Events Leading to the Real Estate Market Crash of 2008

While many predicted the current collapse of the real estate market, others were taken by surprise when the market that had left plenty of opportunity in the last few years for profit began to tumble.

Certainly, one of the leading events that eventually resulted in the crash of the real estate market was the crumble of the subprime market. As a result an unfathomable amount of companies suddenly were suddenly facing foreclosure. Even those companies that were not forced to declare foreclosure found they had suddenly lost billions of dollars.

The news has been filled with reports regarding the subprime market crash; however, while it has affected most property owners to some degree there remain many of remain uncertain exactly how this came to be.

Just a few years ago subprime mortgages were a great advantage to many property buyers. Buyers who were interested in taking advantage of the hot real estate market but who lacked good credit histories were able to take advantage of subprime mortgages in order to obtain loans. The underwriting guidelines for these loans were generally more lax than traditional mortgages. This allowed even buyers with poor credit to obtain a loan. In exchange for making a loan to buyer with less than stellar credit, lenders were able to charge a higher rate of interest. In addition, so the theory went, lenders relied on the belief that they would be able to foreclose on property and sell it for a profit in the event the borrower defaulted on the loan.

The money which funded these loans came from a variety of sources. Low interest rates made it possible in many instances for lenders to actually borrow money and then loan out those funds to home buyers. In other cases, the money was obtained from more complicated sources. As you may or may not be aware, it is not uncommon for governments to borrow money from central banks. This practice is particularly common in the United States.

At the time the housing market was stable. In fact, the housing market was experiencing a high that had not been seen in quite some time. Beyond the fact that many homebuyers were taking on massive amounts of debt there also existed another problem. Due to the health of the real estate market at the time, in many cases there were expectations regarding future growth that in hindsight now appear to have been unrealistic.

The last two years of the real estate boom occurred in 2005 and 2006. During that time period lenders did not hesitate in the least to lend money to borrowers regardless of their credit profile. These loans represented a tremendous money-making opportunity for lenders. Problems really began to occur; however, when interest rates began to rise from their previous lows. Historically, rising interest rates have always had a negative effect on the real estate market. When rates are low they help to produce demand; however, when they are high they ultimately cause prices to fall. Until mid-2006 home builders could not build new homes fast enough to meet the growing demand. During mid-year; however, the demand began to slow. It was also about this time that the rate of defaults on loans began to increase.

Before long many mortgage lenders began to find it difficult to obtain money from their previous sources of funding. As a result, would-be buyers discovered that loans were no longer as easy to obtain due to the fact that money was no longer as widely available. Additionally, investors suddenly became wary of taking on risk and underwriting guidelines grew stricter. Homeowners who had taken out loans with adjustable rates began to find it difficult to meet their mortgage payments as interest rates continued to rise. More stringent underwriting guidelines meant they were unable to refinance to fixed rate mortgages in some cases. As a result, defaults continued to rise; fueling the massive rash of foreclosures.

The Real Estate Professional’s Guide to Networking

Miriam-Webster defines networking as “the exchange of information or services among individuals, groups, or institutions; specifically, the cultivation of productive relationships for employment or business.”

A large number of people who are drawn to the real estate profession are outgoing, goal-driven, and personable-thus natural-born networkers. However, there are also agents that can be placed more on the introverted side of the spectrum, for whom networking is a mysterious, intimidating thing.

Networking has become a popular catch phrase in recent years, particularly in relation to job seekers. Experts advise you to “talk to people you know; widen your sphere of influence; obtain more personal and professional connections.” But just how does a person go about doing that?

One of the best ways for real estate agents to build their network is to join either a local or national real estate organization. These groups often host regular events, which provide excellent opportunities to meet like-minded individuals in your field. Exchange business cards with those that you speak with, and engage in conversation with as many people as possible. Try to get other members’ contact information, and keep in touch with them so that you haven’t socialized in vain.

You don’t need to build a lifelong friendship with these people; you just need to forge a professional connection that both of you can benefit from. Contacts that you make through professional organizations like The Women’s Real Estate Network for instance, can turn out to be invaluable in terms of getting referrals and sharing information.

If you’re not competing in the same market, you can feel free to pick each other’s brains and brainstorm ideas. In difficult economic times like these, developing creative marketing plans can be the key to your business’ survival.

These types of relationships can also be rewarding on a personal level, as you get to know others who share a passion for the real estate industry. You can also commiserate on the challenges you both face every day, which can be very cathartic.

In addition to meet-and-greets, professional organizations also keep their members informed of the latest happenings in the housing market, and may offer workshops and lectures to attend.

Aside from in-person events, you can also expand your circle of influence by going online. There are in fact several websites today that are dedicated to networking online.

These online meeting places are known as social networking sites, and they’ve become the latest vehicle for savvy realtors to market their businesses and make connections with other professionals in the industry.

Social networking sites include MySpace and Facebook, which are casual, social places where you can meet up with former schoolmates, extended family members, and meet friends of your friends. If you decide to post a profile on social sites like these, please keep in mind that self-promotion can be off-putting to others. Be subtle when you talk about your business, and try to use social sites simply as a way to make contacts.

ActiveRain on the other hand, is a social networking site that was created specifically for real estate professionals. It is a website that allows realtors, potential clients, and colleagues to meet and share information. Agents can create profiles for themselves, host their own blogs, and join groups on the site. There are articles designed for clients going through the buying or selling process, as well as articles for agents on topics such as online marketing and industry news.

These sites are an ideal platform for real estate agents to bounce ideas off each other, as well as attract new business. However, a better way to get clients’ attention is to start a regular blog as part of your networking efforts.

Blogs, or web logs, are essentially online diaries where you can post mini-articles on whatever topic you choose. Blog posts are meant to be less formal than a traditional article, which means that you can let your personality shine through. Thanks to a blog’s comment feature, visitors can comment on your post, and participate in a dialogue with you.

You may find that clients or other agents follow your blog posts, and are interested in what you have to say. Either scenario can lead to increased revenue-whether it’s from agent referrals, or directly from the clients themselves. Increased income is the ultimate goal when networking, though the relationships you develop and the knowledge you acquire will prove to be priceless in your career as well.

Why Do All the Real Estate Gurus Promote the Same New Guru at the Same Time?

Way back in the 1980’s a guy named Robert Allen would rent a huge hotel room and give a “seminar” which was an infomercial for his courses. Many people also did this, he was just the most famous. This evolved over time and Mr. Allen started holding 3 and 4 day extravaganza sales events where he lined up speakers who were hawking their seminars. Each one got an hour or two and in between Mr. Allen would come out and give motivational speeches with sometimes good content. At the back of each session the speakers had people lined up to take money and registration forms for more seminars. Books and tapes were also sold.

This went on for awhile and other people started doing the same thing. Many people gave individual seminars, and many developed their own courses and sold them on TV via infomercials.

Fast forward, and the advent of the Internet has caused this tried and true method of selling information to be far easier than it ever was before. There are still huge events with speakers selling their course. But now people get speakers lined up to deliver an infomercial over the Internet and no one even has to leave their home!

This has allowed many people who were quietly doing a great real estate business in their area of the country to expand and teach other people how to do the same thing, and also to conduct their business in a much broader area.

With technology, the business of creating a Real Estate Course and selling it became easier, and the business of launching it became easier, because it became easier to find gurus to joint venture partner with.

In the Internet Marketing world this has been going on for a long time. A new product comes out and all the affiliate marketers in the world start sending almost identical emails urging you to buy the latest and greatest product. And next week it’s something new.

Well, the Real Estate gurus have adopted this as a strategy since it is so much easier than staging live events where people have to travel to learn. It’s enough to drive one crazy! A new course comes out and you get a million emails selling the same course. When will it ever stop?

When will the information you spent that money on ever be enough to start yielding results? Why do they keep telling you that you need still another course…

Well, I have a solution that worked for me. Just choose one. Choose a basic one with a specific type of Real Estate as a focus, and just start doing what it says to do. And while you are doing that, don’t listen to anyone else or go to any more webinars. Just concentrate on what that one person says to do and do it. Only after you are successful in one area should you go on to another. So just choose one. It doesn’t have to be a perfect choice. You can get around to other areas after you are successful with one. In the meantime, ignore all those webinars and spend that time really implementing the course you already bought. Believe me, if that new guru’s information is really good and really helps people, he’ll sell it again.

Too many people start one area and then keep listening to more webinars and get confused and do nothing. For real results, follow one all the way through to the end.