Sandra Nickel

John Herzog, Alabama's first Certified Mortgage Banker, is a finance wizard, world class trainer and friend of many years. He has always had the ability to take the most complex concept and restate it in terms that I and others can easily understand.

And once again he's done it: an intelligible explanation for the current state of affairs in the world of high finance. Thanks, John!

"Trying to guess which way interest rates will go in circumstances unprecedented since the great depression is impossible so let's see if we can describe what is going on in laymen's terms to allow each of you to decide for yourself if the government is taking the right course of action.

Banks and investment banks have a lot of delinquent (and potentially delinquent) loans on their balance sheets. These financial institutions are required to hold money (capital) in reserve against the potential of the future losses of the bad loans to be considered solvent. The money held off the market then is lost to the market as capital for future lending. The higher the delinquencies the more capital held out of the market until finally there is no new money for new loans (lack of liquidity). That is about where we are as no new capital is flowing into the mortgage markets.

Potential solution: Issue each of these institutions a Waste Away Bin with two wheels to roll it to the Wall Street curb. Allow them to put all their bad debt in the bin and put it on the curb for the government to come pick it up for some small percentage of its value. The money the government pays these institutions for their bad debt when they drive the garbage truck down Wall Street will be just enough to keep the institution afloat. The real value however will be to free all that capital being held in reserve against future losses to inject into the credit markets (all be it under much tighter credit guidelines and regulation).

Next the Federal Government takes all the garbage back to the dump and tries to make compost out of it so they can sell it later for more than they paid for it so the tax payer does not lose money. It remains to be seen if this step could be accomplished, but it is believed the losses will not be as great as the market currently expects and consequently later the value of these bad assets will rise.

Sounds like a good solution, but there are a lot of variables that will determine if in fact it will work:

1. Will the cost of buying the bad assets drive the dollar down, cause inflation to go up, and make rates rise?

2. Will lenders find enough "qualified" borrowers for their new money under the tighter regulations to stimulate the housing market back into prosperity and avoid recession?

3. Will the government be able to work with the troubled assets (loans) it buys enough to resell them at a profit, or will this "bail out" cost the taxpayer a bundle and be a drag on the economy for decades? To use Barak Obama's phrase, the answers to these questions are above my pay grade and I am glad some of the best financial minds in America are focused on the problem. For me, I am betting they'll work it out."

John Herzog CMB Vice President/Regional Manager
New South Federal Savings Bank
JHerzog@NewSouthFederal.com

I am - scheming to jump-start our business despite phone silence.

I think - it's just like 1980-82, and a lot of us blew through that and are STILL here!!

I want - to focus on all things positive...and there are so very many

I have - a warm bed to sleep in and people I care about and who care about me. Who needs more?

I wish - I could talk to my father about the economy. Should have buried him with a microphone!

I hate - negativity and all the ism's.

I miss - my mother (died 6/2/97) and father (died 6/18/84) terribly. They were fine and wise.

I fear - failing my team. They are such a gift to me and to the industry.

I feel - apprehensive and excited at the same time.

I smell - little...allergies keep me stuffed up most of the time.

I search - daily for inspriration to begin anew and inspire those around me.

I wonder - what crazy new technology will make me feel out of it tomorrow!

I regret - not having appreciated my 4-year full scholarship to Washington University in St. Louis

I love - being challenged and stimulated.

I care - deeply for people and want desperately to make a difference while I am here.

I always - bite off more than I can chew. I'm insatiable at accepting challenges.

I am not - organized and I AM productive.

I believe - I can achieve anything as long as I am willing to pay the price.

I dance - only in my dreams. A bad ankle sidelined me years ago.

I sing - badly but loudly when the occasion requires.

I write - pretty darned good ad copy.

I win - at the game of staying up.

I lose - at the game of sucking up.

I listen - consciously and attentively. One learns so much more with one's mouth shut!

I can usually be found - at my desk or at a Midtown Montgomery community meeting or event.

I'm scared of - snakes and helplessness.

I read - VORACIOUSLY! If it has print on it, I read it!

I forget - most anything that's not written down.

I just - talked with a good prospect about buying a home in Montgomery.

I am happy about - my many, many blessings...far more than I deserve!

As most owners of Montgomery real estate have realized by now, this is not the ideal time to try to sell a house. With a struggling economy and negative media surrounding the housing market, more and more homes are staying on the market for longer and longer as fewer buyers are out making offers. So what should you do if you are in a situation where you need to sell your home now? The Wall Street Journal offers the following tips that I hope you'll find helpful:

1. DON'T WAIT AROUND. Even in the better housing areas, it's taking a long time to sell houses; so, don't try to sit out the market. That's what hundreds of other timid sellers are doing, each of them hoping -- somehow, some way -- that hanging on the sidelines will improve prices and, ultimately improve the chances of a successful sale. It won't. If you want your place sold, the best way to make sure that happens is to put it up for sale.

2. FIX IT UP AND CLEAN IT UP. Buyers are taking your house out on a date. It has to make a good impression. You don't have to (and shouldn't!) spend a lot of money, but ensure everything is in good working order. As you get closer to the date that the house is actually on the market, start moving out by decluttering - buyers don't want to see a house filled to the rafters with other people's things.

3. PRICE IT CHEAPLY. Don't fight the market by trying to price your house at bubble-era levels or by factoring in all those improvements you made. In today's market, your best bet is to set a realistic, salable price on day one. Don't let the house hang around on the market as you gradually lower the price. Forget what you think the house should be worth or what it was worth three years ago. That's not what it's worth today.

4. HIRE A TOP REAL-ESTATE AGENT. Get the best listing agent you can find. When everything was selling before it even hit the market, of course, you didn't need the best. Sellers of higher-end properties may be able to negotiate a lower commission percentage, but this is no time to quibble over a couple of percentage points. Also, offer the agent a big bonus if he or she sells the house in 30 days or at your asking price. Offer other agents bonuses if they bring in the ultimate buyer.

5. PROMOTE. PROMOTE. PROMOTE. The agent should pay the usual marketing costs, but you should be prepared to pony up for extras, especially if you insist on more expensive or untraditional promotions. Make sure your house is on the leading real-estate Web sites; Trulia, Zillow, Cyberhomes, Eppraisal and Realtor.com are some of the top ones.

Beyond that, get really creative. Advertise in corporate newsletters and intranet listings. Check in with local relocation firms that help transferring corporate executives find new homes. List the house on eBay. Put it on Craigslist. Put it in your church bulletin.

6. PLAY THE BANKER. As bad as things are, there's one big factor in your favor: the tight credit market. If you have no mortgage you have to pay off, your strongest selling point might be your ability to finance all or a substantial part of a buyer's purchase.
You're a lot more flexible than a bank that has the Federal Reserve looking over its shoulders, so you might even be able to charge a higher interest rate than a commercial lender as well as command a higher sale price.

7. TAKE THE OFFER. If any qualified buyer comes in with a reasonable offer, be prepared to accept it. Negotiate, of course, but recognize that the buyer has a lot more clout than you do. Your house, as wonderful as you think it is, is worth only as much as someone is willing to pay for it.

If you are considering selling your Montgomery real estate, let my experience work for you! Please call me at 800-428-5239, visit HatTeam.com, or request a complimentary market valuation of your home.

Existing-home sales rose from the first quarter in 13 states, largely from buyers responding to discounted home prices, according to the latest quarterly survey by the National Association of Realtors®. Nearly one-quarter of metropolitan areas showed rising home prices in the second quarter from a year ago, with greatly mixed conditions continuing around the country.

In the second quarter, 35 out of 150 metropolitan statistical areas¹ showed gains in median existing single-family home prices from the second quarter of last year, while 115 had price declines. NAR's track of metro area home prices dates back to 1979. NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said foreclosures are distorting the price data. "In many areas with large concentrations of foreclosure sales, homes are being purchased below replacement cost values," Gaylord said. "Many buyers with long-term expectations are getting exceptional value in the current market. Once the inventory is drawn down, price pressure will return because the costs of construction are rising - today's buyers are very well positioned to build wealth over time." National Association of Realtors®.

Let's take a look at the sales statistics for July 2008 to see how the Montgomery AL real estate market looks:

In Midtown Montgomery, pending sales decreased 18% in June 2008, compared against June 2007. Likewise, the number of sold listings dropped 21%. The average sales price decreased 9% to $131,446, and homes remained on the market for an average of 7 fewer days this June.

Again, as Gaylord said and as these statistics show, real estate prices are declining in some areas, even within the same city For the latest Midtown Montgomery real estate market conditions in your area, please call me at 800-HAT-LADY or visit HomesForSaleInMontgomeryAlabama.com.

Information is provided by the Montgomery Area Association of Realtors and is deemed accurate but not guaranteed.

The Montgomery Real Estate Podcast

August 2008: This month's edition covers Montgomery real estate market activity and then we will discuss today's Short Sale programs. Features special guest Terri Murphy of US Learning. download podcast mp3 file | subscribe to podcast feed

Also read:

Montgomery Real Estate: Short Sale Tips
Montgomery AL Real Estate Podcast June 2008
Montgomery AL Real Estate Podcast May 2008

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