November 19, 2008
A Tale of Two Rooms
I spent the first two days of this week in Las Vegas, hence the reason my normal Monday morning blog hasn't arrived until Wednesday. While in Vegas, I attended two very interesting, and not entirely unrelated, real estate events.
The first was a short-sale seminar. Not knowing anything about the short-sale phenomenon, my curiosity was piqued. There were several active short-sellers in the group of approximately 300, and several newcomers. After listening for a couple hours, it became clear to me that short-selling is much more prevalent in the U.S. that I could have ever imagined.
Short-selling, in a nutshell, is where the lender on a property in a declining market agrees to take a discounted payoff in order to avoid the lengthy and costly foreclosure process. The short-seller, in turn, attempts to find a buyer for the property closer to the true market value of the property. In essence, the short-seller 'flips' the property and makes a spread. There are a lot of moving parts, but it is certainly a viable business.
Many attendees shared the details on deals they had done, and many conversed amongst themselves how to work through the different problems they encountered in the course of a transaction. These people were inspired and excited about the opportunities in front of them.
The second event was the exhibit hall at the National Association of Mortgage Bankers (NAMB) convention. Completely in contrast to the short-selling seminar, the exhibit hall was filled with 'thumb-twiddlers'. I spoke to a couple representatives from a bank in the southern U.S. I asked them how the convention was going for them. "Nobody here qualifies for a line of credit from us" was the response. "Then why are you here?" I asked. "To prove to these people that we're still in business" was the reply.
Wow. This bank acknowledged they expected no business from this convention. The rep said their criteria had tightened so much that virtually nobody qualified for a line of credit. Just waiting out the storm, more or less. But for how long?
I spoke with a representative from a title company. She told me she was doing twice as much work for half as many closings. Nothing was easy, and she was ready to quit the title business altogether.
I spoke with a rep from one of the mortgage industry magazines. A long-time subscriber standing next to me commented to her, "Your magazine gets thinner with every passing month!", to which she replied, "It wouldn't be that way if our advertisers wouldn't keep going out of business!"
The first room was filled with people identifying new opportunities and looking forward. The second room was filled with people looking backward and lamenting about windows of opportunity that have been slammed shut.
Both rooms contained experts in the field of real estate. Yet the attitudes in each were remarkably different. Using the old adage, both rooms were given lemons, but only one of them was making lemonade. What about you? Are you going to continue biting into that sour citrus or take out the juicer and get to work?
Make it a great day.
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