Nick's Real Estate Blog: December 2011

Another excerpt from The Personal MBA: by Josh Kaufman. 

Agency as described in Kaurfman's "Twelve Standard Forms of Value"

"Agency involves the marketing and sale of an asset you don't own. Instead of producing value by yourself, you team up with someone else who has value to offer, then work to find a purchaser. IN exchange for establishing a new relationship between your source and a buyer, you earn a commission or fee."

read more at http://book.personalmba.com/agency/

To see complete list of 12 visit: http://book.personalmba.com/12-standard-forms-of-value/

visit my page at www.nickmiller.biz.

Merry Chirstmas.

I am an avid reader and love books on business and history. I have ready a lot of good books, and a lot of bad books. I recently picked up The Personal MBA: Master the Art of Business by Josh Kaufman (I couldn't recall from high school English if I am supposed to italicize, underline or put in quotations the title of a book). I am on page 15 and have already found great value in this book, and can that it is going on my recommended reading list. I wanted to share an excerpt from the book that outlines the basic business principle's, which can even work for real estate.

"very successful business (1) creates or provides something of value that (2) other people want or need (3) at a price they're willing to pay, in a way that (4) satisfies the purchaser's needs and expectations and (5) provides the business sufficient revenue to make it worthwhile for the owners to continue operation. pg 15

Continued on pg 15: "As I deconstructed each of those factors, I found additional universal requirements. Value can't be created without understanding what people want (market research). Attracting customers first requires getting their attention, then making them interested (marketing). In order to close a sale, people must first trust your ability to deliver on what's promised (value delivery and operations). Customer satisfaction depends on reliably exceeding the customer's expectations (customer service). Profit sufficiency requires bringing in more money that is spent (finance)."  The Personal MBA: Master the Art of Business; Kaufman.

To see my entire reading list and recommended books visit my LinkedIn profile at http://www.linkedin.com/in/nicktmiller

www.nickmiller.biz.

Imagine being one of the first home buyers to purchase a home in a new subdivision where the developer has plans to build out at least 100 homes, only to go broke shortly after your purchase, leaving the neighborhood a virtual wasteland. There are several neighborhoods in my area where this was the case. Maybe 10% of the projected homes were built out, the rest are just vacant, overgrown lots.

Let's say the value of your home was $200,000 when purchased. But that value was largely based on the assumed completion of the neighborhood. But now that development has stopped way short of completion, and no one is wanting to purchase in your subdivision, you values have been cut in half. So you have a home worth $100,000, which most likely no one would want to buy, and a mortgage around $200,000. What do you do? Would you walk away?

That is an interesting dilemma. And a real story. CBS 60 Minutes just profiled 6 neighbors who are living this situation: http://www.cbsnews.com/8301-18560_162-57344513/there-goes-the-neighborhood/?tag=cbsContent;cbsCarousel

Interesting, though, out of the 6 profiled, only one walked, and the was because of medical issues which kept her from making the payments. One of the neighbors made the profound statement that, even though her homes value declined by 50%, she was still going to pay the mortgage because she was still able to pay. The decline in her homes value didn't affect her ability to pay the mortgage that she agreed to when she closed on the loan.

Also in this article, which profiles the city of Cleveland, Ohio, it states that city officials have already demolished 1000 vacant homes and plan to demolish another 20000 in the future. That has to make quite an impact on a community.

www.facebook.com/jacksonmsforeclosures

When will the market recover? I guess that depends on who you talk too, but in my opinion, not soon enough. I found this interesting article on cnbc at http://www.cnbc.com/id/45507581. It states that "the average loan in foreclosure has now been delinquent a record 631 days." That is a long time for a loan to be delinquent.

This article also states that foreclosures are at an all time high at 4.29 percent of all active homes and that new foreclosures are outnumbering foreclosure sales 3:1.

So what does this mean? It means that foreclosures will continue to flood the market for years to come. There is a large shadow inventory building, and, as more delinquent borrowers are allowed to stay in their homes for extended periods of times, other borrowers who are fighting to keep up with the mortgage may decide to take their chances with foreclosure and live in their homes rent free for 2 years or more.

But that news isn't all bad. It could mean great buying opportunities for home buyers and investors. It is also a good time to learn to sell foreclosures as a real estate agent, which I can help with as I have written a course on REO Agent Fundamentals. If your interested in the material, let me know.

www.nickmiller.biz

Sick and tired of being sick and tired? Visit www.livefitandhappy.com