Loren Johnson, CMPS

There have been a lot of comments on AR the past few weeks regarding looking at your 2009 Business Plan (I've written a few myself!). As we've all witnessed and experienced, particularly over the past several months, the economy is in constant flux-day-to-day, week-to-week, month-to-month-and the real estate industry feels each and every shift.

You need to be prepared to shift with it, just as you would with the fluctuating needs and goals of your clients. While you're thinking about your business plan for next year and setting your production and personal goals, keep in mind that the end of 2009 could look drastically different from the beginning.

Once you've evaluated where you've been and established where you're headed, schedule and consider these follow-up strategies:

Revise Your Budgets. The key way to avoid spending more than you make: stick to your budgets for home and work. Tally fixed expenses first, such as insurance, rent, car payments and employee salaries. Then account for advertising, supplies, travel and other variable expenses. You won't find yourself in a bind as long as your spending stays in line with your production.

Modify Marketing Strategies. If you know exactly where your business is coming from, you know exactly where your marketing dollars go furthest. As you track your rate of return on advertising, community sponsorships, Web campaigns and other marketing options throughout the year, you'll know when it's time to shift funds toward more effective strategies.

Amend Your Schedule. Create a schedule and block out appointment slots, including personal commitments, in the earliest draft of your business plan. Revisit it often. You'll be better prepared for unexpected obligations as the year goes on. (And I'm telling you all now...this is the one I plan to work on in 2009!).

Adjust For Average Sale Price. It's easy to overestimate or underestimate the market. At the end of each quarter, recalculate your average sale price based on year-to-date transactions so that you know exactly how many more or fewer transactions you'll need to hit your mark.

Refine Goals. Realistically forecast your growth so that you see and feel progress.

Write your 2009 business plan with future updates in mind, and you'll avoid missed opportunities to maximize your time, money and energy.

A lot of economic data will come out during this short week ahead.

Existing Home Sales will be released today. The first revision to third quarter Gross Domestic Product (GDP) will come out on Tuesday. GDP is the broadest measure of economic growth. Wednesday will be a huge day with Durable Orders, Chicago PMI, Personal Income, and New Home Sales. Consumer Confidence and Consumer Sentiment are also on the schedule for next week. Mortgage markets will be closed on Thursday and will close early on Wednesday and Friday for Thanksgiving.

Have a great Thanksgiving week!

If you have clients planning on waiting out this housing downturn, intending to buy a home when the coast is clear, the first step for them is to start checking their credit reports now. There may be some surprises waiting.

Credit card companies are reducing credit limits on some borrowers. And for some people, that may cause a drag on their credit score.

Here's why: A major factor in calculating a person's credit score is credit utilization. When your total available credit shrinks, the percentage of credit that is being used goes up-and that has the potential to do some damage to your credit score.A good credit score is necessary to get the best loan rates, and for more than a year now lenders have been requiring higher scores as mortgage underwriting standards tightened.

If your credit limit is cut, it might be difficult today to change a lender's mind.

In addition to cutting limits, credit card companies have been making changes to interest rates and fees. They're also reaching out earlier to borrowers when they have a missed payment, using a "soft touch" to help them create payment plans shortly after the due date has passed instead of waiting a month.

Granted, not everyone is seeing their credit disappear. To determine where to make changes, companies look at customers' credit scores and their track record for paying bills on time. If, say, a company's data shows that people with FICO scores of 710 or less have shown a higher pattern of risk lately, someone with a 700 score could very well be affected. Unfortunately, that creates the possibly of a consumer experiencing a "snowball effect," which could push a score down even farther.

Those with credit accounts that haven't been used in a while might also be affected. Recently, lenders have been freezing home equity lines of credit as well, although a reduction in these lines shouldn't hurt a person's credit score much, if at all.

If you plan on buying a new home in the next year, there are some things you can do to keep your credit looking as good as possible.

- Check your credit report. Find out if there have been changes to your account limits, and make sure there aren't any errors. Look for any negatives on your report-many negative items should be removed after seven or 10 years.
- Don't get close to card limits. About 30% of your FICO is based on the ratio of the amount that is owed on active cards to your available credit. But utilization on individual cards is important too; getting close to the limit on one card will also reflect negatively on your score. Pay down balances as much as possible.
- Keep accounts active. Accounts get closed when there hasn't been activity on them for a while. Make small purchases on cards a couple of times a year-then pay them off right away-to keep accounts active and your available credit up.
- Pay bills on time. This should an easy one, but could prove challenging for people who could lose their jobs in the months ahead. Be proactive, and contact the credit card company as soon as possible if you're having problems paying your bill. Payment history counts for about 35% of your credit score.
- Don't apply for new cards. Store cards are tempting when they offer discounts at the register, but don't bite. Applying for that card will have a negative effect on your score in the short term.

A lot of inflation data will highlight the Economic Calendar next week.

The important Consumer Price Index (CPI) inflation report will come out on Wednesday. CPI looks at the price change for those finished goods which are sold to consumers.

The Producer Price Index (PPI) will be released on Tuesday. PPI focuses on the increase in prices of "intermediate" goods used by companies to produce finished products.

In addition, Industrial Production, an important indicator of economic activity, will come out on Monday. Housing Starts and the detailed minutes from the October 29 Fed meeting will be released on Wednesday. The Philly Fed index and Leading Indicators will round out the schedule on Thursday. The G20 economic summit, a meeting between large industrialized nations, will take place over the weekend.

Here in Minneapolis-St. Paul, we are still a 2 newspaper town. It's interesting to see how each looks at some Real estate trends that surfaced this morning.

The St. paul paper has an above-the-fold headline, " Over One-Third of Homeowners Lose Money on Homes". Of course, that caught my eye....being in the business. Upon reading the article, it uses stats from Zillow.com to show that 34% of Twin Cities homeowners are selling their homes for less than the purchase price of that home. Does that take into account any information on financing, down payment, foreclosure or not? But it makes a great headline, feeding into the depression many feel about the housing market.

The Minneapolis paper has a story below-the-fold of their business section, "Some good news for Twin Cities Real Estate", which talked about the fact that for the 3rd month in a row, listed inventory is down and median home prices are up. It does talk in the article about being cautious.....factoring in the current economic landscape.....but overall, it was a positive article.

But of course, positive news wouldn't sell on the front page!!!

Let your clients know what YOU see in your market......don't let the writers try and shape your market for you!