Real estate is like Newton's 3rd Law

Real estate is just like Newton's 3rd Law which states for every action there is an equal and opposite reaction. Bad for a seller = good for a buyer.

To those who believe that the market is bad and that they should not get in, the question that needs to be asked is, "Who is the market bad for?" If you are a seller, the news is going to be a lot different than if we talked 4 years ago. And if you are a buyer, the news is going to be a lot different than if you had talked to us 4 years ago too. Both of these say exactly the same things! It is kind of like the old Virginia coal miner that said that no matter how thin he tried to make his pancakes, they still ended up having two sides! The difference between the market that we have today compared to the boom market is that the unemployment rate and consumer confidence levels are dramatically different.

The Brainerd Lakes area has the dubious honor of holding the highest unemployment in the state of Minnesota according to the Brainerd Dispatch on Dec. 30th, 2009. With a current rate hovering at around 15%, it is approximately twice as high as the state average. And if that number is similar to the national number, which is currently at 10%, it is likely to be actually much higher by the time you factor in the under-employed, those whose benefits have ran out and those that have simply gave up looking for work. The national number is then closer to 18% representing an increase of nearly double the actual posted number. Using that number, it then puts Brainerd at closer to 30% unemployment!!

With the combination of these events, many property owners in the Brainerd Lakes area market are falling behind on their payments. I recently attended a continuing education class that addressed the short sale process. A short sale is when the bank agrees a property to sell for less than the principal balance on the mortgage rather than go through the foreclosure. It is unfortunately a bi-product of the boom market that we experienced just a few short years ago. There are strict rules associated with them, but the banks are willing to work through these. Why do you ask?? According to the class, a bank stands to gain over 20% more by accepting a short sale than going through a formal foreclosure process. Because of the sensitive nature of these, we commit to absolute privacy. Roughly 2/3rds of the listings did not sell in 2009. Many of those sellers “wanted” to sell in 2009 and many of them will “have” to sell in 2010. That’s where we can help.

More to follow in the next few days....stay tuned!