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Is the Media Trying to Ruin My Life?......

by Jeremy Larkin

I guess they may not MEAN to ruin our lives.....they just want to sell papers, TV time, increase Internet viewing. But they are ruining our lives anyway.

If you don't belive me, consider the following "incident" experienced by one of my Seller clients this week:

  • They listed their home with us a few months back and after a relatively short time on market, we placed the property "under contract" with a ready, willing and able buyer to close yesterday, October 9th.
  • They day before closing, October 8th, all parties were ready to go with a fully approved loan, documents waiting at the title company. My clients had moved 90% out with the exception of their beds to a rental home.
  • Mid morning the Buyer's agent recieved the following letter from their buyer: 

My husband and I have been watching the news very closely and it seems just too risky to buy a home. We know that the appaisal came in above the purchase price but we heard that houses went down 16% yesterday making this purchase worth way less than the price before we even buy it. For this reason I do not want to go through with buying the home."

Wow.

THE OUTCOME: Since (like most normal people) the Seller couldn't afford to pay both rent and a mortgage payment, they are now moving BACK in to their home without the proceeds they really needed to pay off some debt, etc. The Buyer missed out on a great buy on that home (truly), neither agent got paid, nor did the mortgage lender, nor did the title company, and the profit that everyone DIDN'T make DIDN'T go back into the economy.

Oh and by the way, houses didn't fall 16% in 1 day, nor have they ever done so in 1 single day, but the Buyer thought they heard that and the rest is history. That's a funny statement though.

As if the Country isn't already facing a huge economic crisis, the Media compounds the issues 40x over by printing headlines such as:

  • "Is your Wall Street Money Safe?" (CNBC.com) - How do you think that headline affects the markets? Do you think many people ran to their broker and said "CASH OUT!!"?..I'll bet so.
  • And my personal favorite: "Credit Markets Frozen!" (just about every news outlet in the world....) - How many totally able people may decide to not even try to make a home or other purchase by hearing that? "What's the use?" they probably say...

That's strange about the credit situation..my credit card still works, my home equity line is still completely open to me and people continue to buy and sell homes, cars and everything else under the sun right now.

Let's take this 1 step further. Been to Wal-Mart lately? How about In-N-Out Burger? What did you find? TONS of people spending money, that's what. People washing their cars, shopping at Kohls, fueling up, going to movies, going to DISNEYLAND!! (I LOVE Disneyland). I was in Costco today and the place was ABSOLUTELY PACKED.

The world of commerce has not stopped turning as near as I can tell.

Look, I DO NOT have a crystal ball, but many of us may be wishing we had lots of cash to buy up real estate, stocks, diesel trucks, whatever during this period. There are GREAT buys in the market on alot of items.

The world has not ended. On the contrary, it is actually revolving quite normally in so many regards. But we DO face some tough challenges in the short term. You may just have to unplug the news and stop reading the paper to survive this moment in time.....I know I have.

What does $700 Billion Rescue Bill mean for Real Estate?

by Jeremy Larkin

Am I the only person who has been asking this: "What in the world does this $700 billion bailout MEAN?!?!?"

I have been patiently waiting for some kind of summary that actually makes sense (and that a lowly Realtor can understand) on this $700 Billion bailout deal. The National Association of Realtors released a fairly concise (2 pages) summary this morning which can be found at the link below:

 

(click here) Summary of Rescue Bill 

I am not even going to TRY to explain it all in this post, but I would be more than happy to discuss it in the comments area below, or by phone.

I think the real key idea for the real estate world is that the bill had provisions for the Government to buy "troubled" loans from the banks, which would in turn give the banks short term cash to #1 - stay in business so Buyer can #2 - continue to get loans. 

The Government would, in turn, be able to not only renegotiate interest rates with troubled borrowers, but potentially LOWER their princpal balances based on current market values. That is a bizarre thought, isn't it?

SOME IMPORTANT QUESTIONS:

1. Should troubled homeowners be able to get loan balances lowered while those who aren't in trouble don't? What do you think?

2. Is all this stalling just so McCain & Obama can avoid looking like idiots if the bill fails and they are elected President?

3. Does Nancy Pelosi just generally tick you off every  time she opens her mouth, or does she bring back warm memories of your childhood when your mother scolded you for using a cuss word?

 

 

What I do know is this: I SHUDDER to think of a world where credit was no longer available. At first I was prone to only think of home loans and credit cards, but now I realize that this would extend to student loans and more...YIKES! 

AT THE SAME TIME, we continue to see Buyers obtain financing for home purchases without jumping through (in my perspective) too many proverbial hoops, so it is hard for me to really believe that credit is on the brink of totally drying up.

Stay tuned......

Cheesecake Factory makes the "Worst Company" list...I'm offended.

by Jeremy Larkin

I thought this was interesting. Calpers has been naming the worst companies since 1992. Fortunately their worst company picks WON’T put my beloved ‘Avocado Eggroll’ in jeopardy, but certainly isn’t helpful to the company’s stock.

 

On this year’s list? Cheesecake Factory, (OUCH!), La-Z-Boy, and many, many others.

 

According to Calpers, one of America’s biggest Pension funds ($235 Billion Big), the companies on this list need to improve their stock performance and governance practices.

California Public Employees Retirement System, also named insurance brokerage firm Hilb Rogal & health-care equipment supplier Invacare, and home-building group Standard Pacific to its most recent Focus List.

Making it onto Calpers' annual list is generally considered to be bad for a company's image and business, industry consultants have said, and top executives try to make quick changes to avoid being embarrassed a second time by the fund.

Here is a link to the MSN video that I first saw about this list: Calpers Worst Company Video.  Evidently they contact these companies “discreetly” in advance of publishing the list and tell them “hey, you need to clean up your act on some issues.” Some improve, and others don’t and end up on the list.

Last year the pension fund named insurance broker Marsh & McLennan and drug company Eli Lilly, but they made enough positive changes to escape being singled out again.

Personally, I couldn’t care less about their stock performance as long as they continue to serve those absurd portions and create one of the best products I’ve EVERY put into my gut.

Moral of the story: STAY OFF of any “worst” list of any kind.

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Photo of Jeremy Larkin - The Larkin Group Real Estate
Jeremy Larkin - The Larkin Group
Keller Williams Realty
50 E 100 S, Suite 300
St. George UT 84770
435.767.9886
Fax: 435-359-5085

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