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Warren Buffett Bets Big on US Housing Market

by Bruce Ailion
Warren Buffett, arguably the world’s most famous investor, is looking to take a $3.85 billion bet on a US housing market recovery.

His firm Berkshire Hathaway Inc has submitted a $3.85 billion bid for the mortgage and loan business of bankrupt Residential Capital LLC.
 
Buffett is taking a “picks and shovels” approach to his investment in a US housing recovery by buying firms he believes will benefit strongly from an upturn without purchasing real estate directly. He recently bought shares in a large US brick making company.
 
Encouragingly for agents and developers selling US property internationally, the world’s third richest man told CNBC earlier this year that his preference would be to invest directly in residential US real estate if the administration costs were not prohibitive.
 
“If I had a way of buying a couple hundred thousand single-family homes and had a way of managing—the management is enormous—is really the problem because they’re one by one. They’re not like apartment houses. So—but I would load up on them and I would—I would take mortgages out at very, very low rates,” he said.

 

The news on the US real estate market is not consistently positive but foreclosure have fallen on an annual basis for 20 straight months, according to RealtyTrac Inc. 


Inventory is shrinking.  A voice mail replay from a listing agent where a full price offer was made on day one, states, "Thank you for your offer, we received 29 offers on the property and the seller selected a higher offer"

REALTOR vs Real Estate Agent

by Bruce Ailion

John Reilly recently offered this interesting analysis.

Consumers often use the term real estate agent
and Bruce Ailion is an experienced Realtor®
interchangeably. Actually there are differences, even though both are licensed to sell real estate in their respective jurisdictions. REALTORS® must be licensed and belong to the National Association of REALTORS® (NAR) as well as their state and local associations. In addition, they must subscribe to the REALTOR® Code of Ethics

Are the majority of licensed real estate brokers and salespersons REALTORS®?

John reviewed The statistical reports generated by NAR and the ARELLO Digest (Association of Real Estate License Law Officials) and came up with these numbers:

ARELLO Digest: 2,128,709 Active real estate licensed brokers and salespersons In the US

Brokers: 710,216 (brokers and associate brokers) Salespersons: 1,334,589

Unclassified: 83,904 (included in some state totals but not identified as sales or brokers)

NAR Membership (5/31/12): 981,892 (down 3.49% from 5/31/2011 but increase over last month)

The NAR statistics give a clear breakdown of membership state by state along with increases/decreases over the prior month/year. The ARELLO Digest also reports jurisdiction by jurisdiction although the numbers were somewhat hard to work with because the numbers for inactive licensees and firms had to be removed. Also, some of the state counts were prior to 2011.

So, I ask, are the majority of licensed real estate brokers and salespersons REALTORS®? It is close, but the answer is No.

Based on John's unofficial count he estimates 46% of the licensed real estate brokers and salespersons in the U.S. are also REALTORS®.

The cost to be a member of the Local State and National association of REALTORS and voluntary agree to abide by a Code of Ethics and higher standard of conduct costs about $300 to $500 per year.

As an educated consumer, check to see if your representative is a REALTOR or not. If not ask yourself if you should be doing business with someone unwilling to accept a higher standard of ethics and spend a couple of hundred dollars to belong to a trade association that among other important activities supports and protects the rights or real property ownership and polices the industry.

Bruce Ailion,  

RE/MAX Greater Atlanta

An Atlanta Real Estate Expert Serving Clients Since 1979

RE/MAX Hall of Fame – REALTOR Phoenix Award

CRS, CRB, ABR, MSRE, CDPE, CIAS, e-PRO, ESQ

2050 Roswell Road

Marietta GA 30062

404-978-2281  Direct

404-386-3682  Assistant Robin

678-760-6266  Buyer’s Agent Adam

770-973-9700  Office

bruce@locationlocationlocation.com

www.LocationLocationLocation.com

FREE GREAT seminars and workshops in Atlanta

by Bruce Ailion

UPS and Entrepreneur Magazine are hosting their annual awards in Atlanta In January with a number of FREE GREAT seminars and workshops and it is free!! Check out the video of Brenton Hayden, a 25 year old real estate broker, one of the finalists for entrepreneur of the year. Great story great video, worth going to learn about.

http://www.entrepreneur.com/growthconference/index.html?cm_mmc=Growth2011-_-globalatlanta-_-Post-_-120817

Genius Investment Advice

by Bruce Ailion

“Sell when people are buying, Buy when people are selling”

Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”  -Warren Buffet

At the peak of the housing bubble, analysts touted real estate prices had nowhere to go but up.  Economists, bank CEO’s government leaders, most of the majority of the best minds in the world missed the coming biggest collapse of housing values since the Great Depression.  The public: teachers, accountants, bus drivers lined up to buy real estate following the herd mentality - buy because everyone is making money in real estate.   Long term success in real estate has never been based on a get rich quick theory.  Buying property in a down market, holding property long term, prudently managing property, and selling property during periods of market expansion is a time tested strategy for wealth. 

How do we know this is the time of a lifetime to buy?  We have experienced 3 years of economic decline.  Millions of buyers are unemployed.  Financing is extremely difficult to obtain.  Household formation  is at a 40 year low. Interest rates not seen since Truman was president. The nation’s largest seller Fannie Mae and Freddie Mac had 166,787 and 74,910 You can search the available properties on our website respectively, doubling since last year and expected to increase substantially despite dropping prices and offering incentive to move property off their books. Big banks and small banks  are failing in record numbers from growing inventories of non-performing assets; i.e. foreclosed real estate. The directive to bank management regulators, board of directors, and investors is clear; get those properties off your books.

RealtyTrac reports 24% all US residential sales in 2nd quarter were foreclosed homes. The sales price of these homes was 26% lower than the sales prices of non-foreclosed homes. Foreclosure filings were reported on 332,172 You can search the available properties on our website in October 2010. October marks the 20th consecutive month where over 300,000 U.S. homeowners received a foreclosure notice,” said James J. Saccacio, chief executive officer at RealtyTrac. 

Where are the buyers that were rushing to pay sky high prices for real estate a short 3 years ago?  The herd has changed directions, advised by the same economists and pundits who preached sky high prices will never fall.  Today in unison, the economist and pundits are preaching there will be no recovery in rock bottom prices during the next decade.  The big question is will you profit from the today’s depressed market, the rush to sell, the fear of buyers, the pessimistic pronouncements of pundits?

Deeply discounted You can search the available properties on our website are a substantial part of the US housing market today. It appears the bottom is near.  In some areas, despite decades of inflation, properties can be purchase at prices far below their purchase prices in 2000, 1990 even 1980.  If you ever said, “I should have bought ten years ago when prices were low”, the market has given you a second chance.  Today, I am buying properties at prices lower than I sold them for in 1982.  Unbelievable! 

With the record number of foreclosures coming to market, the fire sale of You can search the available properties on our website is expected to continue for 12-24 months.  How do you profit from this perfect storm in US real estate markets? 

First assemble your cash, REO sellers prefer cash.  If this is not an option, obtain full approval for a loan, subject only to the property appraisal from a known, reputable lender. 

Second, assemble a knowledgeable team of professionals coordinated by an experienced Bruce Ailion is an experienced Realtor with experience in REO markets, investor You can search the available properties on our website and superior local market knowledge.  Such a REALTOR will have connections and recommendations for inspectors, appraisers, contractors, insurance providers, attorneys and property managers needed to execute a successful investment strategy. Buying a bank REO is not the same as buying a home from a traditional seller or builder.  Skill and knowledge in this market is critical to protect your interests.

Third, establish price and location parameters.  Determine the types of repair issues you are willing to consider.  Learn and understand the market you are considering; view listed You can search the available properties on our website, view sold properties, and call recent buyers to confirm the returns you expect are being received in the market.  How do trends in this market support your buy and hold strategy?  Will neighborhood and macro trends support your exit strategy when the general economy improves?

Last be prepared to move quickly.  Today’s investors are quick to identify a good buy.  In my market 25% of You can search the available properties on our website are under contract in less than 15 days.  The take away lesson, “You snooze, you lose” 

The biggest mistake new investors make is to waiting for the bottom.  No one can predict the bottom of the market.   Now is the time to buy.  Once the market realizes we are past the trough in values, herd mentality sets in and prices rise sharply.  By then, your easy and best returns are lost.  It is a long known fact, you make your money in real estate when you buy, it is realized when you sell.  Tomorrow’s millionaires are buying real estate today.  Seize the opportunity. 

5 Steps for Getting Ready to Buy

by Audric Stevens n-Financial and Contemporary writer

Step 1. Find a Local Lender You Can Talk To in Person
Local lenders understand your market and know of loan programs that might be beneficial to you.

Check with your lender on any local programs that might help with closing costs or in other ways. Even though the media have pronounced the 100-percent-financing option dead, this is not always the case. Check it out for yourself and then get preapproved for a loan so you know how much house you're able to buy.

Step 2. Be Specific in the Area You Want To Live
Educate yourself. Familiarize yourself with the neighborhoods you're interested in, the taxes and school districts. This not only helps you narrow down your search when you need to move fast, but also helps you figure out potential mortgage payments. Find a home in your desired neighborhoods.

Step 3. Find an Agent Specializing in the Area You Want to Live
This will save you time and effort. Once you've identified a real estate agent, trust him or her to do the job. Agents who are thriving in this challenging market have proven their worth. They have the resources and skills to help you find your next home.

Step 4. Don't Shy Away From Houses That Need Some Work
Just because a house needs some paint or cosmetic fixes doesn't mean it's not a good buy. Most real estate agents have an address book full of trusted businesses they work with to help you fix up your new home. There’s an HUD program known as 203(k) that enables you to fold repair money into a primary mortgage; ask a RE/MAX agent in your market about the program.

Contact me for more information about the 203(k) program.

Step 5. Be Prepared To Act
Sometimes the first home you see is the right one for you. Don't discount it. Remember, good deals still go fast. Take advantage of the electronic tools your real estate agent has to offer. In many instances, real estate agents have access to better information than what you can find in a standard Internet search.

Should I Buy a Home Now?

by Bruce Ailion

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

New $7,500 Tax Credit for First Time Buyers

by Bruce Ailion

The Housing and Economic Recovery Act of 2008 was just signed by President Bush with some amazing benefits for first time homebuyers. Call everyone you know who wants to buy their first home (or who hasn't owned one in three years), this is too good to miss - it's a $7,500 tax CREDIT (not deduction but a credit).

If you have not owned a home in three years, you qualify as a first time home buyer. If you buy a home after April 9, 2008 and before July 1, 2009, you qualify for this credit. Call your friends who just bought a home since April 9th and tell them they may take $7,500 off their tax bill if they qualify. It has to be your principal residence, so rentals do not count.

The tax credit is 10% of the cost of the home, up to a maximum of $7,500. This is not an additional deduction that lowers the amount of income to be taxed, it is a tax credit. In other words, you take $7,500 off your tax bill. But there is a catch; the credit you receive now is actually an interest-free loan that must be repaid.

The loan has no interest, and will be paid back over 15 years. You get the credit on your 2008 taxes, but you start paying it back on your 2010 taxes that are due in 2011, so you get at least two years without a payment. You pay back 6.67% of the credit each year, so for a $7,500 credit the payment is $502.50 per year. If you stay put for 15 years, you pay it off with no interest.

What happens if you sell the house? You pay the balance back at the closing. So, you get $7,500 now, and pay the rest of it back if you make money on the sale of your house. What happens if you do not make enough money when you sell your house? They forgive the rest of the debt.

Other restrictions stipulate that you have to buy your first house in three years before July 1, 2009, not have super high income, not use bond financing and buy anywhere in the US.

If you'd like to learn more about this program, please call me!

Displaying blog entries 11-17 of 17

Contact Information

Photo of The Ailion Team Real Estate
The Ailion Team
RE/MAX Town and Country
2623 Sandy Plains Rd #202
Marietta GA 30066
404-978-2281
678-760-6266
Fax: 404-480-8448

  Council of Real Estate Brokerage ManagersHome

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