William Blackburn

Spin....Florida unemployment rate

The 17.5% unemployment rate reported today (which includes those who have stopped looking and those forced to work part time) is really much higher in Florida. In the Tampa Bay area we have lately been about 2% higher than the US rate in general. Additionally, we do not account for the illegal workers that made up a significant part of our economy in agriculture and building...the unseen 800 pound gorilla in the middle of the room... whose consumption of goods and services is a shadow of its former self. (And whose sales tax revenue is greatly missed). They have gone for greener pastures.

I am reading a book called Busted: Life inside the great mortgage meltdown, by Edmund L Andrews.

This book is an interesting study behind the scenes about one man and his personal life experiences during the real estate bubble. The writer is especially interesting in that he is an economic columnist for the "New York Times".

He goes behind the theoretical and tells of his own family relationships and the ups and downs during this time. He describes the process of buying in a sellers market and his relationships with his real estate agent and mortgage broker . He describes experiences...family pressures, the motivation behind decisions that seemed not so crazy at the times.

The writer does not blame someone else for his mistakes but points out the environment that led him to be "Busted". A good read.

As short sales and other distressed property sales are dominating the real estate market, the more than 1 million Realtors in the US are scrambling to cope with this phenomenon.

Short sales are extremely labor intensive for Realtors listing these properties. Even after property is listed and the property is contracted to be sold at an agreed upon price (where buyer and seller agree in writing), the seller's lender must approve the sale at less than the mortgage balance. Only a very small percentage of short sales attempted eventually close in spite of all the parties to the contract wanting it to happen. The main reason for this is that there are so many steps to take which almost always lasts for months. Buyers become impatient, sellers are already financially devastated, banks do not like taking losses and Realtors are not paid for many months, if at all, and banks often want to insist that Realtors cut their commissions to reduce the bank's loss.

Prior to this time the listing agent and the property owner work together to put together the "package". This package is essentially proof that the lender is better off allowing a short sale than foreclosing on the property, which would end up being owned by the bank, who must then resell it. This package includes tax returns, financial statements, bank account statements, proof of income and expenses, detailed information on the property and proof of its current value. The package and its contents need to be frequently updated.

The bottom line is that although accomplishing a successful short sale is a good deal for all parties (buyer, seller and lender), it takes a lot of attention to detail, lengthy negotiation between the parties and the financial ability of the listing Realtor to defer any and sometimes all income that is required to make a short sale real estate practice attractive.

The Distressed Property Institute is educating Realtors rapidly. So far 10,000 Realtors have achieved the CDPE designation (Certified Distressed Property Expert). This compares to only 1,200 at the end of 2008. We expect a growing part of our practice to be listing property where the seller has been referred to our company by other Realtors because we specialize in this difficult and lengthy process.