"Why people are losing their homes and pretty much everything they've got..."

I've noticed something very similar between all my friends who are having a hard time and working very hard just to make ends meet. They have a lot of bad debt.
I'm amazed at how badly these people use money and how they think about it. I know money doesn't buy happiness, but it does buy food, shelter and water..... so unless you plan on not having any of this, then I suggest you start thinking about how you use your money.

I was at a car dealership trying to buy a truck. I asked if they were doing any zero percent financing and here's where I got upset.... and what triggered the need to write this blog. The guy ran my credit and came back with financing options. He showed me a paper with a payment plan and said, oh you have great credit and I can get you very low monthly payments...the first thing I saw was the APR - 13.9%!!!!!! Are you out of your mind? I pay less than 5% on my credit card.... But the sad thing here is that, people actually buy cars, paying these interest rates. I mean, the guy showed me the paper as if it was normal to pay that much interest - and it probably is.

So here's where I want to hopefully make a difference in this world. See if you can identify with this.

How most people think about money......

One of my best friends said to me - "I want to buy a car, probably the new mustang although something more luxurious would be cool".... "oh and I need to buy a flat screen tv for my room...."

Another friend said - "When I buy things, it's just a matter of numbers... if I see that I can afford a $300 payment, I'm buying the jet skis..."

You're spending your money on the wrong things!!! - Both of them gave me the deer-in-the-headlights look....

What do I mean?

You need to think of every dollar you own, as an employee.
I for example know that for every roughly $500 I spend on my business, I get a closed transaction which results in an avg $6k commission. So now, I think.... should I buy that new car or invest those $16K into my business and make a lot more money and then buy the car? (or re-invest and then buy the car.... etc.) I also own properties and total cashflow is about $545 a month. I don't think I can get that at McDonald's working full time, but hopefully you get the point. I'm now starting a second business.... Hey, who said there was a limit in how much money you can make, right?

How do I know I get that much?

Here's what separates the successful from the not so successful. You write out a detailed business plan. This includes an economic model that should describe marketing, operating expenses, and everything else. Starting a business is a lot of mental work and if you've never done it before, I suggest you get help. And yes it is going to cost you if you want to do it right from the beginning, but believe me - it's cheaper than if you don't get the education....

It's time to take responsibility for your own finances... Oh and for Lyn Sims or bitter people like her - I'm not saying that everyone lacks financial literacy, I'm trying to help those who don't get it... I know there's a lot of good people who depend on retirement accounts and are seeing all that disappear. I know some are having misfortunes due to things that are beyond their control. Whatever the case, it's never late to get the proper education so pass this one on

Recommended reading

Robert Kiyosaki - Rich dad poor dad
Michael Gerber - The E-Myth

Is This Market Making You Unethical?

With so much turmoil going on in our markets, I guess it's not surprising to see people become unethical. They call it survival....

Everywhere you turn you hear the word "economy". People are actually paying attention to how much money they spend, but we're still far, far away from financial literacy and understanding our economy (just the thought puts many people to sleep). I guess XBOX 360 is more fun than understanding the FED, or the relationship between crude oil and sugar production in Brazil. Who cares, right? (it doesn't affect you..... or so you think)

At least, this is what I get from fellow Real Estate Agents who think that this market sucks. It's funny they think that because I'm showing more agents leaving the business (more business for me), and even if they stayed, we are selling more homes than the average in the past couple of years (even more business for me). I mean, I wasn't an agent back in 2004 but I checked the data for the average homes sold in 2004 and 2005 and it was about 380 homes a month, which is the same amount we're selling in today's market (closer to 360). Gilbert Real Estate market

So with that I'd like to say to you mr./mrs. poor-me-this-market-sucks, it's not the market it's YOU!!. Ok, ok, a little harsh, I know, but it's the truth and it's the reason why I'm about to share with you what happened recently.

The Story

I have a client who bought a house in May and was alright until he found out his employer was going to downsize and went into panic mode (understandable, most people are afraid, yet they won't take the time to learn how to build a business or invest - the only way for financial security). His house has maintained it's value, but since he went in with 97% financing he'd have to pay commissions out of pocket if he wants to sell (he still has his job, but the idea of an employer downsizing will make anyone uncomfortable). He stumbled accross the idea of moving into a smaller home to lower his payments, so he went into an open house and the Real Estate agent he talked to proposed "The greatest idea to recession proof your investment in today's market".

The Proposal -

Why don't you trade your $345K home (which is in a great neighborhood), for this beautiful bank owned home going for $280K (in a not as great neighborhood, oh and it needs about $10K in repairs). Better yet, let's short sale your current home to sell it fast (I think this was an oxymoron), and then you can lower your payments by buying this one.

Yikes! is this person really that much of an idiot? telling people to take specific action only spells one word, LAWSUIT.  Well luckily, my client has put enough trust in me and called me to ask what I thought about this proposal. Obviously a short sale on your credit report won't help him buy a house. I'm surprised the agent didn't tell him to stop making payments to make sure the bank would consider the short sale.

Here's why I wrote this.

Are you that desperate for business that you're telling people these kinds of things just to get a transaction and make money? If there is a reason Real Estate Agents are sometimes seen as Used Car Salesmen is because of people like this. I know of many agents (average people) who were in business in 2004-2005 and were having $30k-$40K months. What did these people do with their money? bought bigger homes, replaced entire sets of furniture, cars, vacations. All these luxury items without investing money back into their business. These are the same people returning to their jobs.

Please help us clean our industry by getting educated and teaching others. Protect your clients against unethical Real Estate agents. And if you're one of these agents, do yourself a favor and take a look at these simple books you can read(you are literate, right?):

• Rich Dad Poor Dad by Robert Kiyosaki
• The E-Myth by Michael Gerber
• The Millionaire Real Estate Agent by Gary Keller

Trust me, the business is out there.... you just need to learn how to get it. If you can't do that, then you might want to consider a different career (lion tamer, parachute packing, maybe taco bell?)...... Ok I'm off my soapbox

Remember to be positive in today's negative society.

You Become What You Sorround Yourself With!!

We recently hosted a real estate education seminar in Scottsdale AZ and I had an eye opener that I'd like to share with you. One of our speakers brought a bunch a newspapers from accross the country and started reading the headlines. "AIG Bailout", "Job Losses", "Merrill Lynch","Lehman Brothers" all negative and really depressing. This is what people are reading out there and it's no different on TV.

I've been lucky to have built my business around a solid foundation with a predictable and measurable marketing campaign. I know that for every $1,000 I spend on marketing I get more leads than I can handle for a couple of months and stay in business. People - Wake up, this is possible....

The number of agents leaving the office is increasing and it's sad to see that they who preach so much about this being the best time to invest in Real Estate are not doing anything about it. Why? They have no money.

I think it's more about lack of knowledge and fear.

Banks keep getting tougher on their loans and now people can't take advantage of all the deals out there because banks won't lend money as easy. In this market cash is king. Who benefits? most people will say the wealthy and there goes the mantra (the rich get richer while the poor get poorer). This is just not true.

You can invest in real estate using self directed IRA's (not necessarily your own). There is more money out there in retirement accounts than there is in our banking system. Many of these retirement accounts are getting on average 3-6% ROI and is very easy to get 20-25% in real estate with the right structured deals.

People wake up, get educated - there's a goldmine out there waiting to be tapped and all you need is to take action. Take action to get educated and take advantage of all the opportunities out there.

Yes we hear the economy is not doing so great and we're about halfway through this whole financial mess, but none of my business partners are being affected. On the contrary we're gaining market share and are going to create so much wealth in the next 5-10 years you'll wish you would of listen to me.  

I really hope I broke your bubble of reality, but in my reality I'm going to write my future and take control of my finances - hopefully you listen to me and do the same....

Why is my home not worth as much?

I wrote a blog a couple of days ago titled "being positive in a negative society". It's actually helped me quite a bit to cope with some of the unusual situations we are facing in our current real estate market.

I was doing my follow up phone calls and came across this person (we'll name it Sally to protect their identity) who had requested a home evaluation. I sent out a CMA and called later that day. The conversation started very good, very polite. Unfortunately Sally was unable to open the attachment which showed all the homes that had sold. No harm, but then Sally started to drill me.

Normally I'm the one who asks the questions but this time I got rocked over the phone!! She asked me what I thought she could list the house for. Obviously I hadn't seen the house inside so I said, "I'd be glad to give you a good estimate when can I stop by to take a look at the house?" 
She responded, "well just give me a ball park number."
I said, "I can't estimate unless I've seen the house, but if you want I'll tell you what other homes have sold for." Fair enough. By the way, us guys just can't say 'I don't know'.....

So I opened the CMA and read the first one that was similar to hers and said "This one sold for $177K" (there was another one that sold for $159K and one for $180K) but I didn't get a chance to read them out loud because Sally was apparently offended that I had quoted her house too low!! Then all hell broke loose.....

Apparently the home accross from hers sold for $191K (I don't even show a house that sold for that price so who knows when that happened?) and it was a foreclosure. Apparently I shouldn't be using foreclosures as comps. Uhmmm, last I heard we are going through a financial crisis with banks going bankrupt and the fed bailing out everyone they perceive to be too big to fail. I think most homes being sold are bank owned or short sales....

Well I'm sorry seller, but it's not my fault that home prices are declining, thank you for your understanding..... NEXT

San Tan Ranch Real Estate Market

If you are thinking about selling your San Tan Ranch Home, here's what you can expect.

Since July of 08, there has been 31 homes sold ranging from $159K-$309K.
We currently have 17 pending home sales and 43 active listings. The average days on Market for homes in San Tan Ranch is about 65-80. Average sales price is about  $113 sq/ft.

What keeps attracting buyers to San Tan Ranch is  location. Only minutes away you can find shopping, dining, golf and hospitals. Within less than 3 miles you can find stores like Costco, Wal Mart, Fry's, Sprouts, and San Tan Village Shopping Center.

Nearby you'll find plenty of recreational activites, from the trails whithin the communities, to parks like the Discovery District Park and famous Cosmo Dog Park. Our newest addition to the city is the Polar Ice skating ring located in Gilbert's Crossroads Park.