You may have taken out a adjustable rate mortgage in the past few years. All time low interest rates and “No-Doc” loans created a frenzy of activity in the housing market that peaked in the latter part of 2005. Many people who shouldn’t have purchased a home were sucked into subprime mortgages that promised the American dream of home ownership, with the shadow of the American nightmare if values diminished and/or rates shot up.

That nightmare is beginning to unfold for millions of Americans.

For most homeowners, the subprime meltdown doesn’t directly affect their property, credit, or net worth. Subprime lending represents only about 13 percent of the $10.4 trillion U.S. mortgage market, and only 5 percent of subprime loans totaling $67 billion in loans are in foreclosure, what’s the big deal? At least half those losses will be recovered when foreclosed properties are sold, so we’re looking at losses of maybe $34 billion — or less then 1 percent of the total market. The problems in subprime lending are playing havoc with the stock market in a way that’s out of proportion to their real impact on the economy.

That’s the argument economist Ben Stein made in an Aug. 12 New York Times column (watch him delivering the same message the following week on CBS Sunday Morning).

Mortgage broker and columnist Peter G. Miller offers a more in-depth analysis on DS News today, explaining how the use of derivatives can greatly magnify these losses for hedge funds and other investors.

Hedge funds — and just about everybody with large amounts of capital to invest, including mortgage lenders — use derivatives to manage risk. These are essentially bets, which companies cover like sports bookies. Interest rate and credit default swaps, for example, allow lenders to share risk (and potential profits) with others.

Whatever the outcome all their bets, their losses and gains on various derivates are supposed to balance out — or leave them ahead of the game. Computer models can also be used to exploit tiny anomalies in the marketplace, Miller notes, allowing profits to be wrung out of what started out as a risk hedging strategy.

But derivatives are highly leveraged, meaning that a hedge fund like the infamous Long-Term Capital Management was, at the beginning of 1998, able to hold derivative contracts worth $1.3 trillion with just $4.8 billion in capital, Miller explains.

“If one hedge fund with $4.8 billion in capital can hold derivative contracts worth $1.3 trillion, then how much is held by 8,500 hedge funds as well as other investors?” Miller asks. “The worry is that huge investors have borrowed from banks and other financial sources and then placed many of their leveraged bets on the movement of mortgage-backed securities. With a growing volume of foreclosures the value of mortgage-backed securities are less than they were six months or a year ago, meaning once-profitable computer models are no longer on target.”

The real fear among investors, RealtyTrac.com CEO Jim Saccacio tells Miller, “is not so much that we’re having a subprime debacle, rather it’s that rising foreclosure levels throughout the U.S. mortgage system will set in motion a series of bigger problems in related financial instruments.”

An individual’s interpretation of this mess can be on a macro economic level or a micro economic level. Academically, it is interesting to crunch numbers in the billions and trillions. But for Joe six-pack, the real message is less clear. Consumers need to pay their debts on time, of course, but will the ripples in the economy make their financial obligations more difficult to manage in the future? Your job may be secure today and your may have even converted to a fixed-rate mortgage, but has a fragile house of cards been constructed in the housing market that devalues your greatest asset to a level lower than the loan balance?

The remodeling of various rooms in houses or the replacement of roofs and windows is a business doing better than new home building, which has seen significant declines in the past year.

“Compared to the major up-and-down cycles of the new home market, remodeling activity remains fairly steady,” said Mike Nagel, a remodeler from Roselle and chairman of the Remodelers of the National Association of Home Builders (NAHB).

“Remodeling continues to show strength despite the housing slowdown,” he said. “With more than 120 million homes in the United States plus $11 trillion in owner equity, the demand for remodeling will be there now and in the future.”

Nagel noted that remodeling currently accounts for more than 40 percent of the home construction industry by dollar volume.

“A significant part of the remodeling market comes from work that home owners cannot delay—like replacing a roof—leaving the industry relatively stable during housing market downswings,” he said.

Another significant portion of the remodeling market is the higher end discretionary market, according to figures from another industry association, the National Association of the Remodeling Industry (NARI).

Organization figures indicate that upgrades are increasingly concentrated in high-value homes. Forty-three percent of expenditures by owners of homes valued at $400,000 and up are for room additions, 33 percent for kitchen remodels, 32 percent for bath remodels, 23 percent for exterior replacements, 22 percent for other improvements and 22 percent for replacement of equipment and systems.

Area remodelers indicate that the optional or discretionary higher priced choices also remain strong among their customers.

“Our business is up a bit,” said Scott Sevon of Palatine-based Sevvonco, Inc. “We have not seen a slowdown. One of our biggest segments is enlarging kitchens and creating master bedroom suites from two smaller bedrooms.”

Many companies, like Sevvonco, have Web sites that have various industry designations.

“People interested in quality work will call professionals rather than fly-by-night remodelers,” said Sevon.

He cited the huge increase in the Certified Aging In Place (CAPS) program from the NAHB.

“So many people are seeking to upgrade their kitchens and baths and make the home more comfortable,” Sevon said.

Remodelers use words like comfortable and ease of living for people who might need more helpful design features, particularly the baby boomers who are aging, but don’t want words used like universal design or accessible housing which make some people feel old.

But Sevon added that another buyer market having an impact on the remodeling business is the Gen Xers, the age group behind the baby boomers which is now coming on strong. Gen X buyers first bought houses three to five years ago and now want to expand their two- and three-bedroom ranches.

The Gen Xers and other people doing remodeling choose that method over having new houses built, said Sevon, because “they know what they are getting in an existing neighborhood and existing community.”

In addition to location, both remodelers’ reputation and word of mouth mention by previous satisfied customers are important to companies like Dan Wangler Builders in Elmhurst.

“Our business is mostly word of mouth. We are very heavy into kitchen remodeling,” said Wangler. “We also do a lot of second-story additions because many people like where they are and they would rather fix up their house and stay put.

“That applies to places like Elmhurst and Oak Brook where our company does a lot of work. But we also have done remodeling in places like Wilmette, Glencoe and Northbrook.”

Quality work is also a key factor for IMH Remodeling and Repair in Downers Grove. Dawn Tuskey, president and co-owner with her husband Dennis, said the company’s good reputation has played a part in increasing additions by 50 percent while overall business is up about 8 percent this year.

“People always need remodeling,” she said. “And we provide quality remodeling which is more expensive.”

The story is the same for Lellbach Construction in Warrenville. Debra Lellbach, who is chairman of the Naperville Area Chamber of Commerce, noted that she and her husband Doug have been operating the company for 20 years doing projects mostly in Warrenville, Naperville and Wheaton.

“We have not had ups and downs,” she said. “We have seen a shift to more whole house remodeling.”

The remodeling business has been good, but Lellbach said it presents many challenges since a remodeler is always working with existing houses where there are a lot of unknowns like the ground conditions.

“Also, you have to blend the work you do into the existing house. New construction, on the other hand, is an open book.”

Business also has been good for banks which provide the money usually through home equity loans. For instance, business has been up considerably, probably about 20 to 30 percent in the home equity loan category, according to Scott Hamer, president of Community Bank of Wheaton and Glen Ellyn.

“This has been the best year for our bank since it was started in 1999,” he said. “Part of the reason for the increase is that we offered a special promotion of 2 percent below the prime rate, instead of 1 percent for loans of $75,000 or more.

“We don’t get into the details of what the loans are used for. It is probably about 60 percent for renovations to houses, and 40 percent for college tuition and debt consolidations.”

The strong business in home equity loans is in stark contrast to new home construction financing.

“That market has pretty much dried up,” Hamer said. “Builders we are working with are doing most of their work on contract and not on speculation. I think that most of that market dried up before the sub-prime loan problems which have been in the news lately.”

The rapidly declining subprime mortgage market may be to blame for the voliatility in the real estate market, however, subprime lending is not the only factor in the financial squeeze that has pushed national foreclosure activity up 93 percent from a year ago.

RealtyTrac, a foreclosure data firm in Irvine, Calif., reported Tuesday that the nation saw about 179,600 homes in some stage of foreclosure last month, one for every 693 U.S. households.  This increase, while devastating, can not be attributed to only one factor.
Chicago area saw a modest decline in July, but for the first half of the year there has been an increase of 42 %, according to Rick Sharga, a RealtyTrac spokesman.

The firm said many property owners with adjustable-rate mortgages who were seeing their payments rise anticipated being able to refinance when the time came.  The time is now for many of them and they are being shut out of refinancing into better rates because of the subprime lending crisis.

“Interest rates are just one of the culprits,” said Marki Lemons, a Chicago real estate agent who specializes in preforeclosure sales. She said it is one of a trio of factors she sees regularly.

Taxes are another. “We’re in a city that has an abundance of new development, and people aren’t fully assessing what their taxes will adjust to in 12 to 18 months — in some cases it’s double what they thought they were getting.

Assessments are a third. “And we have a large percentage of condos, and people are seeing increases in monthly assessments and special assessments. In some of those cases they have doubled, also.”

The situation has grown so serious that consumer-advocacy groups in California, where RealtyTrac said foreclosures were running at three times last year’s pace, on Tuesday called for the state to declare a moratorium on foreclosures. They say consumers have been victimized by predatory lending or otherwise are facing a mortgage-induced squeeze that threatens to put thousands out of their homes.

“A moratorium doesn’t really fix the situation,” said Lynnette Briggs, a counselor for the DuPage Homeownership Center in Wheaton. “You can postpone the foreclosure but the steam just keeps building.

“What we need in order to recover are more refinancing options and more loan-modification options.”

Illinois’ 5,530 homes in foreclosure in July put the state 15th in the nation, RealtyTrac said. Of those, 4,652 were in the Chicago area.

That works out to one of every 930 households in Illinois, according to RealtyTrac. In Nevada, the No. 1 state for foreclosures, it’s one per 199 households.

The firm said 43 states saw year-over-year increases, with five — California, Florida, Michigan, Ohio and Georgia — making up more than half the total.

California and Florida suffer from high foreclosure rates because rapid appreciation led buyers to borrow huge amounts of money, while the economy in Michigan and Ohio has been weak. Many Georgia homeowners relied on subprime mortgages, and the region also saw a significant number of mortgage fraud cases.

RealtyTrac saw one small glimmer locally.

“Actually, Chicago had a good second quarter relative to the rest of the country,” said Sharga. “Chicago’s foreclosure activity was down 6 percent in the second quarter compared to the first quarter, while the rest of the country was going up.

“But that dropping-back by 6 percent is a number that’s still almost twice last year’s first-quarter number,” he said.

Nonetheless, real estate professionals say the pain is widespread.

Hudson & Marshall of Texas, an auction firm that specializes in foreclosure properties, conducted a sale last week of 190 Chicago-area homes attended by hundreds of bidders.

“When we were in Chicago for an auction last fall there were about 25 homes auctioned,” said Crystal Wright, a spokesman for Hudson & Marshall.

South Holland real estate agent Daryl Russell said the wave of foreclosures is not the investment bonanza that some clients envision because loans have dried up for them, too.

“There are more foreclosures, but the buyers aren’t as plentiful, and I attribute it directly to subprime mortgages,” said Russell.

“I had three deals that were about to close lately, and none of them happened” because lenders changed their minds, he said.

“I’m talking about people with 740 credit scores who six months ago could have bought two properties,” Russell said.

You know that TV show “American Idol”…where the audience gets to vote off singers one by one… until there’s only one left standing?  One of the most popular shows on television will now be cloned-real estate style. Beginning May 29th, a new competition started…with the Real Estate Investor in mind. 

The promoters lined up the best of the best of Real Estate Experts who are going to go up against each other in search for the coveted prize:

 “Renegade Real Estate Warrior of the Year 2007″

Our friend and instructor, Gina Clifford, has been nominated this year.  Just like “American Idol”, you can be part of the action and vote for the winner!

http://www.renegaderealestatewarrioroftheyear.com/ginaclifford

Gina will be competing against 49 other top notch educators and each participant will conduct a “Webinar” where they’ll give everything they’ve got to convince you to cast your vote.  Now, if you aren’t familiar with webinars, it’s a really cool technology where you get to not only listen to each participant on the phone, but WATCH them work their magic on the computer screen. Don’t worry, if you want to just listen you can do that too.

To read more about this awesome contest, head on over to:

http://www.renegaderealestatewarrioroftheyear.com/ginaclifford

Among the 50 Real Estate Experts who are going to battle it out are Ron LeGrand, Dave Lindhal, Reggie Brooks, Lou Brown and Gina! The best part is that this “Virtual Seminar” won’t cost you a cent, zip, zilch, nada.  Plus you’ll get to eavesdrop on the computer desktops of all of these amazing real estate trainers. 

Her webinar is set for August 14^th so don’t miss out. Sign up now for your  FREE pass to join us.

http://www.renegaderealestatewarrioroftheyear.com/ginaclifford

Make sure to listen in on August 14^th to The Short Sale Diva/ The Queen of Short Sales, Gina Clifford! …and be prepared to cast your vote for “Renegade Real Estate Warrior of the Year 2007!”

By Barbara Hagenbaugh

USA Today

WASHINGTON — Although subprime lending has caused pain for individual homeowners, it has not hurt the U.S. economy, a Federal Reserve official said Thursday as lawmakers questioned if the Fed should have done something to try to prevent the subprime problems from building.

“The real economy does not yet seem to be affected by this,” Federal Reserve Governor Randall Kroszner told members of the Senate Banking Committee who were hearing from nominees to the Fed.

One of the nominees said earlier action from the Fed could have prevented some of the subprime problems.

“If the Fed had acted somewhat earlier, we might have had a better outcome,” said Larry Klane, 47, president for global financial services at Capital One (COF).

Kroszner’s comments about subprime and the economy echoed recent statements from other Fed officials, including Chairman Ben Bernanke. Still, lawmakers said they were concerned that problems with subprime mortgages — home loans made to borrowers with impaired or limited credit histories — posed a serious threat.

“This is a looming economic issue,” Banking Committee Chairman Sen. Christopher Dodd, D-Conn., said, noting that home foreclosures could lead to falling home values in communities. “I can’t go anywhere without this issue being raised.”

The comments came during a confirmation hearing for three governor slots on the Federal Reserve. President Bush re-nominated Kroszner, 45, to the Fed for a full, 14-year term after he finishes the end of a term that is expiring next year. Nominees for two open positions also testified: Klane and Elizabeth Duke, 55, chief operating officer for TowneBank.

Fed governors are nominated by the president and must be approved by the Senate.

Although the Fed’s most visible role is in setting interest-rate policy and oversight of the economy, the Fed also supervises banks.

While the senators asked the nominees a few questions about the economy, subprime was the main focus of the 2½-hour hearing. Many of the mortgages signed in recent years are adjustable rate. Defaults on the loans, already jumping, are expected to rise as many of the loans reset to sometimes sharply higher rates, and borrowers cannot afford the payments.

Bernanke has pledged national rules by the end of the year that likely will try to ensure lenders make loans that are affordable even at higher interest rates.

But Sen. Jim Bunning, R-Ky., accused the Fed of being “asleep at the switch,” arguing the Fed should have been more on top of what kind of loans were being made and seen the problems coming.

Kroszner said the Fed did take “a lot of actions” and argued a lot of the people making the suspect loans were not banks and not under the Fed’s jurisdiction.

NEW YORK (CNNMoney.com) — The outlook for the housing market looks bleaker than ever. Foreclosures are skyrocketing. Home prices continue to fall. And forecasts for a recovery keep getting pushed back.

Meanwhile the collapse of the subprime lending market has spread to the financial markets, sparking fears that tighter credit will have a broader impact on consumers and the economy.

The U.S. government has downplayed the risk of the subprime meltdown spreading. Treasury Secretary Henry Paulson has said the effects are largely contained, and the economy is still strong. William Poole, the president of the St. Louis Federal Reserve branch is also reserved.

“Unless the pressure becomes much more severe,” he said on July 20, “the problems would not impact consumer spending or credit quality more generally.”

In the financial markets, credit, including corporate bonds, has become harder to get, but Mark Zandi, chief economist of Moody’s Economy.com, is loath to call it a “credit crunch.” He does admit to a “liquidity squeeze,” however. The difference: In a crunch, nobody can get a loan; in a squeeze, only the riskier borrowers are cut out.

According to Peter Schiff, president of Euro Pacific Capital Inc. and author of “Crash Proof: How to Profit from the Coming Economic Collapse,” the problem goes way beyond subprime.

“It’s a mortgage problem,” he said. “Subprime is like a little leak where the underlying problem is the integrity of the dam itself. Most of the mortgages taken out during the past few years will fail.”

Schiff expects huge losses in the housing market with home prices falling by half in some areas.

Most economists are nowhere near as pessimistic. Standard and Poor’s chief economist, David Wyss, and Moody’s Economy.com’s chief economist, Mark Zandi, have forecast 8 percent price drops in the housing market, peak to trough.

On Tuesday, the Case-Shiller Home Price Indices revealed a 3.4 percent fall in its market basket of 10 U.S. cities in the past 12 months; San Diego prices plunged 7 percent. Those declines will have an effect on consumer spending, which accounts for 70 percent of the gross domestic product.

“Consumer spending growth has been stronger than income growth because the strength of housing prices enabled owners to borrow,” according to Gault. “As prices decline, consumer spending will grow more slowly than income.”

Zandi does not believe a consumer spending slowdown is enough to trigger a recession, but he’s not counting it out. What it will do, he said, is “ensure that the economy grows at a pace below its potential. I wouldn’t dismiss the possibility of a recession. I put the possibility at one in five.”

Ken Goldstein, an economist for the Conference Board, doesn’t believe the subprime contagion is enough to send the economy off-track.

“The idea that average consumers are quaking over the prospects of losing their homes or much of their equity is wrong,” he said.

The mortgage market adds up to about $10 trillion, according to Goldstein, with about 10 percent to 15 percent of that in subprime. Of that, some 15 percent or so is imperiled, he said.

“It’s big, but not the tipping point that will bring the whole housing market down,” Goldstein said.

John Silvia, chief economist for Wachovia, agreed. “I don’t think the impact of subprime lending will spread anywhere near enough to trigger a recession,” he said. “It’s a small percentage of overall lending.”

Instead of a recession, “It’s a correction” he said, “and it probably has a small impact on economic growth, on the order of 0.20 to 0.60 percentage points.”

Subprime problems have not, so far, slowed consumption down much. The pace of consumer spending is still brisk, although growth slowed in June. And the Conference Board reported Tuesday that consumer confidence is at a six-year high. Steady job growth and low unemployment (between 4.4 percent and 4.6 percent since September) have kept it that way.

Consumers don’t really care much about changes in housing prices or, for that matter, in the stock market, according to Goldstein.

“If you really want to screw up consumer confidence,” he said, “go for the jugular - the labor market.”

As long as that’s strong and earnings growth substantial (4 percent annually, according to Goldstein), confidence - and spending - will remain high and the economy will chug along.

“Consumers can continue to stay resilient in the face of lower stock and home prices,” he said.

It’s time to meet the person who has been responsible for the life you live right now.

This person has created your income, your debt, your relationships, your health, your fitness level, your weight, your attitudes and your behaviors. Who is it? To introduce yourself, just walk to the closest mirror and say hello! This person is you!

Although one of the popular myths out there is that “external factors” determine how you live, the truth of the matter is that you are in complete control of the quality of your life.

It’s time to look at the life you’ve created and determine what is working and what is not. Certainly there are wonderful things happening in your life, whether it’s your job, your spouse, your grades, your children, your friends, or your income level.

Congratulate yourself on these successes; you are creating them for yourself! And then take a look at what isn’t working out so well. What are you doing or not doing to create those experiences?

It’s time to stop blaming outside factors for your unhappiness.

When you realize that you create your experiences, you’ll realize that you can un-create them and create new experiences whenever you want. But you must take responsibility for your happiness and your unhappiness, your successes and your failures, your good times and your bad times. When you stop blaming, you can take that energy and redirect to focus on creating a better situation for yourself. Blaming only ties up your energy.

It’s also time to stop complaining.

Look at what you are complaining about. Really examine it. More than likely it is something that you can do something about.

Are you unhappy about something that is happening? Make requests that will make it more desirable to you, or take the steps to change it yourself. Making a change might be uncomfortable to you. It might mean you have to put in more time, money, and effort. It might mean that someone gets upset about it. It might be difficult to change or leave a situation, but staying put is your choice so why continue to complain? Face the facts that you can either do something about it or not. It is your choice and you have responsibility for your choices.

Successful people take 100% responsibility for the thoughts they think, the images that visualize and the actions they take.

They don’t waste their time and energy blaming and complaining. They evaluate their experiences and decide if they need to change them or not. They face the uncomfortable and take risks in order to create the life they want to live.

Taking responsibility requires you to first decide to believe that you create all your experiences. Second, to pay attention to yourself, your behavior, and your life experiences. And last, to face the truth and deal with what is not working in your life. You have to be willing to change your behavior if you want a different outcome. You have to be willing to take the risks necessary to get what you want.

Isn’t it a great relief to know that you can make your life what you want it to be? Isn’t it wonderful that your successes do not depend on someone else?

Commit to taking 100% responsibility for your every aspect of your life. Decide to make changes, one step at a time. Once you start the process you’ll discover it is much easier to get what you want by taking control of your thoughts, your visualizations, and your actions!

© 2007 Jack Canfield

Jack Canfield, America’s Success Coach, is the founder and co-creator of the billion-dollar book brand Chicken Soup for the Soul and a leading authority on Peak Performance. If you’re ready to jump-start your life, make more money, and have more fun and joy in all that you do, get your FREE success tips from Jack Canfield now at: www.FreeSuccessStrategies.com

BankrateMargarette Burnette

After months of hunting and preparation, you’re finally ready to close on a house. The last thing you want is to have a problem pop up and delay the closing. Watch out for these common closing-day glitches, and learn how to avoid them.

7 closing-day glitches

1. Walk-through shockers
When you’re buying a home, one of the last steps of the process is to conduct a final walk-through of the property. These walk-throughs are usually scheduled the morning of or the day before closing — after the seller’s furniture and artwork has been removed — to verify that the new home is clean and in move-in condition. However, sometimes buyers receive surprises when they see what’s behind the decor: faded floors, holes in walls or dirty rooms that can make a buyer balk at going through with the closing.

“I had an experience where on a walk-through we discovered that the flooring the owner advertised as ceramic tile really wasn’t. It was a ceramic-looking design that was actually laminate,” says Joyce Rhodes, a Realtor with Coldwell Banker Residential Brokerage in St. Charles, Ill. The buyer complained and the closing was delayed until the seller offered the buyer a credit to pay for installing real ceramic tile. “In general, a credit can go a long way to fixing any problem. The buyer and seller just have to negotiate how much money is needed for the repair,” says Rhodes.

2. Not enough cash to seal the deal
“A buyer, particularly a first-time buyer, could discover at the last minute that they don’t have enough money to pay closing costs,” says Alan Weinberger, a professor of law at Saint Louis University Law School in Missouri. “Even with a modest house those costs can run into the thousands of dollars for title insurance, recording fees, etc.”

“We try to put together the final settlement statement within 24 hours of closing,” says Leah McCann, a loan officer with First Horizon Home Loans in Fort Myers, Fla. Up to that point, the buyer has only an estimate of the fees they need to pay at closing. “Because of prorations and title fees, the final amount may be a few hundred dollars more than what’s noted in the good-faith estimate, but the buyer still has to provide those funds in order to close.”

“At that point, all eyes are on the lender” to see if they will lower their fees enough to let the buyer go through with the closing, says Weinberger.

McCann concedes that sometimes lenders have to be willing to do just that. “Nobody wants to lose a deal over a couple hundred dollars.”

Even if the funds are available, they may not be in the right form.

“If a seller needs the funds from the purchase of one house in order to buy another, they may be expecting a wire transfer of the purchase price into their account. If the lender provides only a check, then they have to wait for it to be deposited,” says Alan Gottlieb, vice president and special counsel for First American Title Insurance, in Philadelphia. “If they need that money for a subsequent funding, then they should make amends for a wire transfer.”

Even if a wire transfer isn’t necessary, funds need to be guaranteed. “We often see people who don’t bring certified or bank checks to a closing,” says Gottlieb, and that could cause a delay.
3. The house is still occupied
“Another pretty common example of a closing-day glitch is that the property simply isn’t vacant,” says Weinberger. It could be that the property was previously a rental, and the tenant is taking too long to move out. The seller might not even be responsible for forcing the tenant out after closing.

“Depending upon the law in the state, it may be the seller’s legal obligation to deliver only the right to possession (of the property) on the closing date, as opposed to actual physical possession,” says Weinberger. “What a shock that could be to the buyer, who would then be responsible for getting the tenant out of the house!”

If you’re considering buying a property that currently has a tenant, Weinberger’s advice is to ask to see the lease. If there’s a substantial security deposit that the tenant would forfeit by not moving out when the lease ends — which would presumably be before the closing date — the seller is less likely to have a holdover-tenant problem.

“You can also provide in the contract of sale that it’s the seller’s obligation to deliver actual, physical possession of the property on the closing date, not just the legal right to possess,” says Weinberger.

It may be the seller, not a tenant, who’s still occupying the house at closing, particularly if the seller’s new home isn’t ready. If the buyers don’t need to move in right away, both parties could negotiate an agreement under which they close on the property and the seller rents from the new owners for a short while.

4. Unfinished repair work
Sometimes a house could be undergoing repairs that are specified in the contract but are incomplete on closing day. “It’s not unusual that sellers underestimate the length of the time it takes to complete a repair,” says Gottlieb. “There may need to be a discussion about delaying the closing date to enable the seller to finish any outstanding work.”

If the seller waits until the last minute to address the issue, however, the new homeowner could be in a bind.

“Buyers may have their stuff already on the moving truck waiting outside of the house to move in,” says Weinberger. “If the buyer’s financing commitment expires on closing day, the buyer doesn’t really have a whole lot of options at that point other than to close.”

In that situation, the seller could put the money for the repairs into an escrow account to be paid after the work is complete.

“The escrow funds could be held by one of the brokers, the title company that’s conducting the closing or anybody other than the seller,” says Gottlieb. The seller may also choose to offer the buyer a credit in the amount of the repair.

5. New liens on the property
When an offer on a house is accepted, a title search usually occurs within the first couple of weeks to make sure a mechanic’s lien isn’t on the property — that is, a claim for unpaid work that was done on the property. Just because the initial title search comes up clean does not mean a lien couldn’t be placed on the property right before closing.

When remodeling work is done on a house to get it ready for sale, the seller still has to pay the contractor. If the roofer or carpenter gets stiffed, they could put a mechanic’s lien on the house — and they don’t have to do it right away. “Under a state’s mechanic’s lien statute, a contractor who completes the work has a period of time after completion to file a lien if they haven’t been paid. The time frame varies by state and also by trade,” says Weinberger. So even though the title could have been searched well before closing, a lien could be placed on the home right before closing — or even after.

According to Weinberger, the way to prevent this problem is to ask the seller to verify that any repair projects have been paid. “There needs to be an affidavit signed by the seller at closing in which the seller swears that there was no work performed prior to closing for which the seller didn’t pay.”

6. Buyer’s remorse
A buyer who is having second thoughts about their impending purchase may be tempted to use one of the above points to kill the deal, even if it means walking away from the earnest money paid to make an offer on the house. However, doing so could mean big penalties for the buyer.

“There’s an implied obligation of good faith and fair dealing in all contracts. If the buyer is using the walk-through, for example, as an escape hatch to walk away from the contract, they are playing with fire,” says Weinberger. The seller could sue the buyer for breach of contract. “Courts see that for what it is and they’re unsympathetic to buyers.”

7. Closing confusion
Even if all parties fully intend to close on the contract, mistakes can still happen that could cause a delay. “My first year as a real estate agent, a closing was postponed because the attorney neglected to get a ‘plat of survey’ completed,” says Rhodes. A plat of survey is a drawing of the property that shows all legal boundaries. “The closing was originally on a Friday, but it had to be rescheduled for the following Monday so the attorney could bring in the document.”

A routine examination can also cause last-minute problems. “When we were selling our house a few years ago, one of the last things that happened before closing was the gas company came out and conducted an inspection,” says Weinberger. “The gas company determined that our stove wasn’t connected properly, and we were surprised to see them unhook it then and there. Fortunately, the new owners were preparing to totally remodel the kitchen and replace all appliances, so they didn’t need the gas connection. But for those last few days when we were in the house, we had to live on microwave food.”

Though closing-day glitches do happen, they can still be overcome. Don’t panic, says Weinberger. “Most closings go through smoothly.”

The Bugatti Veyron 16.4 may be the most powerful, most expensive, and fastest street-legal production car in the world. Its 1000 horsepower engine boasts a narrow angle double V8 configuration for a total of 16 cylinders and four turbos, with 8.0-litres of displacement per cylinder. Step hard on the gas and it will rocket you to 60mph in 2.5 seconds thanks to four-wheel-drive traction. You’ll make 125mph in 7.3 seconds and 200mph in less than 20 seconds. Whew!

Yet, if you fail to put gas in the tank, the Bugatti Veyron 16.4 will take you exactly nowhere.

We’ve all been told that goals are the vehicle that will propel you to your destiny. And so we expend extraordinary amounts of energy crafting high-powered goals built for maximum thrust. We write our goals down. We carefully select a target date. We create detailed step-by-step plans. We evaluate our time, our resources, identify skills that we need to obtain and obstacles we need to overcome. We create pictures and visualizations and we even review our goals. We do all the things the motivational experts tell us to do because we are told that by building a turbocharged goal we are assured of success.

Yet too often we find that the goals we built to rocket us to victory just sit there in the drawer where we put them. Like the Bugatti with the empty tank, they take us nowhere because they lack the proper fuel. They simply are not meaningful enough. They fail to arouse our deepest and most powerful emotions, and so they end up sitting in the garage like an enormously powerful car with no gas.

Finding goals that are meaningful to you is not about logic. You can come up with a long list of logical reasons why a goal is good for you, and yet not really care about that goal deep down inside. Your most effective goals make your heart blaze like burning magnesium. It makes your eyes light up and lightning shoot out your ears. Effective goals are the ones you want so bad that you will crawl 50 miles over broken glass to achieve them. Effective goals get you so fired up inside just thinking about them that you feel as if you could leap tall buildings in a single bound. Walking on fire, crossing oceans, climbing the highest mountains are nothing to you if your goals tap into your emotional core, because your desire to achieve them will empower you to do whatever it takes.

Effective goals are the ones that you don’t have to make yourself do. They are the ones that you want to do, no matter what. Your emotions are the fuel that powers your goals. If your fuel — the emotional meaning of your goal — is weak, then your motivation to achieve the goal will also be weak.

So if you are wondering why you have been setting goals but not accomplishing them, then you may want to check the fuel gauge on those goals. Here are a couple of tips to help you design goals that are already loaded with a full tank.

Stop Using Other People’s Fuel

Figure out what YOU really really want. Sometimes we choose goals because we think we SHOULD choose them, or perhaps we are imitating someone we admire. In fact, what we really want is entirely different. For instance, I find it annoying that so many motivational speakers love to talk about their mansions and private jets and limousines. There is nothing wrong with these things, but I get way more excited about a cabin in the mountains, a new Subaru (with a really nice stereo), and the chance to go skiing every day. By building my goals around those things that specifically excite ME, they add gas to MY fuel tank.

Tune Your Mental GPS to the Destination

Mentally put yourself in the place of already having accomplished your goal. Ignore all the road inbetween and just focus on what it would be like to actually be there. All that stuff inbetween is about HOW, and it belongs to the logic side of the equation. There’s a time to take care of that later. Right now, you just need to check the fuel tank to see if this baby has enough go-juice to get you there. To do that, you need to program the end coordinates into emotional GPS.

Monitor the Feedback

This feedback will come from your body. Listen to what your body tells you. Does thinking about this goal make you feel like you just want to jump out of your skin? Does it send electric shockwaves up and down your spine? Does it make your respiration increase and make your heart race? If so, then that’s a good sign that this goal contains the fuel you need. If you don’t really feel much, then keep searching for the goal that will get you going.

Suspend Judgment

When going through this process, suspend all judgment about whether this goal is realistic or attainable. The fact is, if you feel strongly enough about it, the concept of realistic is mostly meaningless. If you really get excited about the goal, but it also scares the goobers out of you, then you may have to play with the time frame or the size of your goal to get the right emotional feedback, but that’s just fine tuning. When you feel strongly enough about a goal, your mind and heart will find a way to overcome almost any obstacle to achieve it.

Embrace the Pain

Finally, it is always best to fuel your goals with positive pictures and desires. Sometimes, however, you can use a matter-antimatter reaction to get extra mileage. This means that you can picture the pain that will come from NOT achieving your goal. If the idea of failure discourages you, then don’t use this technique. On the other hand, if it fires you up, and makes you feel more resolute and determined to overcome all odds, then dump that into your fuel tank. It can significantly increase the octane of your motivational fuel.

The bottom line is that the best goals come pre-loaded with a full tank of fuel that contains a million times the energy of liquid oxygen rocket fuel. Find a way to connect your goal to something that carries that kind of meaning for you, and you will be amazed at how far you can go. Just be sure to wear your seat belt. It’s gonna be one heckuva ride!

Be Free!

David Denis

Speaker and Instructor
david@deliverfreedom.com

David Denis is a speaker and instructor at Freedom Speakers and Trainers, a company that specializes in personal development.  Workshops are presented all over the country. To learn more, visit www.deliverfreedom.com, call 888-233-0407, or e-mail info@deliverfreedom.com

by Matt Woolsey

Before you install that custom wine cellar or bamboo flooring, it’s wise to make sure such upgrades won’t leave you in the red long-term. Fancy features such as these might not seem so essential to a buyer with different tastes.

Rather, in a market slump, sellers whose properties have the right add-ons get the highest rate of return on their investment, allowing them to move their homes faster and for more money than their neighbors.

“It’s about keeping up with the Joneses, but not exceeding them by too much,” says Alan Hummel, chief appraiser of Minneapolis-based Forsythe Appraisals and former president of the Appraisal Institute, a membership organization of professional real estate appraisers. “If something isn’t up to the standards of other houses in the neighborhood, investing in improvements will bring a big return. If it’s already at that level, spending more may help you sell your home faster, but it won’t have a high rate of return.”

That means that if your kitchen cabinets and appliances lag behind those of the guy next door, an investment of $40,000 to update the room completely will likely be made back and then some when it comes time to sell. But the same investment on a kitchen already at or above those in the neighborhood will have diminishing returns with each extra dollar you spend.

Another example: Don’t waste your money on a new roof. Few buyers care about the materials and age of a roof; their only concern is whether or not it leaks. Similarly, don’t invest too much on individualized features like a sauna or a steam bath. They might make your home stand out, but if a buyer doesn’t share those tastes, it can be a strike against the property.

And don’t spend a lot on technological advancements. In the early 2000s, people spent millions wiring their homes for Cat-5 connectivity; when wireless internet became standard, those investments became worthless.

“The simple things can bring the highest rate of return,” says Hummel. “It can be as simple as making sure landscaping looks good, or that the exterior paint is fresh. Especially with median to luxury homes, curb appeal is very important.”

That’s especially true since 80% of buyers begin their searches online, according to the National Association of Realtors. In this case, a photograph is worth more than a thousand words; it could mean the difference between a quick sale and languishing on the market.

Time to start evening out the front yard and working the nicks off the garage door.

Right-Away Remedies

If you don’t have the time to spend on additions and improvements, there are more quick-fix strategies that can net large returns.

Hiring decorators and designers to fill your home with coordinating furniture, fresh flowers and high-tech TVs and stereo equipment can sometimes result in a faster and higher-priced sale.

“A home we staged just sold for $1.9 million amongst multiple offers after only receiving one offer of $1.1 million prior to staging,” says Beth Shepherd, president of Dressed to Close, a Los Angeles-based luxury staging company. “We can generally add 15% to 20% to the sale.”

Talk about being in the right place at the right time. Los Angeles is a particularly depressed market, and Shepherd’s business has tripled in the last year. The most difficult requests? A 40-gallon saltwater fish tank and a baby grand piano delivered up 70 stairs. Prices depend on the size of the house, but Shepherd estimates fees of $10,000 for a $1 million home and $17,000 for a $5 million home.

Another thing to consider before charging in with fixes and revamps is how American homes are changing.

“With the trends we’re seeing, homes in the future will be very different from how we think of them now,” says Gopal Ahluwalia, vice president of research at the National Association of Home Builders. “Forty percent of homes built last year didn’t have a living room, and the square footage of the average home is getting smaller.”

Upscale home buyers, he says, are still enamored with kitchens and master bedrooms, which makes those rooms important candidates for improvements or updates.

“Master bedrooms continue to be sanctuary,” says Hummel. “Nice amenities like fireplaces and vaulted ceilings … those are things that will set a property apart from others.”

Just don’t go too far.

“There’s nothing worse than putting $300,000 into a $700,000 house and only raising the value of the home to $800,000,” says Hummel. “Practice moderation.”