required. If you do not, you might find out the seller or neighbors have begun using the back yard as a trash dump, or something worse – and you would not be able to do anything about it.

Some of the requirements you might want to include in your offer are that the roof does not leak, the appliances work, the plumbing does not leak, that there are no broken or cracked windows, the yard has been kept up, and any debris has been cleared away.

Home Inspections

Besides appraisal and the termite inspection, you should also have a professional go through the house and seek out potential problems. Of course, you will have inspected the home, but you are not used to looking at some things that a professional will find. Even if they are not things the seller is expected to repair, at least you will have foreknowledge of any potential problems.

The seller will want this inspection performed quickly, so that you can approve the results and move forward with the purchase. Once you receive the inspection, you will want to allow yourself sufficient time to review and approve the report. If you do not approve the report, you may negotiate with the sellers on which repairs should be performed and who should pay for those repairs. Otherwise, you can cancel the purchase without penalty, provided you have included timetables in your offer.

Allow a maximum of ten to fifteen days to receive the report and five days to review it.

Final Walk-Through Inspection

Before closing, you will want to revisit the property to ensure it is in the condition you have required in your offer, and to inspect that any required repairs have been performed. You should do this no sooner than five days before you intend to close. Make sure this right to do a final inspection is included in your offer to purchase the home.

How Market Conditions Affect Your Offer Price

A hot market is a "seller’s market." During a seller’s market, properties can sell within a few days of being listed and there are often multiple offers. Sometimes homes even sell above the asking price. Though most buyer’s want to get a "deal" on a home, reducing your offer by even a few thousand dollars could mean that someone else will get the home you desire.

A slow market is a "buyer’s market. During a buyer’s market properties may languish on the market for some time and offers may be few and far between. Prices may even decline temporarily. Such a market would allow you to be more flexible in offering a lower price for the home. Even if your offered price is too low, the seller is likely to make some sort of counter-offer and you can begin negotiations in earnest.

More often than not, the market is simply "steady," or in transition. When a market is steady, no real rules apply on whether you should make an offer on the high end of your range or the low end. You could find yourself in a situation with multiple offers on your desired house, or where no one has made an offer in weeks.

Transition markets are more difficult to define. If the economy slows unexpectedly, as it did in the early nineties, people who buy on the high end of a seller’s market (like the late eighties) could find their home loses value for several years. So far, no one has proven reliable in predicting when markets change or how good or bad the real estate market will become.